Newfoundland and Labrador’s offshore oil and gas industry is facing some of the biggest challenges it has ever experienced, due to the combination of COVID-19, the related drop in demand for oil and gas and the oil price collapse. This has resulted in deferred projects, delayed exploration programs and the loss of jobs and government revenues.
There is an urgent need for government support for the offshore oil and natural gas sector, in spirit and in policy, to overcome these challenges and position the province for success as the market begins to stabilize.
Through the current challenges, and looking at the road ahead, Newfoundland and Labrador’s offshore oil and natural gas industry has an important role.
The world needs oil and natural gas and Newfoundland and Labrador is well-positioned to help supply that energy in a responsible way. Did you know that our offshore industry produces significantly less emissions per barrel than the global industry average?
The industry has worked hard to reduce its environmental footprint, through reductions in flaring, advances in remote technology, improvements in efficiency on key pieces of equipment, and collaboration and sharing of key services. Offshore producers have also invested almost $600 million in research, development education and training in the province, with a focus on generating knowledge and reducing environmental and safety risk.
The offshore industry directly employs more than 6,500 people — thousands more when you consider the indirect jobs related to the industry. It represents one-quarter of provincial GDP and 41 percent of exports of the past two decades. Then take into account 600 supply and service companies that rely on work associated with the offshore, and the spin-offs which extend across the province to restaurants, hotels, and real estate.
Newfoundland and Labrador’s positive energy story is coupled with a vision of sustained and responsible growth. It is essential for this story to continue to unfold — providing more jobs, economic benefits and continued environmental innovation — as the province, and our country, plan for a resilient future.
Globally, companies are looking at their investment portfolios and making crucial decisions regarding where to invest for the future.
When the market recovers, Newfoundland and Labrador must be positioned to attract investment, and that means competing with jurisdictions like Norway, the United Kingdom and the United States, who have introduced, or are considering, tax changes and incentives to ensure their countries are ready to attract investment. In the wake of the COVID crisis, competition will be steep as so many major jurisdictions in the world will be restarting their economies at the same time.
As the market slowly rebounds, demand for oil and natural gas is predicted to grow for decades, even with the increased use of other energy sources including renewables. We are already seeing oil demand move upwards as nations start the phased re-opening of their economies. Newfoundland and Labrador’s offshore industry is well-positioned to help meet that growing demand and should be a supplier of choice given the industry’s commitment to safety and ongoing investment in environmental performance.
Newfoundland and Labrador’s offshore industry is focusing on reducing emissions domestically and can make a significant contribution to global emissions reductions by displacing other, less responsible forms of energy. In fact, exporting Canadian oil and natural gas can have a greater impact on global CO2 emissions reduction than we could ever hope to make by shutting in our production.
The opportunity is clear and Newfoundland and Labrador’s offshore industry has an important role to play.
It has shown that raising the bar on environmental performance can go hand in hand with a vision of responsible growth. Critical support is needed now to help the industry survive current challenges and be in a position to continue its energy story for the future while providing jobs for Newfoundlanders and Labradorians, and a solid economic foundation.