Newfoundland and Labrador is more dependent on its oil and gas sector than any other province in Canada.
“Approximately one-third of provincial revenue is derived directly from our petroleum sector,” Premier Kathy Dunderdale said in a speech opening the Newfoundland and Labrador Oil and Gas Industries Association (NOIA) 2012 conference Tuesday.
It means a drop in the price of oil can hit the province hard financially — something the premier acknowledged outside the St. John’s Convention Centre conference room.
Brent crude closed trading at $95.67 per barrel Tuesday and has been below the province’s predicted price for months.
The government has based its budget on an average price of $124.12.
“We'll have to wait until we get further into the year and just see how things play out,” Dunderdale said when pressed on the price issue later in the day at the House of Assembly.
“(The price) changes all the time, but if oil prices were to stay where they are today, then at the end of the fiscal year we will be several hundred million dollars more in debt than we are at the moment.”
That said, she praised the contributions of the province’s oil and gas industry to the provincial economy.
The sector not only provides direct employment for more than 3,000 people, Dunderdale said, but fuels indirect jobs for thousands more.
It is supporting more than 500 supply and service firms directly, and drawing investment dollars that are fuelling research and development and other enterprises, Dunderdale said.
Pushing for Hebron module
The province is currently involved in a major dispute within the sector. The premier took questions on the issue — the debate over how much of the Hebron project platform can be built in-province.
Echoing statements made when Hebron was given final approvals, Dunderdale said the province is expecting the drilling equipment set module to be built at Bull Arm.
The Hebron partners, led by ExxonMobil Canada, have stated that work could not be completed here — that Bull Arm was already full up with work on Hebron.
Dunderdale told reporters following her speech that both sides continue to discuss the issue, but the province has engaged an international consultant out of the United Kingdom, Ian Wright, who has evaluated what can be done.
He has come out in support of the provincial government's stance, according to government.
A brief resume for Wright including, notably, “23 years involvement in major offshore oil and gas projects, featuring management of multi-disciplined teams, on both fixed and floating facilities,” was circulated to reporters.
The premier was asked about a resolution to the Hebron dispute.
“There are penalties under the contract,” she said. “We would rather not apply — go to a process where penalties are applied. We would rather have the work for Newfoundlanders and Labradorians.”
NOIA’s Robert Cadigan said getting independent assessment of what might be done at Bull Arm was a good idea.
“We share the premier’s view that the (module) can be done here,” he said.
“So we’re hopeful we’ll see — between the province and ExxonMobil and its partners — a solution that will result in the drilling equipment set being done here in the province.”
As well, “I think our members pretty well would echo the kind of comments the premier has made in terms of development of the industry. For all of us, I think, the long-term sustainability of the industry in the supply and service sector is what’s really important.”
The Telegram continues coverage of the NOIA conference today with updates at thetelegram.com.
You can also follow the news minute by minute on Twitter by searching #NOIA2012.