By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Oil exploration in Bahamian waters is one step closer to reality after an application for environmental approval was submitted to the Government late last week.

Bahamas Petroleum Company (BPC), which has spent more than a decade on its exploration project, confirmed it has "lodged an application for Environmental Authorisation" with the Ministry of the Environment and Housing over its plans to drill a first well in waters south-west of Andros.

Simon Potter, BPC's chief executive, told Tribune Business yesterday that the submission was another "step" in the process to 'spudding' that first well, having taken two years to complete.

He added that it would aid BPC's search for a joint venture partner, which has received a further boost in recent months from the increase in global oil prices to over $70 per barrel.

This, Mr Potter explained, had made the Bahamas - and specifically BPC's project - "quite attractive" again to oil industry players whose exploration appetites have been stoked by the rise in global prices and potential profit margins.

He further described BPC's prospects of discovering commercial quantities of extractable oil as "the best I've seen", based on the company's $100 million investment to-date in obtaining seismic data and 'de-risking' the project.

BPC is currently working on a 'parallel track', which involves obtaining the necessary environmental approvals from the Government at the same time as it seeks to secure a 'farm in', or joint venture, partner to share the financial and technical burden of drilling that first exploratory well.

The 'Environmental Authorisation' submission indicates that BPC is likely making progress on its joint venture partner search, although Mr Potter declined to provide details on this aspect of the company's work.

He branded the application as an "intense piece of work" that took two years to complete, but which was required under regulations passed by the former Christie administration in 2016 to specifically govern offshore oil exploration in Bahamian waters.

"Commencing field operations is a complex process, and involves several steps. This is one of them, and a new one mandated by the Government," Mr Potter told Tribune Business.

"The Government came forward with some specific new regulations, which expanded the process for commencing all field operations, including that of exploration, to include a new step.

"This is a tier of authorisation in the Bahamas that is unique to petroleum operations, and certainly as a company BPC embraces any and all acts by the Government seeking to further better environmental oversight and governance. We intend to fully comply with it."

BPC's submission was made in accordance with the Petroleum (Offshore Environmental Protection and Pollution Control) Regulations 2016, and its application will now be scrutinised by both the Ministry and the Bahamas Environment, Science and Technology (BEST) Commission.

Obtaining the required 'Authorisation' was described by BPC as "the first step in commencing offshore field activity", with Mr Potter branding it as "the in-depth part" of the company's environmental compliance.

Apart from the Environmental Impact Assessment (EIA) completed in 2012, BPC's latest submission also includes an Environmental Management Plan (EMP). Mr Potter said other features involved "safety plans and systems, engineering plans and designs, quite a lot of scenario planning - 'what happens if', and all specific response plans".

The BPC chief executive added: "This is required by the new regulations, and goes down into quite some details. It goes all the way down to garbage and how we will handle waste water. It also includes an environmental sensitivity map that covers all the western islands of the Bahamas, including land use maps that go down to 5 kilometres x 5 kilometres.

"This is a process, and this is the next step in the process. This is an intense piece of work that took two years to complete, and involved talking to many experts and communities."

Mr Potter said that since the 'Environmental Authorisation' was a new step, BPC was not sure of the Government's expectations, but remained "ready, willing and able to comply with the regulations as and how the Ministry directs".

Disclosure of BPC's 'Authorisation' application will likely trigger alarm bells among many environmental activists, who are instinctively opposed to any oil exploration or petroleum-related activities in the Bahamas due to the potential negative consequences for many ecosystems and a tourism industry that depends on them.

However, Carl Bethel QC, the Attorney General, recently suggested the Bahamas would have to confront 'hard choices' and soon decide whether to give BPC and companies engaged in similar activities the go-ahead, given the country's economic needs.'

Suggesting that the Bahamas could not ignore the possibilities for economic diversification, he told a Senate debate: "Where will we find future foreign currency earnings to make up for the losses being incurred in our second economic pillar?

"Can tourism alone bring in the kinds of foreign currency inflows needed in an economy which has to import the vast majority of its most basic needs, and to pay for such necessities in US dollars?

"Well, we know that we have to make a decision some time in the near future on the Bahamas Petroleum Company and its proposal to drill for oil in the area just off the southernmost part of the Great Bahama Bank. The hard decision may have to be taken."

Mr Potter yesterday said the 'Environmental Authorisation' submission would also aid BPC's efforts to tie-down a joint venture partner for the first exploratory well, given that it represented a tangible sign of progress.

"The global oil price has not helped us over the preceding few years, but in the last few months it has gone over $70 per barrel," he told Tribune Business. "So it's back on a trend that makes this project quite attractive.

"Every step forward helps the process. Every bit of progress that we tick off, cross off and pass by, moves us forward and moves a potential partner forward."

Describing BPC's prospects as "a tremendous project", Mr Potter added: "It's as good a technical project as I've seen. That's what's kept the team together, kept the team pushing forward.

"When I say technical project, it's chances of success are very good. Five wells have been drilled in the Bahamas, and all found oil, but not with the technology we've been able to apply.

"It's the scale, the size of the project, and location here in the Bahamas that means I'm very confident that this project will ultimately succeed."

BPC's current licence is valid until 2019, the company having been granted an extra year to compensate for the wait for regulations governing its activities to be put in place in 2016.

Mr Potter pointed out that the planned location for BPC's first exploratory well is more than 100 miles from the nearest settlement in Andros, and 300 miles from Nassau.

With the site closer to Cuba than populated Bahamian islands, he added that the 2016 regulations had created a regime "over and above" the existing maritime laws and international conventions that had largely protected this nation from major shipping incidents.

Given that BPC's work has spanned four administrations and 11 years, Mr Potter said: "We feel we have identified a considerable national asset and, as a company, we have an obligation under our licence to fully assess the value of this asset for the Government.

"In the event of successful exploration, the people and Government have a substantial stake in this asset through the royalty payments embedded in the company's licence."