Bay du Nord touted as sign of good things to come

The announcement of a $6.8-billion deepwater oil project off Newfoundland might boost business confidence, but one expert says economic diversification is still necessary.

Business leaders believe $6.8B deepwater oil project will boost confidence in N.L.

A Noia employee points to the location of the Bay du Nord oil discovery on an exploration map. The location is a three-hour helicopter ride from St. John's. (Ted DIllon/CBC)

Reactions to the province's big offshore announcement are coming, hours after Premier Dwight Ball announced the development of the Bay du Nord deepwater oil project about 500 kilometres off the province's coast.

Ball described the project as opening up a "new frontier" for the province, one that will open up a new oil basin and has the potential to provide big returns for the province.

"This is a tremendous day for the economic outlook for this province," the premier said in making the announcement Thursday.

'I think there's a lot we can learn'

Nancy Healey, CEO of the St. John's Board of Trade, remembers when Hibernia was announced, shortly after the cod moratorium was called.

"I watched this city really grow," said Healey, who hopes for a similar effect from this news.

The confidence an announcement like this one inspires in the business community might help people decide to invest, and she says she's hearing from happy entrepreneurs after the announcement.

St. John's Board of Trade CEO Nancy Healey says although the oil market is volatile, things look good down the road for prices, based on World Bank and IMF projections. (CBC)

"It's almost like filling somebody's bucket with confidence," she said. "This gave a good shot of water into that bucket today."

The involvement of Norway is good, Healey said, because of the example the Nordic country has set by how it's handled its own oil wealth and fiscal concerns.

"I think there's a lot we can learn from the Norwegians," she said.

'It gives us a bit more confidence'

The announcement of a new, large project for the province is good news for its real estate market, though the immediate effects will be muted, said John Riche, a Realtor with Karwood in St. John's.

​"I'm happy to hear it. I think it's great," Riche said of the announcement. "It gives us a bit more confidence in the market for real estate."

The announcement won't send housing prices through the roof, says Realtor John Riche, but it should help to continue the market stabilization that has already begun after a few years of declining prices. (CBC)

The local real estate market was already beginning to level out after dropping a couple of years ago, Riche said, and the short-term effect was likely to be more stability instead of any big jump in prices.

But the announcement will help people feel a bit more secure in their long-term prospects here, he said.

"The economy is not going to go under, things are not going to fall into the ocean, things will be OK."

'It's one piece of many things to come'

The announcement is great news, but only scratches the surface of the potential in Newfoundland and Labrador's offshore, said Noia CEO Charlene Johnson.

Today's announcement is a big one, but it's one of a few in the works for the province, she said. By late next year or early 2020, there will be four, maybe five, drilling platforms exploring in the province's offshore.

"This place is going to be on wheels from 2020 to 2025," Johnson said.

"Let's hope it's oil that they find."

Noia CEO Charlene Johnson says the announcement was great news, but still just scratched the surface of the potential of the province's offshore oil industry. (CBC)

As CEO of Noia, Johnson's job is to ensure that as many of the Bay du Nord jobs as possible are filled by Newfoundlanders and Labradorians.

Premier Dwight Ball said after the announcement that 84 per cent of the project would be done by people in the province, which Johnson said was welcome news.

She also touted the wider economic effects of such a project, on sectors all across the province — restaurants and hospitality, construction, even education.

"It's an exciting time. All eyes are on Newfoundland and Labrador and our oil and gas industry," Johnson said.

'We can't just rely on oil'

The announcement of a new deepwater exploration project might have some benefits down the road for renewable energy in the province, even if the current focus is on oil, said Delia Warren, a former offshore engineer and the east coast director of Iron and Earth, a non-profit that advocates for renewable energy and economic diversity.

"Although oil and gas is a very strong part of our economy — this is going to create a lot of jobs and it's going to be a good thing for the province economically — I still think it's very important for us to focus on economic diversification," said Warren.

"We can't just rely on oil."

There are reasons to believe that this project, though it's focused on oil specifically, may lead to different kinds of energy development down the road, she said.

Equinor was formerly known as Statoil, which recently went through a rebranding. The Norwegian oil company has shifted its focus and is now a broader energy company, with hydro projects and renewable energy projects in its portfolio as well.

Though oil and gas are still Equinor's primary business, the company is advancing in other areas, Warren said. For example, the company has the first floating wind turbine off Scotland, and even in its oil and gas projects it looks at ways to reduce carbon emissions.

Warren says the province has great potential in renewable energy, including wind energy, tidal energy, even solar energy. Also, Muskrat Falls and Lower Churchill rely on renewable energy resources.

Working with Equinor might encourage the government and other companies in the province to think about what they could do to diversify the economy and reduce the reliance on one industry, she said.

"We've got a wealth of renewable energy resources, just waiting to be developed that could be used to grow our economy just with a little bit of ingenuity."

Read more from CBC Newfoundland and Labrador

With files from Kate McGillivray and The Broadcast