Nfld. & Labrador

Regulator fumes as Hibernia shutdown costs N.L. $2.5M a day in deferred revenue

What's the Hibernia spill costing Newfoundland and Labrador in deferred revenue? A cool $2.5 million a day, says Finance Minister Tom Osborne.

CEO of N.L.'s offshore regulator says he's frustrated and expects more from oil companies

An oil sheen on the surface of the water is seen from a Canadian Coast Guard flyover on Wednesday afternoon. (Canada-Newfoundland & Labrador Offshore Petroleum Board)

The shutdown of the Hibernia oil platform after an estimated 12,000-litre spill has set the Newfoundland and Labrador government back at least $15 million in deferred revenue.

Finance Minister Tom Osborne confirmed the figure for CBC News, saying the provincial government is missing out on about $2.5 million in oil royalties for every day that production is suspended at the offshore platform. 

Osborne said the royalties are not lost, however, just missing for now.

"It is important to note that this is deferred revenue, not lost revenue as this oil will be produced once operations resume," he said in an emailed statement on Monday night.

"While we appreciate there is a financial impact when production is shut down in the offshore, our main priorities remain ensuring the health and safety of workers offshore and the environment."

Finance Minister Tom Osborne says safety is government's biggest concern, not what the Hibernia shutdown is costing the province each day. (CBC)

Hibernia ceased operations Wednesday after accidentally releasing an estimated 12,000 litres of oil into the Atlantic Ocean from a storage cell containing a combination of crude oil and water.

'We're all frustrated'

Scott Tessier, chief executive officer of the Canada-Newfoundland Offshore Petroleum Board, didn't mince words about what he felt when the offshore oil regulator got the call about the spill from Hibernia.

"Frustration. I think there's always a sense that things can be done better that improvements can be made. Frustration, disappointment and a commitment to do better," he told The St. John's Morning Show Tuesday.

"We're all frustrated with that level of performance. We expect the operators in the industry to do better, and that's going to be our imperative going forward."

Scott Tessier is the C-NLOPB's chief executive officer. (Paula Gale/CBC)

The Hibernia spill comes eight months after an estimated 250,000 litres of oil leaked from a faulty connector in the sprawling network of cables beneath the SeaRose production vessel in the White Rose oil field.

That spill — the largest in the province's offshore history — cost $4 million a day and had to be counted as a deficit in the 2018-2019 provincial budget.

The C-NLOPB, which is still investigating the SeaRose spill, has now launched an investigation into the Hibernia spill, Tessier said. 

"I don't want to connect any dots at this point until I get a better idea of what the root causes might be," he said.

According to Husky Energy, this connector was the culprit behind November's spill in the White Rose oil field. (Husky Energy)

Tessier said the Hibernia Management and Development Company made the call to shut down production and will need the C-NLOPB's approval to start up again, but that won't come for a while yet.

For now, the regulator is focused on the cleanup efforts, the impacts of the spill on wildlife, and on the communication and transparency efforts from HMDC, he said.

"There's still a sizeable amount of volume [of oil] on the water," he said.

HMDC on Monday reported a sheen with a nearly 10-kilometre radius.

Waiting for oiled birds

Until that's cleaned up, environmentalist Stan Tobin is on call, waiting for any oiled birds to be brought to the seabird rehab centre he runs in Ship Cove, on the southern shore of the island.

Three oiled birds have been spotted so far, and a fourth was found dead but unoiled on the deck of a vessel, said an HMDC statement released Monday.

Tobin said he's worried Newfoundland and Labrador will be dealing with more and more spills.

"We keep pushing it, we keep clamouring for more development, [and] as we expand development and exploration, the risk grows," he said.

Read more from CBC Newfoundland and Labrador

Corrections

  • A previous version of this story provided an incorrect name for Scott Tessier, the CEO of the Canada-Newfoundland and Labrador Offshore Petroleum Board.
    Jul 23, 2019 10:58 AM NT

With files from Kenny Sharpe and The St. John's Morning Show

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