The federal government has pledged $320 million to support offshore oil jobs in Newfoundland and Labrador.
Natural Resources Minister Seamus O’Regan was in St. John‘s on Friday to announce the new measures, after six months of lobbying from oil industry groups and workers demanding assistance.
O’Regan said the money will “support jobs and ensure the sustainable, long-term, lower-emitting future for our offshore.”
He said it will be spent on safety improvements, maintenance and upgrades of existing offshore infrastructure, environmental services and clean technology.
O’Regan said the money will be handed over to the province with no strings attached and will come from Ottawa’s portion of royalties from the province’s Hibernia oil field.
Newfoundland and Labrador Premier Andrew Furey announced a new task force will decide how the money is spent.
While many details remain unclear, what is known is that the aid does not come in the form that major industry players were rooting for. Husky was asking the federal government to invest in equity stakes in its major projects in the province while offshore advocacy groups like the Newfoundland and Labrador Oil and Gas Industry Assocation — Noia — and the Canadian Association of Petroleum Producers were rooting for tax credits and investment incentives.
In a press release sent after the announcement, CAPP said it needed to see more details but hoped it would lead to immediate help for workers. The group said it will continue pushing for tax reforms and other measures to help stalled projects off the coast of Newfoundland.
Hard times for province’s industry
The announcement comes after six months of crushing losses for the province’s offshore oil industry. Workers took to the steps of Confederation Building last week to speak about the anxiety they feel amid layoffs and cutbacks.
The biggest blow to the province could be still to come. Husky Energy has announced it’s reviewing the West White Rose extension — a $2.1-billion project in Placentia that employs more than 600 people on a daily basis — with the possibility of canning the entire job.
O’Regan said he spoke with Husky on Friday morning, and said the federal government is still at the table over a possible solution for the West White Rose extension.
Problems started in March with the onset of the pandemic in North America coupled with a price war between Saudi Arabia and Russia, which sent oil and gas prices into a nosedive.
Since then, Suncor has anchored its idled Terra Nova FPSO in Conception Bay, the long-standing Hibernia platform has suspended drilling, and future ventures that once sounded lucrative and promising have been shelved.
The result, according to Noia CEO Charlene Johnson, has been thousands of job losses and local companies closing up shop.
O’Regan acknowledged on Friday that the industry is “suffering from a double-whammy.”
He said the new measures are a practical program, “because we believe in our workers. We believe in this industry. And we believe in its future.”
O’Regan also said the federal government is trying to strike deals with the owners of the West Aquarius and Transocean Barents exploratory rigs to support future development in the offshore industry.
The province announced a new incentive for offshore exploration on Thursday. That new measure gives oil companies a chance at a rebate for exploration by taking down payments that would typically go into provincial coffers and offering them back to companies.
Task force details
Furey said the task force will work on an “emergent” basis to get the money out as quickly as possible.
The task force will be chaired by Karen Winsor and Bill Fanning, two former oil executives who are members of the province’s Oil and Gas Industry Development Council — the group to which the task force is reporting.
“The remaining members, to be selected by the council, will bring a diverse mix of skills and experience so that they can contribute to driving the recovery of the Newfoundland and Labrador oil and gas industry,” reads a news release sent to media during Friday’s announcement.
O’Regan said he is OK with putting the province in charge of dishing out the money, since he believes the province should have control of its offshore industry under the Atlantic Accord agreement.
