Royal Dutch Shell PLC said Friday it will spend nearly 986.78 million (C$1 billion) on deepwater oil exploration off the coast of Nova Scotia.

Shell bid C$970 million (US $962 million) for four offshore parcels more than 125 miles from Nova Scotia’s coast. The amount represents how much Shell intends to spend exploring for oil in the area over six years.

It’s the largest amount ever spent on offshore drilling rights on Canada’s east coast, and represents a gamble on an underexplored deepwater frontier for Shell.

“This particular area where the four licenses have been awarded is an underexplored area … there hasn’t been any drilling on those four parcels and there’s limited data available,” said Stuart Pinks, chief executive of the Canada-Nova Scotia Offshore Petroleum Board, which awarded the licenses.

The Nova Scotia government recently estimated that its offshore region potentially contains 120 trillion cubic feet of gas and 8 billion barrels of oil.

“Shell views this as an important entry into an attractive new deepwater basin offshore Nova Scotia,” a Shell spokesman said.

The seafloor is between 4,500 feet and 12,000 feet below the surface in the exploration areas, Pinks said, compared to the 5,000-foot depth the BP Plc-operated Deepwater Horizon drilling rig was operating in when an underwater blowout caused a massive oil spill in the Gulf of Mexico.

Pinks said there have been new regulations and guidelines put in place by his regulatory organization to improve the safety of deepwater drilling since the Deepwater Horizon spill. Because it will be a few years before Shell actually drills an exploration well, there’s additional time to study that incident, he said.

“Certainly by the time we get to drilling, lessons that have learned by Macondo will have be learned and taken into account and incorporated, as necessary, into our regulatory system,” Pinks said.

Source: Dow Jones & Rigzone