I note that there is a suggestion that Newfoundland and Labrador consider reducing offshore oil and gas royalties to help sustain the industry — or at least that is what I have read in an article in your paper.
I wonder what is the present status of the Hibernia and Terra Nova projects, as well as the other producing projects?
That is, have the oil companies through their revenues over the years from these projects paid off the initial capital cost of these projects? I suspect they have for Hibernia and Terra Nova and likely White Rose.
Then, how much of ongoing revenues go to ongoing maintenance and development on these projects and how much is profit even at these low prices? It would seem to me that this is the kind of information that is needed in order to consider the wisdom of looking at the production/royalty side of the industry.
Any royalty reduction would directly affect provincial revenues at a time of already large deficits, now complicated even more by the recent pandemic, already necessitating federal involvement to assist in provincial borrowing.
Is there some federal aid to offset this royalty reduction being contemplated?
Without that, such talk is a non-starter, I submit.
From the article I do not detect the realization by the participants of the province’s enormous problem — a unsustainable budget position caused, to some degree, by spending beyond our means for many years now and the second historic blunder on the Churchill River.
It would seem to me that it is the exploration side of the offshore business that would lend it itself to quick interim support as has been suggested by Noia in the article.
Brian Peckford
Parksville, B.C.
