Bay du Nord decision will speak to N.L. oil’s role in energy future
Posted on March 24, 2022 | By Ashley Fitzpatrick | 1 Comment
Any news of a green light for the proposed Bay du Nord oil development offshore Newfoundland and Labrador will be shared with the local supply and service community through The Conduit. That’s the new name on the daily newsletter from Energy NL – the organization formerly known as Noia, the local oil and gas industry association. The business association has also changed its logo and more in a recent rebranding. Now it will actively seek opportunities for members on renewable energy projects, in addition to its oil and gas sector work.
“If for instance Gull Island becomes a project, that is something that we will get involved with,” said CEO Charlene Johnson, referring to the hydroelectric prospect in Labrador while taking questions from reporters at a re-launch event at the Delta Hotel in St. John’s.
Local industry subcontractors were already landing business in the renewable energy sector locally and all around the world. The change from Noia to Energy NL was really part of “a natural evolution that’s happening anyway.”
Even so, Energy NL is not giving up on having oil from Canada’s east coast in the mix as part of the global energy future.
Every country, every province, thinks that their oil is somehow cleaner, greener oil and should fit in the carbon budget…
— Angela Carter, University of Waterloo associate professor in political science
In the International Energy Agency’s (IEA) pathway to net zero, the race to meet climate goals, it calls for no new oil fields to be approved but also predicts that oil demand drops from around 90 million barrels per day (mb/d) in 2020 to 24 mb/d in 2050, a 75% decline. But Energy NL – along with the Liberal provincial government, Progressive Conservative opposition and many people in the community writ large – say Newfoundland and Labrador will retain a share of the shrinking pie post-2050, regardless of the intense jockeying underway on the global stage.
“We have the skills, we have the expertise, we have the low-carbon resource,” Johnson said [see our piece on greenwashing to better understand the source of low-carbon resource comments].
Speaking with Atlantic Business Magazine recently, University of Waterloo associate professor in political science Angela Carter, author of Fossilized: Environmental Policy in Canada’s Petro Provinces, and part of a wave of objection to seeing any new offshore oil projects, rightly pointed out there’s a hurdle to the popular position right now.
“Every country, every province, thinks that their oil is somehow cleaner, greener oil and should fit in the carbon budget,” she said. “It is a big problem.”
And while Newfoundland and Labrador has had a short life in offshore oil and gas production to date, by nation we are politically now in a battle that packages us with Alberta oil sands and requires us to argue for our projects (and by extension for limits on expansion elsewhere), against places like Guyana which is on track to become the second-largest deepwater crude producer in the world. The arguments to place limits on Guyana would be a direct affront to the idea of an equitable energy transition model that sees long-time high emitters like Canada leading present-day and future emissions reductions.
But let’s stick to talking about Norway instead. The reality is there’s less intense speculation right now on, say, Norwegian offshore oil production shutting down, given the size of the industry (and its lobby) and clear and consistent messaging from Oslo with, as Reuters recently reported, “a broad majority in parliament” supporting a long future for production.
Bay du Nord
It doesn’t matter where you’ve positioned yourself in terms of your view on the energy transition. In Canada, the leadership outside of this province has made little effort to articulate a clear view on Canada’s offshore oil future. And provincially, there’s been no effort to imagine a future without it. Provincial politicians and Energy NL have run breathless in their advocacy. And I still can’t tell you with any level of certainty if the federal Liberals want to shut it all down over the next 15 or 20 years. And, fyi, it’s not enough to hear the opinions of Newfoundland and Labrador MPs with Newfoundland and Labrador constituents.
The proposed Bay du Nord oil project is now the focal point in Canada’s offshore oil and gas future, if there is to be one. The Equinor-led project has been under environmental assessment (EA) and is awaiting release by the federal government, should that be the decision made. A decision was once expected by December 6, 2021, but that was pushed by 90 days, with a nod to the post-election federal cabinet shuffle and demands on new Canadian Environment and Climate Change Minister Steven Guilbeault, including those related to the Glasgow climate change conference in November. A decision on Bay du Nord’s release was then expected by March 6 but was pushed forward again. In the interim, there was a Radio-Canada report saying there is division in the federal cabinet about giving the go-ahead.
A final decision is now expected by mid-April.
Some provincial politicians have recently opted to link the project’s production to the devastation in Ukraine following an invasion by Russia. “The recent and terrible events that are unfolding in Eastern Europe demonstrate the need for a secure oil supply which Newfoundland and Labrador can help provide,” said Progressive Conservative critic Lloyd Parrott on March 1, 2022, as an example.
It has to be said the principal arguments for the development locally before the war were money and jobs. When, in June 2015, then-premier and Progressive Conservative MHA Paul Davis gave a speech at the Noia (now Energy NL) conference, he said he was hopeful a term sheet laying out an agreement between the government and oil companies on Bay du Nord development would be signed “in the coming weeks.” He didn’t spend any time talking about the Russians.
That was the first premature announcement for Bay du Nord. I was there and recall outright laughter from different consultants and local supply company reps over the idea the province could dictate the speed of anything in the oil and gas world, even a project within its boundaries, assuming that’s what Davis was trying to do. Guffaws.
It was the next government and Liberal premier Dwight Ball who in July 2018 held an event to announce the project was going ahead. That didn’t quite work out either. There were price issues and a pandemic to come. Equinor, for its part, moved step-by-step through the EA process.
But essentially, by the original timelines set by the federal government for the EA, a final decision on release from further assessment would have come before the invasion of Ukraine ever happened. And the company never committed to displacing Russian oil.
Zooming in on the idea that’s been touched on in political commentary around Bay du Nord displacing Russian oil (versus gas, since Bay du Nord is not a gas source), it’s worth considering the sheer scale involved. The idea that production from this one project offshore Newfoundland and Labrador is going to move the needle on international oil trade comes from delusions of grandeur. Bay du Nord as proposed and reviewed has the potential to deliver 94,000 to 188,000 barrels of crude oil per day. Right now, we’re over 90 mb/d worldwide. The IEA has forecast the year’s global oil consumption at 104.1 mb/d. Essentially, it’s a big, wide world and there are many potential suppliers.
As Ukraine President Volodymyr Zelensky’s chief economic advisor Oleg Ustenko recently pointed out in an essay published in the New York Times: “In terms of oil, OPEC and other suppliers can provide up to an additional 2.2 million barrels per day within a month.”
The next thing to consider is the complexities of the global oil market. Crudes are not all the same and refinery capabilities (in efficiency, products produced and more) are not the same. Shipments moving about on any given day are not directed by the Government of Newfoundland and Labrador or Government of Canada. The country can slap on tariffs or even bans at a national level that can deter or incentivize trade involving that country and one source or another, but it can’t directly control the choices of other countries. There is such a thing as secondary sanctions, reaching into indirect control, but they are controversial in a global business world and can complicate things quickly on a political front.
Increasing Newfoundland and Labrador’s capacity means getting the world off oil produced by dictators.
— Lloyd Parrott, N.L. Progressive Conservative energy critic
“Unlike with Iran and North Korea,” for example, as one Washington-based think tank described, “the sheer size and international integration of the Chinese and Russian economies may deter the United States from over-sanctioning them, especially with regards to secondary sanctions.” And when it comes to secondary products where crude is sourced from multiple countries, it can similarly become difficult to politically navigate and enforce bans.
In trying to weave Bay du Nord into all of this, there is the timeline issue. The Bay du Nord project is not expected to be in production – if it passes its EA and then gets through a separate public review process, assuming everything runs on schedule – until 2028. Europe isn’t waiting until then to sort out and firm up its needed oil and gas supplies, so the pro-development argument can’t be about the immediate conflict.
That’s when you get into the “ethical oil” argument. But it makes little sense in the way it’s framed to argue for Bay du Nord, with the description of ethical being tied to the country and not the producer. It’s not the 1970s. Bay du Nord is an Equinor-led project. The Norwegian state-owned company has also been in Russia for over 30 years, being part of the post-Soviet rush, and had minority stakes in three Russian oil fields, at least they did before the invasion of Ukraine. Norway’s sovereign wealth fund has been busy divesting Russian assets estimated to have a total value around US$2.8 billion. The company is a modern, international oil company, a player in global oil markets, with interests as well in Algeria, Tanzania and Angola at the time of the original Bay du Nord filing for review with the Government of Canada.
“Increasing Newfoundland and Labrador’s capacity means getting the world off oil produced by dictators,” said Progressive Conservative critic Parrott, in a statement this week.
However, increasing production here (as a natural extension of increasing capacity) doesn’t necessarily mean reductions in exploration and production elsewhere. And – and this is an important point – the oil isn’t produced by the dictators. It’s produced by oil companies. That includes state-owned players who are not limited to production in their home countries.
You can make the argument if you like that Russia and its state-owned companies are n’er do wells on the global oil scene, but it’s also relevant that it was Western investment and technical expertise in what are considered Western companies that allowed Russian production to expand at the rate it did and capture the share of the global market it enjoys today.
The Financial Times has just come out with a piece, “Oligarchs, power and profits,” on BP’s history in Russia. In Oil: Money, Politics and Power in the 21st Century, historian and journalist Tom Bower includes a picture where Russian President Vladimir Putin is meeting with a half-circle of white men with oil interests. There’s ExxonMobil’s Rex Tillerson (CEO from 2006-2016, later Secretary of State under U.S. President Donald Trump) and Lee Raymond, Chevron’s David O’Reilly and ConocoPhillips’s James Mulva. As Bower describes, it was no open-arms welcome and easy ride for these companies in Russia over the years, between the government and the oligarchs, but the companies persisted. They also insisted on returning time and again, despite setbacks, to try and secure an interest in the future of Russian production.
Bower describes the situation in 2005 involving Shell and a doubling in the cost estimate for a natural gas project at Sakhalin and some tense discussions. But behind it all? “Shell’s technology, project management and marketing skills were far beyond Russian competence. The Russians working on the project had so far failed to master the skills to produce 3D seismic, horizontal drilling or LNG or to design rigs able to withstand earthquakes and tsunamis,” he states, describing project partner and state company Gazprom’s “rawness” with the project type at the time. “Without Shell, Sakhalin would not be developed, and based on an oil price of $30 a barrel, Russia could expect to earn $80 billion over the project’s lifetime.”
It’s not just the multi-national producers we have to consider, but also the supply and service sector. The world’s largest oil service companies play a role. As the Wall Street Journal reported March 23, Halliburton, Baker Hughes and Schlumberger are all winding down work or suspending new investment in Russia but had been playing a critical role in Russia’s oil sector, providing as much as 60% of industry software (in giving the percentage, the Journal cites Moscow-based energy advisory Vygon Consulting).
Rather than a ‘drill baby drill’ mentality when it comes to Canadian oil, in the name of energy security, UBC political science professor Kathryn Harrison stated in response to questions earlier this month that the climate change emergency has added a new layer to the global oil markets and “ethical oil” question, with the pressure on the world to bring down greenhouse gas emissions.
“Is it ethical to build new fossil fuel infrastructure that will lock the province and the country into economic dependence on oil for decades to come, when Canada has committed to transition to net zero (emissions) in less than three decades and the IEA has said no new fossil fuel infrastructure is consistent with the global (and Canada’s) goal of limiting warming to 1.5 degrees?”
It is a similar answer when the call for development comes from an argument on “energy security.” “Is it ‘secure’ if the particular kind of energy we’re locking in is saddling our kids with an insecure planet and economy?” she asked.
And again, when thinking about the oil and gas production included in the carbon budget, how does local oil and gas win out in that competition, when we may see push-back on continued production given our historic role in global emissions compared to Guyana or, say, Nigeria?
In weighing where we are in the energy transition and what should happen next, it’s maybe worth returning to the “energy security” discussions in the wake of the oil crisis of 1973-’74, per the early data and post-mortem reports of 1975, captured in the U.S. presidential libraries. The Organization of Petroleum Exporting Nations (OPEC) effectively kept 2.4 million barrels per day (bpd) of crude and petroleum products from the U.S. For context, as of January 1975, the U.S. was importing (from OPEC and others) 7.4 million bpd of crude oil and petroleum product, to help against total demand of 18.7 million bpd. The figures are per an assessment in 1975, specifically evaluating U.S. oil imports and whether or not the level of reliance on imports at the time constituted an ongoing threat to national security.
The oil shock cut imports. It also sent the price of crude oil rocketing up from $2.50 per barrel (/bbl) to about $10/bbl. By 1975, the crisis was estimated to have cut the U.S. GNP by $10 billion to $20 billion all-in, affecting all sectors of the economy and contributing to rapid inflation.
Afterwards, it wasn’t just National Security Advisor and Secretary of State Henry Kissinger and one or two others talking about energy as national security. Apart from multiple secretaries, then-chair of the economic council of advisors Alan Greenspan spoke about it in memos. “A threat to our national security will exist until the United States can absorb the effects of an (oil) embargo without damage to its vital economic and military interests,” he wrote, in a letter to an assistant secretary working on the reviews. It made its way to President Gerald Ford (who replaced Richard Nixon in ’74).
A reliance on oil imports wouldn’t be a threat, Greenspan stated, if alternative sources of supply could easily and readily replace the current imports. “At present such supplies do not exist, and consequently there is a threat to the national security of the United States.”
A pie chart in Ford’s files available to him in 1975, titled “The Crux of the Problem,” laid out the underlying issue. U.S. recoverable fossil fuel reserves were 94.5% coal and only 2.7% petroleum, with another 2.7% in natural gas. Production wasn’t keeping up with the rise in demand. The country’s energy consumption, on the other hand, was about 46% petroleum, 31% natural gas, 18% coal, with hydro and nuclear power making up the remainder. It was a complete mismatch, and imports were expected to continue to cover the difference, at an increasing rate.
Such a massive transfer of wealth would enhance the economic and political power of oil rich states which do not necessarily share our foreign policy objectives.
— William E. Simon, U.S. Secretary of the Treasury (1974-1977)
The U.S. Department of Defence was unhappy. “It is imperative that we join with or Allies in a concerted program of conservation, reduced reliance on imported sources for oil and development of alternative energy supplies,” the president was told.
The risk of losing raw access to essential energy supply was only one concern. Another was best articulated by people like Treasury Secretary William E. Simon, who insisted on following the money. In 1973, the U.S. was paying US$8.3 billion a year in dollars of the day for foreign oil imports, only partially offset by the value of any U.S. exports. The hike in oil price paired with a continued and growing reliance on imports meant that outflow of cash was only going up. Simon stated the “payment outflow” was at US$25 billion a year as of January 1975. He argued the money rushing out of the country and into the hands of others, “poses a more intangible, but just as real, threat to the security of the United States as the threat of petroleum supply interruption.”
But OPEC had the energy resources and, Simon warned in the mid-1970s, OPEC’s accumulation of financial assets could reach a total of US$400 billion in investible funds by the end of 1980. “Such a massive transfer of wealth would enhance the economic and political power of oil rich states which do not necessarily share our foreign policy objectives,” he stated.
Looking back, one of the most interesting things about the whole situation were the recommendations made on the heels of the crisis. Conservation was at the top of the list. Simon reported an estimated million bpd in crude and petroleum product could be saved in the U.S. in 1975 without substantially adversely affecting the level of economic activity. The next step was alternative energy sources, with sadly repeated and honest comments on the fact geothermal power, shale oil supply and solar were all being explored but required technological advances.
Then to now, a lot has happened of course. Nixon promised America energy independence. Cozy in his sweater, Carter promised as much as one-fifth of America’s energy would come from solar and other renewable sources by 2006. Neither reached their mark (in 2020, according to the U.S. Energy Information Administration, all renewable energy was about 12.6% of total U.S. energy consumption and 19.8% of electricity generation).
The U.S. government did create the strategic petroleum reserve. There were debates over price controls and production incentives. George H.W. Bush shifted focus from energy independence to securing Persian Gulf supply with the Gulf War. And by the 1990s, the idea was there was no competing with low-cost producers outside of the U.S. for the idea of energy independence.
They failed because of the equally powerful position of producers that inhibited the commitment of resources to new kinds of technology.
— Panic At the Pump by Meg Jacobs, historian and senior researcher scholar at the Princeton School of Public and International Affairs
It’s a brutally brief summary, but it’s worth returning to that pivotal time in the 1970s when everyone knew there was a terrible problem and floundered.
As Meg Jacobs, a historian of U.S. political history and political economy and senior researcher scholar at the Princeton School of Public and International Affairs wrote in Panic At the Pump: “As the story of the 1970s shows, Washington policy makers failed to solve the energy crisis because the political power of consumers led to holding down prices even as environmentalists called for conservation. They failed because of the equally powerful position of producers that inhibited the commitment of resources to new kinds of technology. And they failed because of a new idea that there was no room for government to play an effective role.”
Basically, everyone has a role to play.
Energy revenue FOMO (Show me the money)
Canadians who support the oil and gas sector’s continued growth in Canada, even to the point of injecting public money into the industry, are often less afraid of climate change than of lost revenues. They see a future where Canada moves too soon, too fast in its response to climate change compared to other countries and is the “altruistic doofus,” as former executive vice-president of TransCanada Corporation and Dialogues on Canadian Energy podcaster Dennis McConaghy suggested in his 2019 book Breakdown, discussing the tensions around pipeline development. The book was awarded the Donner Prize for writing on public policy.
“The global climate change risk is the ultimate ‘tragedy of the commons’ – only collective action can avoid a suboptimal outcome, and without collective action each country has too much incentive to ‘free ride.’ Canada, however, faces pressure from without and within to do more than any other country, and so we face becoming the inverse of the free rider – the altruistic doofus,” he writes.
Canada is big geographically but not in many other ways. If Canada ended all hydrocarbon production, McConaghy asks, in that now-common question, would it make any material difference globally? “Would such a sacrifice make any economic sense in the real world Canada finds itself in?”
In Newfoundland and Labrador, the industry has many supporters who have made much the same argument. Economist Wade Locke is not a climate change denier but has talked about how oil and gas production offshore Newfoundland and Labrador amounts to little in terms of emissions when viewed on a global scale.
In 2020, he pointed out that at the time of the Bay du Nord filing for environmental assessment, Newfoundland and Labrador accounted for less than 1.5% (1.42% in 2018) of Canadian greenhouse gas emissions and Canada accounted for 1.48% of the global emissions total. He said the province ultimately produced 0.02% of global emissions (the idea was repeated by Energy NL, formerly Noia, this week, citing the fraction of a per cent tied to Bay du Nord emissions).
… there needs to be a reasonable and realistic road map that draws on more than an idealistic argument that claims the moral high ground.
— Wade Locke, economist and head of Economics at Memorial University of Newfoundland and Labrador
Locke stated Newfoundland and Labrador could cut its emissions in half by eliminating emissions from the Holyrood Thermal Generating Station (a bunker C-burning power plant) and halting all emissions from mining activity and the oil and gas sector. “Cutting our emissions in half would mean the global GHGs would be expected to fall by one one-hundredth of a per cent; not zero, but it is not as large as one might expect given the missionary zeal with which these arguments are being made these days in terms of the Newfoundland and Labrador oil and gas sector,” he wrote, with some sass.
Plenty of people latched on to Locke’s 0.02%. Very few – for or against offshore oil from Newfoundland and Labrador – really took up the idea that followed: “It is no longer sufficient to say that N.L. should not support a dying industry, oil workers need to retrain and N.L. needs to embrace the new economic reality or the new environment. That is an incomplete sentence. People making this argument need to tell us specifically for what occupations will the workers retrain in this new environment, how will this retraining be done and under what timeframe can this be accomplished. That is, there needs to be a reasonable and realistic road map that draws on more than an idealistic argument that claims the moral high ground.”
And it’s very much not about the national picture. On March 18, the National Observer ran a piece with Mark Campanale of Carbon Tracker, who looked at the goal of cutting greenhouse gas emissions to meet the 1.5-degree track on global warming, citing the IEA’s scenario. “For the size of the Canadian economy as a whole, even though Canada is the world’s fourth-largest producer of oil and gas, it’s still five per cent of the GDP of the Canadian economy,” he said.
“The 95 to 96 per cent of the Canadian economy that’s not dependent on the production of fossil fuels is going to be just fine. It’s the five per cent that’s dependent that’s going to be worried.”
GDP is not a great measure but has emerged as a go-to measure, and so it’s worth considering the same picture when you zone in on a specific province like Newfoundland and Labrador. When Newfoundland and Labrador released its plan to nearly double oil production by 2030, to hit 650,000 bbls/d, the government stated oil made up about 25% of the province’s GDP and accounted for 41% of provincial exports over the past 20 years. And again, it’s not hard to see the issue being different for the province compared to the country.
Since some high-profile Canadians apparently still haven’t figured it out, talking about an oil project in Newfoundland and Labrador is as sensitive a subject as talking about an oil project in Alberta and for good reason. And if you’re honest, we in Newfoundland and Labrador just matter less to the federal folks who have yet to clearly indicate a position on the offshore. The result is a vacuum that leaves the debate in Newfoundland and Labrador at, as one oil consultant recently put it to me: “What are we supposed to do? Get another TAGS program?”
There’s little on paper anywhere giving real thought to the transition specific to each oil-producing province and the federal government’s role, if any, specific to each province. It’s a generic discussion of Canadian oil. The fear here is what the thinking not on paper says: halt Newfoundland and Labrador since it’s an easier proposition practically and politically than Alberta.
That’s despite the fact that post-pandemic lockdown oil and gas investment is ramping up faster in the oil sands than in Newfoundland and Labrador. The Canadian Association of Petroleum Producers (CAPP) issued a release on January 20 stating the association expects a 22 per cent increase in investment in the Canadian oil and gas sector this year, with capital spending predicted to grow from $26.9 billion in 2021 to $32.8 billion in 2022, or a roughly $6-billion increase. But the offshore is flat – CAPP’s words – at an estimated $1.6 billion investment in Newfoundland and Labrador offshore investment predicted versus $1.5 billion the year prior. Looking specifically at the oil sands, it’s a 33 per cent predicted growth from $8.7 billion in 2021 to $11.6 billion in 2022. In total, CAPP’s members see about $116 billion a year in oil and natural gas production.
The most notable thing in CAPP’s public statements is an absence of any commitment beyond the next few decades. Quotes included in the release from president and CEO Tim McMillan mention oil and gas demand is expected to remain strong “for decades” and the opportunity for Canada’s industry “for decades to come.” He can’t commit to anything beyond that.
Canadian oil and gas – offshore, onshore, oil sands – is in intense, direct competition with oil producing jurisdictions in the rest of the world. The pie is forecast to shrink, and to retain any piece of it Canadian oil projects will have to be preferred. Not only cheaper, though net revenue is usually the key measure, or simply only better for the environment in terms of greenhouse gas production – but preferred by the producers.
An ode to renewables
In Why Your World Is About To Get A Whole Lot Smaller (2009), former CIBC World Markets chief economist Jeff Rubin touched on why some of the best-known oil companies would bother going into places like Russia. His answer at the time, pre-shale, is straightforward. “That’s all that’s left,” he suggested, describing a world of dwindling recoverable resource.
The world has dramatically changed, with key advancements in technology and methodology. Fracking unleashed the U.S. shale revolution (with a 20-year low for U.S. oil imports in 2014 and resulting in Americans becoming a net exporter). But more importantly, shattering the barrier that existed during the oil shocks nearly half a century ago now, the manufacturing and supply chains underlying renewable infrastructure, wind turbines and solar panels, have kicked prices for renewable energy off a cliff.
In a session of the Natural Resources and Economic Development Committee of the Nova Scotia legislature this week, executive director of clean energy Keith Collins spoke about the explosion of interest in solar power within the province. Solar panels, he said, cost essentially nothing with the main cost in the local handling and installation labour. And in talking about the increased purchases of heat pumps and electric vehicles, cars and bikes (with 1,500 electric bikes sold last year) in particular, he smiled. “All that translates into more dollars in the local economy and more jobs coming about,” he said.
But it’s also about what more is coming. Smart grids and home-based batteries, but also more options in energy production. Collins predicted offshore wind projects could dramatically close their cost gap with onshore for Nova Scotia in anywhere from five to 15 years. “It’s very hopeful in terms of the speed at which it’s coming down,” he said.
If we are going to decide ok, we’re moving away from fossil fuels, we need to be honest about how long that’s going to take and what role the fossil fuel producers are going to play in that time frame.
— University of British Columbia business professor Adam Pankratz
Investment is flooding into R&D and needs to keep going. “Change will be slower than advocates and scientists would like. But it will accelerate if the leaders most willing to act on climate change stop moralizing and start seeing deep decarbonization as a matter of industrial engineering.” That’s what an associate professor of resources engineering at Stanford University co-wrote with an assistant professor of engineering and of public policy at the University of California, an assistant professor of global economics and management at MIT and a professor of innovation and public policy at the University of California, San Diego in a piece published in Foreign Affairs, “The Paths to Net Zero: How Technology Can Save the Planet.”
At the University of British Columbia’s Sauder School of Business, professor Adam Pankratz spoke earlier this month with Atlantic Business Magazine about the idea of any link between Newfoundland and Labrador’s oil sector and the Russo-Ukraine war. Not for or against Bay du Nord, he simply highlighted the need to begin more focused discussions on what the energy transition looks like.
“If we are going to decide ok, we’re moving away from fossil fuels, we need to be honest about how long that’s going to take and what role the fossil fuel producers are going to play in that time frame,” he said.
The timeline is everything now. How fast do we move, who gets left behind along the way and what can be done to limit the harm? Newfoundland and Labrador is very familiar with the realities of a sudden transition and economic winners and losers. Federal investments in electric vehicle chargers have largely bypassed this province to now. The announcement of a $5-billion private investment for a electric vehicle battery factory bringing 2,500 jobs to Windsor, Ontario is simply a billboard drawing more working-age people away from a province where we were already in a transition before the energy transition (i.e. the still-in-effect cod moratorium). It feels like the idea of a better future is always a question mark, especially for the fastest-aging province in the country. We’re not a manufacturing centre. People are afraid here. And so the province still struggles to even broach the idea of a future with reduced oil production offshore or a managed decline in oil production offshore.
But the newly rebranded Energy NL is ready to talk about more than just oil and gas. And we’ll see soon, with the decision on Bay du Nord, just how dire those discussions are. •
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