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Saturday, May 30th, 2020

N.L. oil industry, former premier, rallies behind MP Seamus O’Regan in quest for federal help

More than 800 take part in virtual town hall to raise awareness about crisis in the oil sector

A virtual town hall hosted Thursday by a St. John’s-based oil industry lobby group turned into a booster session for federal cabinet minister Seamus O’Regan, who is under intense pressure to deliver a lifeline to the beleaguered industry.

With a turnout that’s indicative of the deep concern being felt by those involved in Newfoundland and Labrador’s offshore, more than 800 people joined a video conference that featured some well-known political and business leaders, including former premier Brian Tobin, Fred Cahill, owner of one of Atlantic Canada’s largest construction and fabrication companies, and venture capitalist Mark Dobbin.

O’Regan is the MP for St. John’s South-Mount Pearl, and is in Prime Minister Justin Trudeau’s inner circle as minister of Natural Resources.

With groups representing the supply and service sector, oil companies and the provincial government calling on Ottawa to help an industry thrown into crisis by the global pandemic and a market collapse, the pressure is on O’Regan to convince the federal Liberals to deliver.

But with talks now ongoing for eight weeks, and nerves growing increasingly frayed by what many call an unprecedented downturn, the N.L. oil and gas industries association, known as Noia, recruited some influential voices Thursday to join the lobby effort.

And it quickly became clear that instead of attacking the province’s representative in the federal cabinet, O’Regan was given unwavering support and encouragement, with Tobin offering some heavy praise for his longtime friend.

“We’re not out to spill blood or be angry. We’re out to get something done, and help the minister speak with a strong voice,” said Tobin, who served as premier from 1996 to 2000, and now serves as vice-chair of BMO Financial Group.

“He is all-in trying to get development and exploration incentives approved,” added Noia CEO Charlene Johnson. “He’s determined, but there has to be political will of the entire government. We need to help him convince his cabinet colleagues.”

O’Regan did not address the virtual gathering, and it’s not clear whether he was listening in, but he has stated in recent days that Ottawa is exploring options to help kickstart more exploration in the offshore at a time when companies are slashing spending and reporting big losses due to the COVID-19 pandemic.

“Exploration is key,” Seamus O’Regan told CBC News Wednesday. “We recognize that.”

But there’s a growing chorus of voices saying that quick action by Ottawa is needed so the offshore can remain competitive, and prevent precious investment capital from migrating to friendlier jurisdictions like Norway, the United Kingdom and the United States.

Industry boosters want Ottawa to provide financial incentives to oil companies that undertake exploration projects, with reimbursements of capital costs of between 30 and 70 per cent.

“We just need short-term assistance, and we promise we will pay it back in spades,” said Johnson.

There’s also a call for the oil industry to once again qualify for the Atlantic Investment Tax Credit to make it more appealing for companies to proceed with projects such as the Bay du Nord development, which has been deferred by Equinor.

“Competition for investment is a global game. We must play this game,” said Cahill, whose company has been involved with all four producing oil fields in the offshore.

“We cannot afford to sit on our hands and let this investment go elsewhere.”

Ottawa played a pivotal role in enabling the Hibernia project to become a reality in the 1990s, and Dobbin said “it’s time for history to repeat itself.”

The oil industry has helped transform the province since Hibernia began producing oil, and typically represents about 30 per cent of the province’s economy.

But it’s been hit by a tidal wave in recent months, leading to some high-profile project delays and cancellations, and what many fear is the idling of the Terra Nova FPSO — one of four mature fields in the offshore — for up to two years.

The situation is expected to deal a crippling blow to the province’s treasury, with annual royalties that typically hover around $1 billion expected to collapse as oil prices and production plunge.

So the industry is calling for exploration and development incentives from Ottawa, similar to those in Norway, where 57 exploration wells were drilled last year, resulting in 17 discoveries.

That’s more than the 54 wells than have been drilled in N.L.’s offshore over the last 30 years, said Tobin.

“We cannot sit and see both capital associated with the offshore oil and gas industry, world class talent, and infrastructure, we can’t see those leave,” said Tobin.

But Johnson said the process has already started, and said everyone should be worried.

Noia has roughly 600 member companies, and Johnson said roughly half have “laid off significant numbers of people,” while some have closed after all their revenues dried up.

“Companies are telling us that they are closing shop and leaving Newfoundland and Labrador. And when they leave, they’re never coming back. I’m hearing from individuals who are facing bankruptcy. They’re not sure how they’re going to provide for their families in the future,” she said.

Johnson believes a suite of federal incentives would be a worthwhile investment. The alternative, she said, is for Ottawa to let the oil industry wither away, to import our oil from places like Saudi Arabia, and eventually be forced to bail out a province that has been transformed by oil production.

“This is a short term investment,” she said.

“If there were ever a time for Canada to step back in and to ensure that this industry is sustained, now is the time,” Tobin added.

Source: CBC | This text was excerpted from the media outlet cited on May 14, 2020 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.