The federal natural resources minister says Ottawa is focusing on incentives based on exploration to help the Newfoundland offshore oil industry as it deals with the crippling fallout of COVID-19.
“Exploration is key,” Seamus O’Regan told CBC News. “We recognize that.”
He says the province’s offshore competes internationally with Norway and the U.K.
“These are also jurisdictions that, like us, are committed to net zero emissions by 2050. But they recognize that oil will have a place in the world,” O’Regan said.
“And the competition for that place is fierce. We’re very proud of our offshore, and we think that if we could get the similar incentives in place that we can compete.”
But O’Regan did not provide details on exactly what form those incentives may take here.
He said companies would get to keep a little more of their money to put toward exploration, but it remains “revenue-neutral” and wouldn’t cost the state any more cash.
“It just basically provides liquidity to those companies, and liquidity is something that we have been doing with not just oil and gas players, but companies all across the country of all sizes,” O’Regan said.
“There hasn’t been bailouts per se; there’s just been making sure that they have access to cash that will allow them to bridge through this tough time.”
At this point, O’Regan won’t commit to a time frame to have an announcement on what the feds plan to do.
“I’m working with my colleagues in Ottawa and various ministers in putting something together that we think will work,” he said.
“It’s a meticulous business. It’s something that you want to get right. But we fully understand the urgency of the situation.”
He says he has been dealing directly with CEOs of major industry players to hear what they have to say.
“Some of it is regulatory, and looking for ways that we can just get rid of duplication and red tape without in any way taking away from the environmental integrity of the regime,” O’Regan said.
‘We’re in crisis mode’
O’Regan spoke to CBC News amid growing concerns about the impact of COVID-19 on an industry that is critical to the province’s economy.
“It has been a death by a thousand cuts,” Charlene Johnson, CEO of the Newfoundland and Labrador Oil and Gas Industries Association — or Noia — told CBC News this week.
“Our members are really worried about survival. The outlook is very bleak, and we’re really in crisis mode. We need help now, and we need help for many of our member companies.”
Noia represents more than 500 members, mainly in the offshore-related supply and services sector. The companies run the gamut from medical services to fire suppression, to supply vessels, to an array of logistics.
More than half of those member companies have laid off employees, according to a recent Noia survey.
Johnson said the only way to get past the current crisis is to be globally competitive with other jurisdictions to attract the scarce investment dollars out there — and there is a role for Ottawa in helping make that happen.
“While the situation is unprecedented, the solutions are not,” she said.
Johnson says federal help could come in the form of a petroleum incentive program, similar to one that promoted frontier drilling and helped kick-start the industry in the 1980s.
NOIA also says Ottawa could allow oil companies to once again avail of an Atlantic investment tax credit they stopped qualifying for nearly a decade ago, when economic times were better.
Last month, the feds pledged $75 million to help reduce emissions in the Newfoundland offshore, but industry players said more needs to be done.
Johnson says she hopes O’Regan can take what he heard at a recent Noia virtual town hall to convince his cabinet colleagues that action is necessary.
“I believe there is a genuine sincerity there to help,” she said. “We just need it to hurry up.”
Another town hall is planned for Thursday afternoon, with heavy hitters participating, like former premier and federal cabinet minister Brian Tobin, and businessmen Mark Dobbin and Fred Cahill.