Exploration and development incentives unlikely, says industry association
There’s mixed messages emerging from those lobbying for the federal government to deliver an aid package for Newfoundland and Labrador’s battered oil industry.
The provincial offshore oil and gas association, known as Noia, is losing hope that Ottawa will come through with incentives for companies to explore for oil, and develop existing discoveries like Bay du Nord.
The association’s board of directors met with Natural Resources Canada Minister Seamus O’Regan last week, but those attending the meeting left “highly disappointed,” said Noia CEO Charlene Johnson.
“I think it’s fair to say that the ask around exploration incentives and development incentives probably are not going to come to fruition,” Johnson told CBC News on Monday.
When asked if the lobby for help had failed, another senior oil insider who asked not to be identified answered with one word: “crickets.”
Johnson said talks are ongoing, and that the more likely outcome is an emphasis on short-term assistance and more regulatory changes that oil companies have been seeking.
Meanwhile, outgoing Newfoundland and Labrador Premier Dwight Ball is expressing a more upbeat assessment of the long-running lobby effort.
“There’s no reason for me at all to be pushing my chair back from this negotiation table right now. We do believe a package will come for Newfoundlanders and Labradorians to support jobs, and to support our environment,” he said.
O’Regan was not available for an interview Monday, but in a statement outlined some of the steps already taken to help the industry, including reducing the timeline for environmental assessments for exploration drilling campaigns from 950 days to 90 days.
He also referenced changes to regulations that make the industry more competitive with the United Kingdom and Norway, and emergency wage subsidies introduced in response to the pandemic.
He did not comment on his meeting with Noia’s board, but said “there’s more to do” when it comes to helping the industry.
“Our offshore industry in this province is the backbone of our economy, so we understand the urgency and we want to make sure we get this right,” he wrote.
he N.L. oil industry has been shedding jobs by the thousands since a global pandemic sent shock waves through the economy earlier this year, and sources say the downsizing is far from over.
With so many projects either deferred or cancelled, and major job losses occurring in producing oil fields like Hibernia, insiders say the fleet of offshore support vessels will shrink dramatically in the coming months, from a high of 28 in Atlantic Canada a few years ago, to just eight.
And the company that supplies helicopter services to the offshore, Cougar, is poised to reduce its fleet of S92 helicopters in Atantic Canada from 11 to four by this fall.
A handful of drilling companies and other supply chain operations have closed their doors, several high-profile projects have been deferred or cancelled, and there are growing fears that billions in future investment could be lost to places like Norway, where tax breaks and other government aid is helping stabilize the oil sector at a time of major societal upheaval.
“In a pandemic year Norway is drilling 30 exploration wells and 36 projects that were delayed are now back on the table because of the outstanding incentives that they have in Norway,” said Johnson.
For months, Noia has partnered with the provincial government and other groups to press Ottawa for help, and there have been hints of growing frustration as the weeks drag on, and the job losses mount.
Industry players who wouldn’t otherwise speak publicly are sharing their stories of economic pain, including Judith Bobbitt, president of Oceans Limited in St. John’s.
The company specializes in weather forecasting for offshore players like Suncor and Husky, and carries out climate studies for companies looking to carry out exploration projects.
But the company is being squeezed this year by the cancellation of several offshore contracts relating to new exploration and development.
The company also monitors the health of fish stocks around oil platforms, but it’s become challenging to do that work because of the shrinking number of support vessels travelling to the offshore.
“We’ve never seen a period like this,” said Bobbitt, who formed her company in 1981.
As for the call for help from Ottawa, Bobbitt supports the lobby.
“I think it’s very short-sighted for the federal government (not to support the oil industry) because I think we have a lot to offer here,” said
Bobbitt said the federal government has profited handsomely from its investment in the Hibernia project in the 1990s, and she said a similar investment today “will come back many times over.”
Like other industry boosters, Bobbitt raves about the “light, sweet” crude produced in the offshore, and how it’s produced at lower carbon emissions than most other countries.
She believes a federal government interested in protecting the environment, and the eventual transition to cleaner forms of energy, should view the Newfoundland and Labrador offshore as an appealing investment opportunity.
Meanwhile, Ball, who will leave the premier’s post on Aug. 3, plans to speak with Prime Minister Justin Trudeau as early as today with another plea for help.
“No one is saying no. They want to support this industry. We just need to be able to find a way to be able to do this,” he said.
Ball said the focus is on short-term assistance that will help maintain jobs and activity, and longer-term incentives such as tax breaks to keep the industry competitive and growing.
“I believe support for the oil and gas industry is the only option that the federal government would have to create jobs here in our province. If they don’t do that, the other option would be to put our province back on large equalization transfers.”
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Source: CBC This text was excerpted from the media outlet cited on July 21, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.
