ST. JOHN'S, N.L. — Federal Natural Resources Minister Seamus O’Regan says $320 million for the province’s oil and gas industry is not a direct subsidy to oil and gas companies in the province — he wants it to go to workers.
O’Regan and Premier Andrew Furey were at the Johnson GEO Centre on Friday for the announcement.
Furey immediately established a taskforce to determine how the money will be spent, led by oil and gas industry veterans Bill Fanning, who has spent more than 30 years in the industry, and Karen Winsor, the current chair of the Newfoundland and Labrador Oil and Gas Industry Association (Noia).
Furey says the taskforce will work quickly to make recommendations, but he wants to see the money focused on compensating workers.
“They’re going to make suggestions, and hopefully we’ll have a chat about what they suggest. $320 million is a great amount of money. It’s a good quantity, with few strings attached,” said Furey.
“We need to unlock that value for the workers of the province. I’m pretty sure this taskforce would agree with that, I’m pretty sure Noia and some of the other stakeholders around the province would agree it's important to invest in the workers.”
The industry had waited six months for Friday’s announcement. O’Regan says the delays were due to the unprecedented situation facing the industry.
“The reason why it took a long time, to be honest, is we didn’t have a playbook for the offshore going through a pandemic and a global price war at the same time. In Alberta and Saskatchewan and B.C. we had a program on the ground that was already working and we were working with the provinces on it. That was orphan and inactive wells,” he said.
“It was very quick that we were able to find that as an answer in order to keep people employed in the industry out there — tens of thousands of people — and we were able to apply $1.7 billion to them. It took us a longer period of time to figure out exactly how most effectively we could use money here for the workers of this province. Things evolved.”
Noia CEO Charlene Johnson told reporters the money is welcome, but it’s not enough to solve the industry’s problem. Even with the province’s fiscal situation, and O’Regan’s statement that the federal Liberals will not directly subsidize oil and gas companies, and the length of time it took to see Friday’s announcement, Johnson says Noia will continue asking for more money.
“There’s still the option to continue working with them. There is the Atlantic Investment Tax Credit that we have been asking for. We’re not going to stop asking yet. The work isn’t over today,” she said.
“To say we’re pleased to see hundreds of millions of dollars come with virtually no strings attached, that is good news.”
Husky’s West White Rose project has been put on hold due to financial difficulties for the company sparked by the oil price downturn and the COVID-19 pandemic. The company says it’s still open to discussing options with the province and federal government to find a way to continue work.
“The funding announced today will not assist in moving West White Rose forward for the 2021 construction season,” reads a statement from the company.
“However, we welcome further engagement with both levels of government, at the earliest opportunity, to find a creative pathway to restarting a project that is an opportunity to develop a net zero emissions facility and employ Newfoundland and Labrador workers.”
Furey says the initial request from Husky — of an equity stake similar to what was seen given by the federal government to the Hibernia project — just isn’t possible for the province.
“I’ve been honest with Husky: we don’t have the amount of money they need in Newfoundland and Labrador to support that project,” Furey said.
“If there’s a way, using creatively that $320 million, to help them, I’m all for it.”
Federal Conservative Leader Erin O’Toole weighed in on the announcement, saying issues for the industry were caused by a lack of action from the federal government to begin with.
“After six long months of job losses and the future of projects like Husky’s West White Rose being in jeopardy, this is just a Band-Aid on a wound created by the Trudeau Liberals. Their slow response and inaction has already cost too many their jobs,” read a statement from O’Toole.
“Seamus O’Regan and the Trudeau Liberals’ announcement has no specifics, no timelines and none of the supports that industry has been asking for. Canada produces the highest-quality oil and we should be keeping the industry competitive globally."
Progressive Conservative Leader Ches Crosbie said public funds should be given to Husky to get the project restarted.
“We know why Husky is having a problem. They have a short-term problem. Yes, those public funds should go into that,” Crosbie said.
“We would get immediate investment returned in terms of jobs, in terms of the income taxes those people who get well-paying jobs will pay to us, in terms of the economic activity and, if it comes to that, in terms of taking up equity in a surefire investment.”
The money for the industry comes from the Hibernia Dividend agreement and is in addition to the $2.5 billion the province will receive from the agreement between now and 2056 — with $2 billion in the first decade.
New Democratic Party MP Jack Harris says he doesn’t understand why money that should be Newfoundland and Labrador’s to begin with is being so slowly distributed.
“I also thought the $320 million fund was new money until I was shocked to learn that the $320 million comes from dividends on the federal government’s Hibernia share,” reads a statement from Harris.
“It has long been the NDP position federally and provincially that this share should have been transferred to the province since it was never intended to be a federal windfall and Canada has more than recouped its investment and received a healthy return. At the same time Newfoundland and Labrador gave up significant tax revenues on Hibernia, breaks that continue to this day. This is money that should already be in Newfoundland and Labrador’s hands.”
