Oil: The good, the bad, the uncertain

Oil: The good, the bad, the uncertain
The Terra Nova Floating Production Storage and Offloading (FPSO) is one of the largest vessels ever built. (Photo: Suncor)

Battered by COVID and the global collapse of oil prices, Newfoundland and Labrador’s offshore oil and gas industry is in trouble. Stalled projects and halted production have become the new normal for this once-powerful economic driver.

Late September, Canada’s natural resources minister Seamus O’Regan announced that Ottawa was providing $320 million in emergency funding to support workers and reduce carbon emissions.

It’s a lot of money, but not what the industry had hoped to hear. Husky had proposed that the federal and provincial governments buy an equity stake to restart the multibillion-dollar West White Rose extension project. Newfoundland and Labrador’s deputy premier and finance minister, Siobhan Coady, was quick to respond that the Province doesn’t have the money for that. On October 16, Minister O’Regan firmly quashed any remaining hopes for a federal buy-in, telling CBC news that a large equity position isn’t in the cards.

The Province established an Oil and Gas Industry Recovery Task Force to determine how the $320 million should be spent. Announced on October 15, the 21-member volunteer Task Force was given 30 days to “submit recommendations for eligibility parameters and prioritization criteria”. They have 90 days to submit their recommendations for immediate action.

The best hope for the sector’s recovery? A rebound in the price of oil. Brent Crude, which peaked at $140 per barrel in April 2008, dropped to $23 in March. As of press time, it had climbed back up to $43 per barrel. •

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