CALGARY — Work will not resume on a troubled Newfoundland and Labrador offshore oil project soon despite $320 million in new industry subsidies from Ottawa.
“Our offshore has been impacted by the double whammy of a global pandemic and an oil price war,” Natural Resources Minister Seamus O’Regan said in St. John’s on Friday, as he announced $320 million in funding for Newfoundland and Labrador’s offshore oil industry, which has been rocked by low prices and the threat of cancelled projects.
A joint task force will determine how to spend the funds to support the province’s offshore oil and gas industry, but much of O’Regan’s speech was focused on how the money would help oil companies reduce emissions at their offshore projects.
“We are listening to you,” said O’Regan, who is the Member of Parliament for St. John’s South-Mount Pearl, and has been under pressure in his home province to support its largest industry.
Speaking at the same announcement, Newfoundland and Labrador Premier Andrew Furey said, “help is here,” and added, “this is just the beginning.”
The money, however, won’t restart construction on a stalled and under-review, $1.2-billion offshore oil project called West White Rose this year or even next year, according to a key backer of the project.
“We look forward to working with the province as it determines how best to use the funding announced today by the federal government,” Husky spokesperson Dawn Delaney said in an email, calling it a “first step.”
“The funding announced today will not assist in moving West White Rose forward for the 2021 construction season,” Delaney said, adding the company’s review of the project and its Atlantic Canada operations are ongoing and “we will provide an update as soon as we can.”
Husky paused construction on the West White Rose project when the coronavirus pandemic hit and contributed to an oil price collapse earlier this year. On Sept. 9, the Calgary-based company announced it would review and potentially pull out of the project without the provincial or federal government taking a stake in the project.
“The funding announced...will not assist in moving West White Rose forward for the 2021 construction season." — Dawn Delaney, Husky
Since that announcement, labour union Unifor organized a protest in St. John’s demanding support for the project, which is 60 per cent complete and supports 1,500 jobs in a province with an 13.1 per cent unemployment rate.
Both Husky and the Newfoundland and Labrador provincial government have been in talks with the federal government for aid for months leading up to Husky’s announced review of the project.
“Although it has taken us a great deal of time to get to today, we welcome the support of the Government of Canada and this investment in our offshore,” Newfoundland and Labrador Oil and Gas Industries Association (NOIA) CEO Charlene Johnson said in a release following O’Regan’s announcement.
Johnson said the industry will now shift its attention to working with the provincial government “and to make progress on other important issues that can get people back to work.”
Similarly, NOIA board chair Karen Wilson called the funding announcement Friday “a good starting point.”
A Sept. 10 Royal Bank of Canada report projected Newfoundland and Labrador would post a 10.9 per cent drop in real GDP, the sharpest economic contraction among the provinces, more than two points worse than the next province, is Alberta, which will suffer an 8.7 per cent contraction.
“Oil-producing provinces had it worse throughout the crisis,” RBC economists wrote in the report. “They’ve been walloped by the double whammy of the pandemic’s massive economic disruption and plunging oil prices pummelling the energy sector.”
“While we expect growth to resume next year, it will likely take years to recover the ground lost.”
Copyright Postmedia Network Inc., 2020