01/20/2012 09:17 EST | Updated 03/21/2012 05:12 EDT

Shell to explore for oil in Nova Scotia offshore in $970-million deal

HALIFAX - Shell Canada (TSX:SHC) will spend $970 million in the hopes of finding oil off Nova Scotia in a deal that Premier Darrell Dexter hailed Friday as a boon to the province's offshore resource industry.

The Canada-Nova Scotia Offshore Petroleum Board announced that the Calgary-based energy company won the rights to explore four deepwater areas about 200 kilometres from the province's southwestern shore.

Dexter said the six-year agreement is the highest bid for exploration rights in Atlantic Canada ever awarded.

"It's a great day for Nova Scotia at a time, generally speaking, when the world is going through recessionary pressures," he told a news conference.

"This will inevitably mean that the others will start to say, 'If they have this level of interest in the offshore, what have we missed?'"

He said he is confident that Shell's commitment will lead to more work.

"Once they get in to do the work and once they start doing it, the experience is that leads to yet more work," he said.

Barbara Pike, executive director of the Maritimes Energy Association, said the development will trigger more activity in the province's offshore oil sector and bring promise of further exploration.

"We're going to see significant activity and attract more companies," Pike said.

"This shows they are very serious about this and that they're going to be going out there aggressively looking for oil."

But a Nova Scotia environmental group warned of the possible consequences that lay ahead for the province's marine life from seismic blasting that often comes with deepwater oil drilling.

Mark Butler, policy director at the Ecology Action Centre, said the sounds emitted between the ocean floor and a vessel during seismic blasting can affect the behaviour of fish and other underwater life.

"It can push them away ... and can impact how they communicate to find food," Butler said in an interview. "And in the ocean, sound travels incredible distances."

The exploration licences are set to begin March 1, pending approval by the federal and provincial governments. Shell is required to post a 25 per cent deposit of its bid under the agreement.

The next call for Nova Scotia offshore bids will be in May.

Unlike Newfoundland and Labrador, where a wealth of offshore resources has turned that province's finances around, Nova Scotia's petroleum industry is relatively small and has experienced struggles.

The Deep Panuke natural gas project, about 250 kilometres southeast of Halifax, has encountered repeated delays. It is expected to go online this year.