Outdated regulations stifling N.L.'s offshore sector, says NOIA
Provincial government agrees modernization of oil rig approval process a top priority
The president and CEO of Newfoundland and Labrador's offshore industries association says outdated regulations for the approval of oil rigs to operate are giving the province a reputation as a difficult place to do business.
Bob Cadigan says the so-called rig intake process has to be modernized if the province hopes to attract greater investment from oil companies, and develop more producing oil fields in areas such as the Flemish Pass.
"We're concerned that the regulatory process hasn't evolved," Cadigan told CBC News Tuesday.
"That's not good in terms of attracting investment and getting more rigs here and getting more work done."
Cadigan says the provincial and federal governments need to act quickly.
He says only a handful of drill rigs meet the criteria for operating in our offshore, and even new rigs require millions in investment to meet the grade.
Not a safety issue
He says one example of this is requiring fire suppression systems in the accommodations unit on a rig.
He says modern construction methods make this unnecessary, and forcing companies to install a sprinkler system can cost anywhere from $10 to $50 million, and take several months to complete.
"It's not a safety issue. It's a regulatory efficiency issue," said Cadigan.
There was plenty of hype in November when oil companies scooped up seven exploration licences in the offshore, committing to spend $1.2 billion to explore in the coming years.
But Cadigan says it's not helpful that Newfoundland's offshore is still operating with a regulatory regime designed in the 1980s.
The return of the Henry Goodrich is proof that changes are needed, says Cadigan.
The Goodrich has been a workhorse in Newfoundland's offshore over the years, but appeared destined for the scrap heap not so long ago.
Husky announced in December it had signed a two-year contract for the Goodrich to drill in the White Rose field.
"The fact that a 30-year-old rig is coming back versus a newer build, I think has partially to do with the ability to get that rig through the regulatory process quickly and out drilling quickly. So I think it's a little bit of an indication of some of the challenges we have on the regulatory side," Cadigan stated.
The provincial government released a statement Tuesday, backing NOIA's call for changes.
"Our government is aware of existing regulations around the rig intake process in the offshore industry in Newfoundland and Labrador," said Natural Resources Minister Siobhan Coady.
"We hope to have progress regarding the regulations as soon as possible."
Coady said the province is working with governments in Ottawa and Nova Scotia to modernize operational regulations.
"As a new minister, this is one of my priorities as we work to further encourage exploration and development of our offshore," Coady stated.