FREDERICTON - The government of New Brunswick is seeking an Atlantic Accord of its own as it looks offshore to reverse its economic decline.
The province's Progressive Conservative government has set its sights on natural resources with the hope that oil and gas can pump some revenues into its coffers.
While the government has been focused on developing a shale gas industry, it has recently turned its attention to its largely unexplored offshore fields. Premier David Alward told a business audience three weeks ago that talks to draft an offshore accord have begun with the federal government in order to ensure New Brunswick can reap the benefits of any future development.
It's not known whether there is a commercially viable reservoir of oil or gas under New Brunswick's 2.3-million hectare offshore. Some seismic exploration work was done from the 1960s into the early 1980s, but that's as far as it went.
But that hasn't stifled the provincial government's enthusiasm.
"There's potential there," Energy Minister Craig Leonard said in an interview.
"When you look around and see what has taken place in the offshores of Nova Scotia and Newfoundland and Quebec, we're not that far away from those locations that work is being done. So you would think that there might be some potential there."
Leonard said new technology will be applied to the existing data in an effort to get a clearer picture on potential petroleum resources.
Paul Barnes, Atlantic Canada manager for the Canadian Association of Petroleum Producers, said New Brunswick has plenty of groundwork ahead before it can arouse industry interest.
"More certainly needs to be done and packaged up and marketed to industry before I believe industry would consider doing work there," Barnes said.
"That area seems to have some prospectivity to it, but it's at the very early stages as to whether there's enough interest for companies to do any activity."
The Atlantic Accord has been pivotal to Newfoundland and Labrador's economic turnaround. The agreement allows that province and Nova Scotia to tax offshore resources as though they are the owner, even though that falls to the federal government.
The deal also shelters those provinces from offshore resource revenue clawbacks in equalization, though Newfoundland and Labrador stopped receiving payments from the federal wealth-sharing program in 2008.
The agreement has funnelled more than $5 billion to Newfoundland and Labrador and about $1.1 billion to Nova Scotia.
"Newfoundland's economy is doing extremely well because of their offshore agreements and Nova Scotia is starting to come into that area as well," Leonard said.
Newfoundland and Labrador's offshore industry dwarves Nova Scotia's, boasting the Hibernia, White Rose and Terra Nova offshore oil platforms. The Hebron offshore project is in development and aiming to come online in 2017.
But Nova Scotia has seen the Deep Panuke natural gas project come on stream last year and two major exploration projects could be on the horizon. Shell Canada (TSX:SHC) completed 3D seismic imaging off the province's southwestern shore last year and could begin exploratory oil drilling late next year. BP plans to acquire seismic data this year and next about 300 kilometres southeast of Halifax.
Wade Locke, a professor of economics at Memorial University in Newfoundland, said an offshore accord is also important because it can remove uncertainty that could block development or cause arguments over ownership and revenue allocation.
"Without that, you will lose half of your money in equalization now and you will also not have the ability to strongly suggest to people that they should be doing economic development with local New Brunswick companies," Locke said.