Despite the downturn in recent years, Newfoundland and Labrador’s offshore oil and gas industry has been a pivotal contributor to the province’s economy for more than a quarter-century.
On Monday, Dwight Ball’s Liberals unveiled their plan to continue expanding the sector.
“The Way Forward — on Oil and Gas,” developed in conjunction with the Oil and Gas Industry Development Council, is a plan with a number of near-, mid- and long-term targets to improve industry performance and hasten development to the benefit of all stakeholders by 2030.
Among them is a goal to have over 100 new exploration wells drilled; have multiple basins producing over 650,000 barrels of oil equivalent per day; directly employ over 7,500 people in sustainable operations jobs; and cut the time required to take a prospect from discovery to production by more than half, to between seven and eight years.
The government admits the plan is an ambitious one, but it seems industry stakeholders are in favour of a little ambition.
“We’re encouraging the government to have such an ambitious timeline because we need to get some regulatory certainty, we need to understand the government is supportive of oil and gas activity,” says Paul Barnes, Atlantic Canada director for the Canadian Association of Petroleum Producers. “And we’ll do our part when land sales come up and the information that the government produces that will provide us with some additional insight into those parcel will be encouraging, and hopefully we’ll have some good results in the near future.”
On the subject of project development timelines being shortened, Barnes says there are a number of pieces of federal legislation that need clarity and resolution in order to make it a reality.
“We need to understand where the new environmental legislation stands with respect to what’s on the designated project list, what are the new review timelines. We need to see where carbon pricing lands this year and what they may look like and how that may affect the cost competitiveness,” he says.
Scott Tessier, chair and CEO of the Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB), says everyone — government, industry and the regulator — agrees there is room to improve efficiency in the discovery to production process and that there are important roles to play on both sides.
“Part of that is on the shoulders of governments to deliver in terms of the framework in which industry operates and part of that is the responsibility of industry itself in terms of their ability to sanction things quickly and weigh global investment priorities,” says Tessier.
The plan also aims to tap into and commercialize the gas side of the province’s oil and gas industry. There’s a bevy of it offshore — a 2016 consultant assessment determined the resource potential to be 20.6 trillion feet of natural gas in the West Orphan Basin, which represents just roughly two per cent of the offshore area — but it’s untapped.
Given the amount of natural gas being produced elsewhere in North America and the cost of infrastructure related to harnessing the resource, the economics don’t make sense now.
“As the potential, proven, possible reserves continue to grow, grow, grow, those confounding factors become that much more manageable,” says Tessier.
“The state of the resources is encouraging and that is good incentive for governments and industry to figure out those other confounding factors and we as regulators will be ready for it.”
Barnes, too, sees it as long-term play and suggests there may be a market in other parts of the world where it’s needed, such as India and parts of Europe.
“It’s a good time to start talking about the regulatory regimes that need to be put in place, the royalty regimes that need to be put in place,” says Barnes.
Newfoundland and Labrador Oil and Gas Industries Association (Noia) CEO Charlene Johnson says it’s in the best interest of all stakeholders to rely on industry experience elsewhere when formulating a plan here.
“It’s not about reinventing the wheel. I think we can learn from the experiences of others and I think it’s prudent that we continue to research,” she says.
Johnson says with an action plan in place, the next step is ensuring government and industry are accountable to one another.
“The oversight piece is the next big pieces we’ll work with the government and all the stakeholders because we all have the same interest here and that’s for the advancement of our oil and gas industry, which ultimately is the advancement of the province.”
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