Nfld. & Labrador

Lobby for N.L. oil industry aid falls flat with 'crickets' from Ottawa

The provincial oil and gas association is losing hope that Ottawa will come through with incentives for companies to explore and build the industry, while Premier Dwight Ball says talks are ongoing.

Exploration and development incentives unlikely, says industry association

Charlene Johnson, CEO of the Newfoundland and Labrador offshore oil and gas industries association, confirmed this week that an effort to convince the federal government to provide development and exploration incentives to the offshore industry has likely fallen flat. (Mark Cumby/CBC)

There's mixed messages emerging from those lobbying for the federal government to deliver an aid package for Newfoundland and Labrador's battered oil industry.

The provincial offshore oil and gas association, known as Noia, is losing hope that Ottawa will come through with incentives for companies to explore for oil, and develop existing discoveries like Bay du Nord.

The association's board of directors met with Natural Resources Canada Minister Seamus O'Regan last week, but those attending the meeting left "highly disappointed," said Noia CEO Charlene Johnson.

"I think it's fair to say that the ask around exploration incentives and development incentives probably are not going to come to fruition," Johnson told CBC News on Monday.

On Tuesday, O'Regan all but confirmed that, saying "It's not something that's going to happen anytime soon."

O'Regan would rather talk about the removal of regulatory hurdles such as shortening the approval process for exploration drilling campaigns.

He said the priority is to protect existing jobs and projects, though he did not offer any specifics.

"You do it by working with the unions and working with the companies and finding out what we can do to make greater stability," he said.

Natural Resources Canada Minister Seamus O'Regan confirmed in St. John's today that federal subsidies for the Newfoundland and Labrador oil industry are a long shot. (Eddy Kennedy/CBC)

When asked if the lobby for help had failed, another senior oil insider who asked not to be identified answered with one word: "crickets."

I think it's fair to say that the ask around exploration incentives and development incentives probably are not going to come to fruition.- Charlene Johnson

Johnson said talks are ongoing, and that the more likely outcome is an emphasis on short-term assistance and more regulatory changes that oil companies have been seeking.

Meanwhile, outgoing Newfoundland and Labrador Premier Dwight Ball is expressing a more upbeat assessment of the long-running lobby effort.

"There's no reason for me at all to be pushing my chair back from this negotiation table right now. We do believe a package will come for Newfoundlanders and Labradorians to support jobs, and to support our environment," he said.

Newfoundland and Labrador Premier Dwight Ball, who will leave office after Aug. 3, says he remains confident Ottawa will come forward with a package to help the offshore oil industry. (Mark Cumby/CBC)

 

O'Regan said the federal government is excited about a commitment from this province to reach net zero carbon emissions by 2050.

Oil is produced in the offshore with fewer emissions per barrel, and O'Regan said this is an attractive sell for the province.

"Increasingly companies are looking for jurisdictions that take net zero very seriously. It's where the investment money is going," he said.

O'Regan said he will continue to work with all players in the offshore industry, and acknowledged "there's more to do" when it comes to helping the industry.

"We're working on what works for workers. We're working on making sure those projects are in a good place. That's a lot of work," he said.

Judith Bobbitt, president and founder of Oceans Limited, says her company has lost several big contracts in recent months as the industry contracts in the face of a global pandemic. (Terry Roberts/CBC)

The N.L. oil industry has been shedding jobs by the thousands since a global pandemic sent shock waves through the economy earlier this year, and sources say the downsizing is far from over.

With so many projects either deferred or cancelled, and major job losses occurring in producing oil fields like Hibernia, insiders say the fleet of offshore support vessels will shrink dramatically in the coming months, from a high of 28 in Atlantic Canada a few years ago, to just eight.

And the company that supplies helicopter services to the offshore, Cougar, is poised to reduce its fleet of S92 helicopters in Atantic Canada from 11 to four by this fall.  

A handful of drilling companies and other supply chain operations have closed their doors, several high-profile projects have been deferred or cancelled, and there are growing fears that billions in future investment could be lost to places like Norway, where tax breaks and other government aid is helping stabilize the oil sector at a time of major societal upheaval.

"In a pandemic year Norway is drilling 30 exploration wells and 36 projects that were delayed are now back on the table because of the outstanding incentives that they have in Norway," said Johnson.

For months, Noia has partnered with the provincial government and other groups to press Ottawa for help, and there have been hints of growing frustration as the weeks drag on, and the job losses mount.

Industry players who wouldn't otherwise speak publicly are sharing their stories of economic pain, including Judith Bobbitt, president of Oceans Limited in St. John's.

The Newfoundland and Labrador oil industry has been shedding jobs by the thousands since the global pandemic sent economic shock waves throughout the world earlier this year. Dozens of jobs, for example, have disappeared from the iconic Hibernia oil platform. (CBC)

The company specializes in weather forecasting for offshore players like Suncor and Husky, and carries out climate studies for companies looking to carry out exploration projects.

But the company is being squeezed this year by the cancellation of several offshore contracts relating to new exploration and development.

The company also monitors the health of fish stocks around oil platforms, but it's become challenging to do that work because of the shrinking number of support vessels travelling to the offshore.

"We've never seen a period like this," said Bobbitt, who formed her company in 1981.

As for the call for help from Ottawa, Bobbitt supports the lobby.

"I think it's very short-sighted for the federal government (not to support the oil industry) because I think we have a lot to offer here," said

Bobbitt said the federal government has profited handsomely from its investment in the Hibernia project in the 1990s, and she said a similar investment today "will come back many times over."

Like other industry boosters, Bobbitt raves about the "light, sweet" crude produced in the offshore, and how it's produced at lower carbon emissions than most other countries.

She believes a federal government interested in protecting the environment, and the eventual transition to cleaner forms of energy, should view the Newfoundland and Labrador offshore as an appealing investment opportunity.

Meanwhile, Ball, who will leave the premier's post on Aug. 3, plans to speak with Prime Minister Justin Trudeau as early as today with another plea for help.

"No one is saying no. They want to support this industry. We just need to be able to find a way to be able to do this," he said.

Ball said the focus is on short-term assistance that will help maintain jobs and activity, and longer-term incentives such as tax breaks to keep the industry competitive and growing.

"I believe support for the oil and gas industry is the only option that the federal government would have to create jobs here in our province. If they don't do that, the other option would be to put our province back on large equalization transfers."

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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