Sobering setbacks and a proposed emissions cap raising concerns for N.L.'s oil sector
CBC
The win column is starting to look a little bare for Newfoundland and Labrador's oil and gas industry, and now the sector is facing more uncertainty as Ottawa proposes an emissions cap on production.
"It's getting more difficult to attract the attention of explorers," Jim Keating, CEO of Newfoundland and Labrador's Crown-owned oil and gas corporation, OilCo, told CBC News.
"That, in my mind, has created a chill; has created an uncertainty," added Andrew Parsons, minister of Industry, Energy and Technology, when asked about the proposed cap.
It's rarely been smooth sailing for the sector, and based on recent events, the current path is one of turbulence.
Starting with the process by which oil companies acquire offshore exploration rights, for two consecutive years the call-for-bids administered by the offshore regulator has drawn zero interest.
Some 41 parcels were on offer this year, spread over more than 10 million hectares in the offshore. Companies were invited to make exploration commitments in order to secure the rights to these parcels, which included some world class prospects thought to contain big oil deposits. But, once again, there were no takers before the bidding deadline on Nov. 6.
It was just the latest setback. There have been five costly exploration wells in the offshore in recent years, but despite the hype over their potential, there were no commercial discoveries.
And the wait for Bay du Nord continues. Equinor paused the massive oil project a year and a half ago, saying it was no longer viable because of skyrocketing costs. Equinor has been working hard to retool the project, but any decision on its fate is still well into the future.
And now there's a different prospect. The federal government is proposing an emissions cap on the oil and gas sector, one that will reduce greenhouse gases by 35 per cent below 2019 levels by 2030.
"It can be done, and frankly it must be done," federal Environment Minister Stephen Guilbeault told CBC's Power and Politics last month.
In fact, Guilbeault believes production can still increase by investing in carbon capture and other technologies.
"Our detailed analysis we tabled today show production in the oil and gas sector by 2030 will increase by 16 per cent, while pollution will reduce by 35 per cent," Guilbeault said.
But the provincial government and industry groups such as Energy NL are frosty to the idea.
Premier Andrew Furey released a statement on Monday vowing to oppose "any approaches that have the effect of capping oil and gas production" in the province.
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