Newfoundland government primes the pump with funding for offshore oil ahead of February election

Newfoundland and Labrador Premier Andrew Furey has called a  provincial election for February  13 –and according to a CBC report, one reason for the quick timing is to get ahead of the forthcoming Interim Report of the provincially-appointed Provincial Economic Recovery Team (PERT), scheduled for late February. The PERT is also called the Greene team for its chair, Dame Moya Greene, who brings a business background, having previously been head of Britain’s Royal Mail and Canada Post, as well as positions at TD Securities, CIBC and Bombardier. Another CBC article highlights that the economic report is going to be a controversial election issue, and discusses the January withdrawal from the team by Mary Shortall, president of the Newfoundland and Labrador Federation of Labour. Shorthall called the exercise “window dressing” , and stated: “I can say that the lack of transparency, top-down approach, rushed timeline, lack of real collaboration and an overall feeling that not all perspectives were being considered, or appreciated, are the overarching themes for my decision”.  Shortall’s departure is also discussed in an article in The Independent .

Another key election issue is likely to be the role of the oil and gas industry in the Newfoundland economy. The election announcement was preceded by a series of provincial funding announcements: on January 14, a government pledge of  $175 million funding as well as royalty incentives to Suncor to prop up the Terra Nova Offshore oil field; $38 million  for the Hibernia offshore project in December 2020; and $41.5 million for Husky Energy’s  White Rose project – all of which are funded by $320 million of federal funds, announced in September 2020. (Note that Husky Energy laid off workers at one of the worksites just days after the funding was announced) .

On January 12, the  Environment and Climate Change Minister issued his decisions under the Impact Assessment Act, allowing Chevron Canada, Equinor Canada, and BHP Petroleum to drill exploratory wells offshore from St. John’s – although further permits will be required, as explained in this new “Toolkit” regarding the process from the East Coast Environmental Law .  Provincial approval is likely to be forthcoming, given the pro-industry views expressed by the provincial Oil and Gas Recovery Task Force appointed in October 2020 to distribute the federal funding. Reflecting this favourable environment, Equinor announced that it is consolidating its Canadian offices and moving staff from Calgary to St. John’s, according to a Financial Post report (Jan. 12) .

$320 million federal aid to Newfoundland oil and gas industry, yet layoffs continue

On October 8, both Suncor and Husky Energy announced new layoffs in their Newfoundland oil and gas operations. A week earlier, there was an announcement by Irving Oil that it would not proceed with the purchase of the Come by Chance oil refinery -yet another blow to the floundering Newfoundland industry.  “Here’s what could happen if the Come By Chance refinery shuts its doors” (CBC, Oct 8) estimates potential job losses of 1,400 jobs when spin-off impacts are considered, if the plant is closed.  TradesNL, an umbrella organization of 16 building and construction trades unions in the province, which released this reaction to the news.  

Unifor has been lobbying for government aid for months – and on September 16, the union organized a public rally calling for government support. On September 25, the federal minister of Natural Resources answered the calls for help by announcing a $320 million aid package, to be targeted at safety, maintenance and upgrades, and at stimulating employment.  In a press release, Unifor states: “Unifor expects to see some of the funding be directed at long-overdue maintenance onboard the Terra Nova and Hibernia offshore facilities where 750 members of Unifor Local 2121 work.”  The decisions on how the $320 million will be spent will be guided by a new  Oil and Gas Industry Recovery Task Force, appointed by the provincial government on September 25 to “focus on immediate actions required to sustain the offshore industry in Newfoundland and Labrador and provide suggestions for how best to utilize the $320 million in funding from the Federal Government to maximize value for all Newfoundlanders and Labradorians.”  To date, only the two co-Chairs have been appointed.

On September 24, the provincial government also announced “the establishment of a new offshore exploration initiative to provide companies with the incentive to drill more wells in the best prospects. This is a policy measure that will allow all future bid deposit forfeitures to be reinvested as received, resulting in an injection of hundreds of millions of dollars in support of growth in our offshore petroleum industry. “ The press release was accompanied by this statement from Siobhan Coady, Minister of Finance:

 “The value of the oil and gas industry to our province cannot be overstated, nor can it be replaced by any other sector in our economy. Upwards to 30 per cent of our GDP, 13 per cent of our labour compensation and 10 per cent of all employment is attributed to this industry. We will support this industry in any way that we can, because it supports our province.” 

The ends to which the government and industry are prepared to go are hinted at in a recent blog by WWF on October 1: Canada Provides Funding for Oil And Gas Development In Newfoundland and Labrador amidst Federal Scientists’ Critique of Flawed Environmental Assessment.

May 2016 News: New Brunswick and Newfoundland extend Fracking bans

New Brunswick’s Minister of  Energy announced an indefinite extension of the province’s fracking ban on May 27, based on the February  report  of its Hydraulic Fracturing Commission,  according to a CBC report  . Similarly, the Newfoundland and Labrador Hydraulic Fracturing Review Panel released its final Report  at the end of May, with a  recommendation that the “pause” on fracking in Western Newfoundland continue.  See the Panel website,   which includes Submissions and Documents , as  well as technical reports as appendices,  which include research into the economic and jobs impacts of fracking, as well as impacts on human health and water resources.

New Brunswick has also released a discussion guide , Building a Stronger New Brunswick Response to Climate Change , in order to to stimulate public input for the Select Committee on Climate Change, constituted in April 2016.  There is no target date yet for its report.