Nfld. & Labrador

Former PM Brian Mulroney calls on Ottawa to save N.L. offshore oil industry

The former Canadian prime minister who championed joint management of Newfoundland and Labrador's offshore — and fought to save the Hibernia oil project — is speaking out again.

Mulroney says pandemic, 'short-sighted thinking' should not be allowed to kill industry

Former Canadian prime minister Brian Mulroney was a virtual guest speaker at a St. John's fundraising dinner for the Progressive Conservative Party of Newfoundland and Labrador on Thursday evening. Mulroney spoke strongly in favour of an investment by the federal government to support the province's faltering oil and gas industry. (PC Party of Newfoundland and Labrador)

The former Canadian prime minister who championed joint management of Newfoundland and Labrador's offshore oil industry — and overcame heavy odds 30 years ago to save the Hibernia megaproject — says it's time once again for Ottawa to step forward and prevent the industry from seizing up and dying.

Brian Mulroney was a virtual guest speaker Thursday night for a $1,000-per-plate fundraising dinner in St. John's in support of the Progressive Conservative Party of Newfoundland and Labrador.

As expected, the 81-year-old Mulroney spoke strongly in support of a role for the federal government in kick-starting an industry being battered by a global pandemic.

"I would not allow COVID-19 and short-sighted thinking to kill Newfoundland and Labrador and the East Coast offshore industry," said Mulroney, commenting on what he would do if he was leading the government now. 

He said Ottawa must provide the "visionary leadership and resources" to the industry. 

Mulroney and former Newfoundland and Labrador premier Brian Peckford sign the Atlantic Accord at the Hotel Newfoundland in St. John's in 1985. (CBC)

Mulroney appeared via videoconferencing to a physically distanced audience of 100 guests at the Capital Hotel, as well as other party supporters who joined online.

Ottawa should act in national interest: Mulroney

He was introduced by PC Leader Ches Crosbie, the son of the late John Crosbie, who was a key member of Mulroney's cabinet and who persuaded Mulroney to step into a breach to save the then struggling Hibernia megaproject in the early 1990s.

Mulroney served as Canada's 18th prime minister from September 1984 to June 1993.

He is best known for major economic reforms such as free trade, but his legacy in Newfoundland and Labrador is more closely linked to offshore oil.

He signed the Atlantic Accord in 1985, which allowed for joint management of the offshore and identified Newfoundland and Labrador as the principal beneficiary of the industry.

When Hibernia was faltering after one of the companies developing the project dropped out, Mulroney's Progressive Conservative government stepped in with an 8.5 per cent equity stake in a project that would help transform the province's economy.

Hibernia alone has provided billions of dollars in revenue to both the federal and provincial governments. 

Describing himself as one of the fathers of the offshore industry, Mulroney vigorously injected himself into the debate about Ottawa's modern-day role in the offshore.

He said the accord and the Hibernia investment were in the national interest, and proved beyond measure to be good decisions.

With more potential for the industry, he said the Liberal government of Prime Minister Justin Trudeau should take similar action.

"We want a nation of winners here in Canada. But to get there the federal government has to step in and help Newfoundland in a dramatic way," he said.

Construction on Husky's massive concrete gravity structure for the West White Rose extension project at Argentia is stalled, with the company saying it doesn't have the cash to continue the project. (Husky Energy)

A lobby effort has been raging for months, with industry boosters calling on the federal government to provide tax and exploration incentives for an industry that, in recent years, represented nearly one-third of the province's economy and supports some 20,000 jobs.

Future of field unclear

More recently, Husky Energy has proposed that Ottawa buy an equity stake in the stalled West White Rose extension project, similar to what Mulroney did with Hibernia.

That project is 60 per cent complete, but major construction sites at Argentia and Marystown are now quiet, and the very future of the White Rose field is hanging in the balance.

With its balance sheet shredded by the pandemic, Husky has said it doesn't have the cash to continue the project in the short term.

Federal Natural Resources Minister Seamus O'Regan delivered $360 million to the province last month to support workers and to reduce carbon emissions, but has yet to signal whether the Liberals will invest in the West White Rose project.

In this negotiation, I would tell them … failure is not an option.- Brian Mulroney

With climate change as a key competing issue, and the Liberals betting heavily on a greener economy, insiders say a federal partnership with Husky is a long shot.

O'Regan has also dismissed the idea of incentives, saying they are subsidies and his party does not support the idea of handouts to the oil industry.

But Mulroney said he has little doubt about what he would do if he were prime minister.

"In this negotiation, I would tell them as well, failure is not an option. I want a deal with Newfoundland and Labrador, and by God if I have to go down there and do it myself, we're going to get one that is fair to Newfoundland and Labrador, and bring greater prosperity to the province," he said.

Mulroney said oil from the offshore is produced with "significantly less" greenhouse gases than other sources, and this should be seized upon.

"If I were there, (I would) advance energy projects that have struck a balance between creating enormous national economic opportunity and managing our global climate change commitments," said Mulroney.

Read more from CBC Newfoundland and Labrador

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.

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