The Newfoundland and Labrador oil and gas industry is a major producer that provides jobs and economic benefit to the province and people across Canada. But how can it sustain these benefits in the long-term?
That’s a question being asked in a new online campaign called KeepNLCompetitive. The industry-led campaign highlights some real challenges facing offshore oil and gas today. Among these are the high capital investment costs associated with drilling in deep water and in often harsh environments. This means that major investments by international oil and natural gas companies are needed to get new offshore projects off the ground.
On the plus side, Newfoundland and Labrador has a world-class resource. Existing projects like Hibernia, Terra Nova, White Rose and Hebron have been responsible for 25 per cent of the province’s GDP over the last 20 years. These projects employ thousands of Newfoundland and Labradorians in skilled, well-paying positions.
Recent discoveries suggest additional resource potential in the billions of barrels—enough to fuel investment, jobs and economic growth for Newfoundland and Labrador for decades to come.
However, long development times and the layering of new costs due to changes in the regulatory environment have the potential to drive away needed investment. KeepNLCompetitive notes costs and uncertainty brought about by either inefficient or ineffective regulations can push a major project proposal across the line from feasible to unfeasible. This is particularly true for international oil and gas producers that have multiple options around the world in terms of where to spend investment dollars.
“We are competing against 160 different countries around the world that produce oil and gas and are trying to drive investment dollars to their country,” notes Jason Muise, General Manager, Subsea Canada, TechnipFMC. “To attract that money, we have to be competitive and we have to be comparable with other jurisdictions in the world.”
KeepNLCompetitive calls for industry, government and regulators to work together to avoid inefficiency and unnecessary costs. This includes reducing the costs of exploration, condensing development times, and making sure the regulatory systems in place are efficient and effective.
“Some ways that we can shorten that development cycle is looking at the regulatory approval process and then working collaboratively to seek a more streamlined approach to bring the projects on in a more timely manner,” says Mike Ryan, Vice-President of ExxonMobil Canada.
“Safe, reliable and environmentally responsible development that attracts investment is a responsibility of operators, but it’s one we share with all stakeholders including governments, regulators, suppliers, contractors and the community as a whole,” says Steve Hogan, Vice-President East Coast, Suncor Energy. “By working together, we can address competitiveness challenges while strengthening the local supply chain and thereby local benefits.”
“We all have a part to play in order to make our industry a sustainable one. That’s the oil and gas companies, the regulator, the provincial government, the supply community,” adds Cathy Mandville Commercial & Joint Interest Manager, Husky Energy.