Buckle down and be ready for the upswing: oil industry gets pep talk
Be ready when the oil business takes an upturn is the message at an industry conference in St. John's.
"We have built a solid foundation, a stable secure basis on which to improve," Natural Resources Minister Siobhan Coady told the annual conference of the Newfoundland and Labrador Oil and Gas Industries Association [NOIA] on Thursday.
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"We have incredible prospects, new offshore opportunities we continue to discover and market to the world."
The minister said recent seismic work has identified 350 "leads and prospects." Many are in deep water, in areas like the Flemish Pass.
Coady said the provincial government has not decided how much it will spend in the spring budget to stimulate the oil industry, acknowledging that every dollar is being scrutinized.
In the meantime, government will be meeting with Statoil "in the very near future" to talk about a royalty and benefits agreement for Bay du Nord.
The project hit a setback in November, with the province's former PC government accusing Statoil of asking for too much.
'Not the end of the world'
"We have a very bright future and we have to just, I guess, keep our heads down, be resilient and get through the next year or two once oil prices get back to a better point," said NOIA CEO Robert Cadigan.
Most major oil companies have reduced spending on exploration for the past two years, said Cadigan, but the Hebron oilfield will start production in 2017.
"There is some pain, but it's not the end of the world and we just need to ride through it," he said.
"Companies have to right-size, they have to make sure they cut their expenses, get their balance sheets in order."
Members of NOIA said they expect a different playing field when prices rebound and talked about the need to be ready.
"We need to re-position our province and our suppliers," said incoming NOIA chair Raymond Collins, who acknowledged that survival isn't easy for companies that sell heavy equipment.
"If no one's buying anything, it's really hard to sell anything. That's obviously a very big challenge," he said.
"For them, it's about trying to minimize costs for the immediate term so that they're still around when people are purchasing again."
Coady said the government is setting up a new advisory council to develop a strategic plan for the oil industry.
"Making sure that we are globally well-known, not just for our fields, but also for the types of services and supplies we can offer, the innovation that we have," she said.
"What do we want to be known as and how do we get there?"