Nfld. & Labrador

N.L. government defends decision to pause seismic oil exploration program amid backlash

The province's oil industry association and opposition MHAs are concerned about a decision to pause seismic surveys, but the provincial government says it will save $20 million.

Noia, opposition concerned about effects of pausing program

Energy Minister Andrew Parsons says data from previous seismic surveys is more than enough to allow investors to make informed decisions. (Patrick Butler/CBC)

Newfoundland and Labrador's government says the decision to pause an annual offshore seismic survey is a smart move, but it has sparked a wave of reactions from oil industry stakeholders.

In place since 2010, the annual seismic program sees specialized vessels sending jolts of pressurized air to the ocean floor in the province's offshore waters in search of oil reserves.

Data gleaned from the seismic surveys help oil companies determine the risk of developing in a particular area.

Charlene Johnson, CEO of the Newfoundland and Labrador Oil and Gas Industries Association, known as Noia, says the seismic program is an economic boon for the province, and hopes it will be reinstated in next year's budget.

Seismic surveys help "de-risk the investment" for oil companies, Johnson said, noting countries like Norway and the United Kingdom invest in similar programs every year.

Past seismic surveys have resulted in some $4 billion in investment in the province's oil industry over the past five years, Johnson said, and eight companies have set up shop here based on data gleaned from seismic surveys.

"Putting something on pause when you have that much momentum going is certainly disappointing to see," she said.

Johnson said the seismic program, which involves stakeholders from food and fuel suppliers to marine ports and hotels, is a significant economic generator for the province.

"So all of that will be lost for next year unless this gets reversed," she said.

$20M in savings

Andrew Parsons, minister of industry, energy and technology, defended the decision Friday, saying the data from previous surveys is more than enough to allow investors to make informed decisions.

Yearly seismic surveys yield data which oil companies use to determine potential for development in Newfoundland and Labrador's offshore environment. (Petroleum Geo-Services)

"We feel we are still in a very, very good position to have attractive information out there for companies to bid on," he said. 

Parsons said the decision to pause the program was also a fiscal one: about $20 million is spent per year on the program, and with interest in the province's offshore already well established, Parsons said, the province felt it was "a good time to put a pause on that."

Parsons said he wasn't surprised Noia is disappointed. 

"Why wouldn't they be?" he said. "But I've heard from people within the industry who feel this is probably a smart move … so that's the move that we've made." 

In a statement released Thursday, Lloyd Parrott, PC MHA for Terra Nova, said he's concerned about the future of the offshore industry following the suspension of the program.

"The minister has confirmed that the Liberal government will once again show their lack of support for our offshore oil and gas industry by failing to nurture the industry's future and eliminating funding for the seismic program," the release read.

In an interview with CBC, Parrott said walking away from the seismic program means the province is "walking away from the oil and gas industry, and it's OK."

Parsons said he "absolutely disagrees" that suspending the program signifies the provincial government is abandoning the oil industry, citing its exploration offshore initiative and investment in projects like West White Rose as evidence of its support.

"So to say that it sends a signal is asinine, really," Parsons said. "What else are we supposed to do here? For some people, it's never enough."

Read more from CBC Newfoundland and Labrador

with files from Terry Roberts


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