It looks like the week will be ending with more than a bit of news regarding Newfoundland and Labrador’s beleaguered offshore oil sector.
This morning, the provincial government announced a new offshore exploration initiative to provide companies with more incentive to drill wells.
The announcement came just hours after Canada’s Minister of Natural Resources, Seamus O’Regan, was making the media rounds saying there will be news as soon as Friday about a federal plan aimed at supporting those employed in the sector.
The provincial government has long held it isn’t in a fiscal position to directly inject money into the offshore sector. In the case of the latest announced initiative, it is providing help by allowing future bid deposit forfeitures to be reinvested. The province says it will result in an injection of hundreds of millions of dollars in support of growth in our offshore petroleum industry.
Here’s how it would work:
Annually, the Canada-Newfoundland and Labrador Offshore Petroleum Board issues calls for bids for exploration licences for the province’s offshore. The sole criterion for selecting a winning bid is the total amount of money the bidder commits to spend on exploration of the parcel. The successful bidder is then required to post a security deposit for 25 per cent of the total work expenditure bid. However, if the stated work commitment isn’t met, the security deposit is forfeited and the investment opportunity is lost. The policy decision announced today will allow any forfeited security deposits to be reinvested into other offshore exploration projects.
A news release says details on this initiative will be released in the coming weeks, but said it will “provide near-term drilling activity and employment, enhance global competitiveness at a critical time, and position the province to realize its resource potential.”
Noia, the lobby group representing companies involved in the province's offshore petroleum industry, quickly welcomed the announcement of the program, saying itt comes after "productive{ talks with Premier Andrew Furey and provincial Energy Minister Andrew Parsons.
"I thank them for recognizing the importance of this issue and for finding a made in Newfoundland and Labrador solution," said Charlene Johnson, Noia's chief executive officer.
Meanwhile, O’Regan appeared on CBC’s “St. John’s Morning Show” and VOCM’s “Open Line” the morning after a federal throne speech that didn’t offer any direct reference to the Newfoundland and Labrador offshore.
The province’s federal cabinet representative didn’t offer details about what he says could be announced as soon as Friday, but hinted at a worker-centric support program for those affected by a downturn in an industry battered by both the COVID-19 pandemic and low global oil prices.
He also said Ottawa’s plan will be done with consultation with the provincial government and the industry.
