Nfld. & Labrador

A near miss: Hibernia almost canned before meeting with John Crosbie, former PM Mulroney recalls

One billion barrels ago, the Hibernia oil field seemed destined to remain an untouched area of ocean waves, desolate but for its mountainous icebergs and perilous swells.
Four years before the first oil was extracted from the Hibernia oil field, the project was nearly scrapped – until a meeting between the prime minister at the time, Brian Mulroney, and his fisheries minister, John Crosbie. (CBC)

One billion barrels ago, the Hibernia oil field seemed destined to remain an untouched area of ocean waves, desolate but for its mountainous icebergs and perilous swells.

The promise of oil, money and prosperity seemed dashed. There was political opposition on all sides, with few cheerleaders for the stalled mega-project.

In 1993, then-prime minister Brian Mulroney believed the project was coming to an end, long before the first barrel was ever extracted.

"This was in the midst of an international recession, where Canada was running a significant deficit," he told CBC's On the Go this week. "This was going to add a couple billion dollars more to it overnight."

Enter John Crosbie – minister of fisheries and oceans at the time, Newfoundlander and fierce backer of the Hibernia project.

It hadn't been a year since he famously denied taking the fish from the ocean, but Crosbie was keen on removing the oil from underneath the sea.

John Crosbie will be forever remembered for this confrontation with fishermen in Bay Bulls on Canada Day in 1992.

"I can still see both of us sitting in my office," Mulroney said. "John came to see me and was his usual persuasive self, of course."

Mulroney was convinced. As the former president of the Iron Ore Company of Canada in Labrador City, he said he's long held a vision for the province.

While prime minister, he took it upon himself to help Newfoundland become a "have" province, he said.

He also had a vision for Canada, with mega-projects from coast to coast boosting a resource-based economy.

With a plan to back the project with $2.7 billion in guarantees, Mulroney and Crosbie went before the Progressive Conservative caucus.

Meech Lake blow-up cause for concern

The timing could not have been worse. Aside from the blossoming recession, the failed Meech Lake Accord was still fresh.

Newfoundland premier Clyde Wells was held responsible by many in Ottawa for torpedoing the accord, which would have made Quebec a "distinct society," and offered some decentralization from the federal government.

Prime Minister Brian Mulroney in the House of Commons June 20, 1990, urging Manitoba and Newfoundland to pass the Meech Lake Accord. (Chuck Mitchell/Canadian Press)

"There were 58 Quebecers in the caucus alone, [imagine] how upset and sad they were about what had happened at Meech Lake," Mulroney said. "I spoke to them and spoke to cabinet and said the one thing you can't do in politics is to seek retribution.

"You can't punish Newfoundland and Labrador for something the premier did."

Mulroney had already made his decision. The government would approve the loan guarantees.

Royalties not a rip off, former PM says

While trying times have returned to Newfoundland and Labrador's economy, the Hibernia oil platform pumped its billionth barrel on Wednesday — far exceeding the field's original expectations of 563 million barrels.

There is much contention among the people of the province about the level of royalties earned on the oil companies' revenue.

While many feel the province should have taken a bigger cut, Mulroney said the government played it smart.

"It's an eternal argument and not necessarily an invalid one," he said. "But the fact of the matter is, while it's true the oil belongs to the people, that if you don't make an inviting statement to international companies, they won't come in and invest."

Hibernia a legacy project for Mulroney

Now two decades removed from his term as prime minister, Mulroney took time to reflect on the beginnings of Hibernia from his home in Florida.

A billion barrels later, the province survived a 19 per cent unemployment rate after the cod moratorium and became a "have" province in 2008.

The Hibernia oil platform, one of several rigs that drill for crude in the Newfoundland and Labrador offshore. (CBC)

Mulroney thinks back to his meeting with John Crosbie.

"We may have been the only two in Ottawa to believe it. We forget about the training that took place for young Newfoundlanders and money for families who would have otherwise been on the dole, and so on."

"It's been a transformational initiative."

With files from On the Go