The Current - Is funding a N.L. offshore oil plan the right way to build a nation?

Episode Date: June 9, 2025

<p>Offshore oil is big business in Newfoundland. And with “nation building projects” a priority of the new federal government, some hope the stalled Bay du Nord drilling project might get a boost. An industry expert shares her hopes for the province’s offshore industry, though a researcher argues oil projects aren’t nation building — they’re “nation destroying.”</p>

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Hello, I'm Matt Galloway and this is the current podcast. All across this country, there's talk of nation building projects. And here in Newfoundland and Labrador, many people are hoping this elbows-up moment will inject new life into the offshore oil industry, people like Rick Riggs. The offshore industry to the province of Newfoundland is very, very important. Right now we have four oil rigs out there, that's Beducine Isle, and two of them are drilling. Overall, directly offshore, I mean, you're looking at three to 5,000 people,

but then there's the spinoffs. And so, I mean, you're looking at somewhere between 25 and 40,000 people that are directly involved. The money that's being paid is big dollars. And this keeps our younger people home in Newfoundland. It keeps our educated people home. You know, they been paid is big dollars. And this keeps our younger people home in Newfoundland, it keeps our educated people home. You know, they're making a good living. It's good for their kids. And it's good all around for everybody involved. It's a great feeling.

The province relies on the offshore oil industry for 22% of its GDP. That industry helped rebuild the economy here after the Cod moratorium. It's meant good paying jobs for people like Rick, but that work is tough. The workers are flown out by helicopter to isolated platforms in the sea for weeks at a time. It's a very, very big sacrifice you make when you're leaving home 18, 19 days before Christmas Day for us, for just to use an example of knowing full well. And you look and you got kids that's six and seven and eight and nine years old. And you know, daddy's not gonna be home with them

for Christmas. And besides, not all men, there's ladies, women out your office who sacrifice the same as the men. Just times I literally had to tear my youngest away from my chest, but you know, you deal with it. After 23 years of dealing with it and riding the ups and downs of the industry, Rick just retired from a job that was also in many ways, a way of life. Made my career special.

It's my work. It's my buddy. It went off short 23 years ago. I knew one person today. I know five or six or 700 and it's a family. I came home on the 21st of April. That was a difficult day when I got on the helicopter to fly home for the last time, knowing it was the last time. I did shed a few tears. I almost cried.

Now there is anticipation about what opportunities there will be for the next generation of workers. The province wants to get moving on its next big project, the Bay de Nord. It's a rich oil field 500 kilometres off the coast of Newfoundland. In a moment we will hear from a researcher who is worried about the economic and ecological risks of doubling down on fossil fuels. But first I'm joined in studio by Charlene Johnson. She is the CEO of Energy NL. It's the sector's industry association here.

Morning. Good morning, Matt. Thank you for having me. Thanks for being here. Your organization, Energy NL, just had its annual conference in St. John's last week. Saw some of the people wandering around with the badges hanging around their necks. How are people feeling about the state of the offshore oil industry? Well, pun intended, they're very energized.

You would hope so, yes. It was a great week to get the latest updates on the oil projects but as well as the hydroelectric projects happening with Quebec and the six wind to hydrogen projects happening in rural Newfoundland and Labrador, proposed for rural Newfoundland and Labrador. So it was a great week of optimism. Trevor Burrus You had described the state of the industry in this province under Justin Trudeau's government in some ways. He had a chilling effect on that oil and gas industry.

What was it that the former prime minister was or wasn't doing that you feel has been replaced now? Jennifer Cableman-Knighton Well, I guess we could go back to Bill C-69. It started there and that was the beginning of the uncertainty for the industry. Then in 2021, the discussion of bringing in an emissions cap had a real chilling effect. We see next door, our neighbors in Nova Scotia had an awarded bid offshore and cancel that. Again, that's sending a message to international investors that Canada isn't open for business. So I think the headlines that we've seen over the last five or six years coming out of Canada is, you know, we don't want you to invest here in oil and gas.

And we are now seeing those headlines starting to change and investors are looking towards Canada again. Prime Minister Mark Carney is sending some positive signals. So you have said – and the industry has said that Beto Nord is one of those nation-building projects. This is what the prime minister is looking for and we know at the first minister's meeting last week, people were pitching them. The premier, John Horgan, pitched the Beto Nord project.

What makes it a nation-building project in your eyes? Well, when you look at the GDP this project would bring in over the life of 25 years, it's expected to be $97 billion. $82 billion of that would be in New foundland and Labrador, as it should be. We should be the primary beneficiaries. But that's still $15 billion to the other provinces. 14,000 jobs are expected annually with this project. That includes direct, indirect and induced. 9,000 of those in Newfoundland and Labrador, again, as it should be, but that's 5,000 jobs

annually going to other provinces in Canada. When you think of manufacturing jobs in Quebec and Ontario to manufacture products for the offshore. So those numbers, that's truly nation building. And then there's the energy security with this project as well. There's a lot of discussion with energy security now given what's happening south of the border. So Canada imports $20 billion worth of oil every year from outside. So this is an opportunity for us to produce more of our own. Trevor Burrus People have talked about this for a long time.

There are real questions as to whether this thing is actually going to happen in part because it has been said there is no infrastructure out there. You're looking at drilling much deeper further out. Is this actually possible? Jennifer Cline-Wayne Well, there wasn't an oil field here in the 1970s. Hibernia first got discovered in the 1970s, produced first oil in 1997 and that's what started the industry. So nobody thought back then that was possible either and here we are with four producing fields.

The ingenuity in this province, the technology is changing. It is absolutely possible and I expect it will be very real very soon. Trevor Burrus The company, the Norwegian company that's behind this, Equinor, might have questions around this. They put the project on hold in 2023 because of increased costs and volatility in the oil market. It's been approved by the federal government for a while now, but it's not moving. A month ago, the CEO of that company said the viability of the project is still up in

the air. In his words, we don't have a project yet. We're not certain we can make it work. That would suggest that there's not a lot of movement. I mean if you think that this is going to happen and the CEO says we don't have a project yet, square that for me. Well, he gave an update at conference on Thursday and they have, over the last two years, they have redesigned this project to start smaller and build outwards.

The hardest part is getting that first initial capital investment to get into the basin. But is there a project there? Is it viable right now? Well according to Equinor, I don't want to speak for them but there are cost overruns so they are working on redesigning the project to get those costs down. One of the things that the premier has asked for at the prime minister's meeting and we have been advocating for is an investment tax credit and that would actually help speed up the sanction of this project. There was an investment tax credit up until 2012 for oil and gas and mining.

That tax credit still exists today, but oil and mining is exempt from it. So we're just asking to bring that back. And that would return 12-fold to the federal government having an investment tax credit like that. When you look at corporate income tax, personal income tax, consumer spending tax, we had an economist run the numbers. That is not upfront money to start this project. The investment tax credit wouldn't kick in until the project is up and running.

So there's no pot of money required upfront. There's no risk. There's only massive reward. Why is it so difficult to get these big projects going? You mentioned the wind to hydrogen project. We were here recently, just a couple of years ago, on the western side of the province in Stephenville talking to folks there who were upset about this but also saw the potential of it.

And it felt like at that moment, it was on the boil. That boil has died off and the water is pretty still right now. It feels like that project might be dying a slow death. Why is it so difficult to get these big projects going? They're very expensive. To even go look for oil in the first place, to drill one exploration well offshore New Finland Labrador is $200 million. Then if you discover oil, it's about $12 to $15 billion to put the infrastructure in place.

Bay to Nord, for instance, was discovered in 2013. So they have 12 years of having an office here, people here. They've spent billions already, and it will be another six years before they get to first oil. Is that wind to hydrogen project dead, do you think? The wind to hydrogen project, well, there are six of them in the province. We're hearing that companies have their heads down now, really focusing on getting offtake agreements.

There was a lot of hype in the beginning. There was a lot of interaction with the communities on the ground and so it should be. But that part has been done and continues to happen, but really now it's focusing on getting those off-take agreements. I was just in Rotterdam for the World Hydrogen Show. We had a booth there. There is still tremendous interest. We have world-class wind in terms of speed and strength.

We have the fresh water. We have the proximity to Europe. So there's tremendous amount of advantages going for us. So yes, there is still a lot of interest. Let me ask you two final quick questions. One is what's at stake here for the province? I mean, we talked about how difficult it is to get these projects going. But for this province, what's at stake if for the province? I mean, we talked about how difficult it is to get these projects going, but for this

province, what's at stake if they don't get rolling? Well, you mentioned in the beginning 22% GDP of our province. It has been upwards of 32% at peak oil. That really depends on the price of oil and the production capacities. So that's really at stake. This is jobs, tremendous well-paying jobs in the province. This is money to do healthcare, roads, infrastructure. This is helping our companies expand into other jurisdictions.

Guyana is a big place for oil production now. We have over 20 companies there helping them develop their oil industry. So without it, I'm not sure what else would replace that jobs and GDP. Peter Van Doren Do you worry about the impact of this? I mean we're seeing smoke from wildfires in Saskatchewan and Manitoba in Italy right now. The last time I was here, we were down in Port-au-Basque talking to people about the impacts of Fiona.

The climate is changing. Do you worry about the impact of these projects on the environment? Dr. Julie Pagliano Canada operates its oil projects very safely. There's a huge focus on environment, safety, governance structures. We're very fortunate in Newfoundland and Labrador that we have what Wood Mackenzie calls advantage barrels. It's a lower carbon per barrel product. What does that mean?

It means that at extraction, the greenhouse gases there are 30 percent below the average greenhouse gases for a project in other parts of the world. So as long as the world needs oil and we're still at 100 million barrels per day, we say that that oil should come from a place that has that focus. Even if oil decreases by 50 percent by 2050, that's still 50 million barrels a day. So we say it should come from Newfoundland and Labrador, a place that is focused on ESG. Our oil offshore accounts for less than one quarter of a percent of world greenhouse gas emissions, but it accounts for over 20 percent of our GDP.

So shutting in production offshore, not only does it not make environmental sense, but it doesn't make economic sense because those barrels will get produced elsewhere where likely we'll have a higher carbon per barrel product. This is a conversation that people are having across this country, including right here in Newfoundland and Labrador. Charlene, thank you. It's good to have you here. Thank you for having me. Charlene Johnson is the CEO of Energy NL. That's the sector's industry association. Is drinking raw milk safe like RFK Junior suggests? Can you reduce a glucose spike if you eat your food in,

quote unquote, the right order? I'm registered dietitian, Abby Sharp. I host a nutrition myth busting podcast called Bite Back with Abby Sharp. And those are just some of the questions I tackle with qualified experts on my show. On Bite Back, my goal is to help listeners create a pleasurable relationship with food,

their body and themselves, which in my opinion is the fundamental secret to good health. Listen to Bite Back wherever you get your podcasts. Angela Carter is Canada Research Chair in equitable energy governance and public policy at Memorial University in Newfoundland. We have spoken before but we're glad to have you here and talk to you face to face. Thank you for coming in. Really nice to put a face to a voice. What do you make of what you just heard from Charlene Johnson?

She talks about, and we know this, the jobs that are hooked to these big projects. It's not just the big projects and the new projects, but the fact that – what was Rick saying – 25,000 to 40,000 people are, he believes, employed in the energy sector in and around this province. What do you make of what's at stake here? The job numbers, some of these job numbers that are being cast about are inflated. The numbers that I use coming from Stats Canada show that the jobs associated directly with the offshore oil sector here, they sit at about maybe 1.4%, maybe 4% at a high.

So in terms of direct job impact, quite low. Now— I guess you were talking about indirect jobs as well. All sectors have plenty of indirect and spin-off multiplier effects and all of that. But first let me say, those jobs are really important and my father worked in the oil sector, both my brothers worked in the oil sector. I get it. I know exactly what those jobs pay for.

We need jobs in Newfoundland and Labrador. But our offshore oil sector here is capital intensive. It costs a lot of money, produces a lot of money. It's not about jobs and it never really was. More so this is about the revenue question and then I would argue some of the bigger consequences of the sector as well. What do you make of the fact that the conversation in this country since Donald Trump – it's not just 51st state, tariffs and what have you – that the conversation around resource extraction has changed in this country.

What do you make of that? How do you think it's changed? Well, how do you think it's changed? I mean people are talking about pipelines in a way that people who didn't talk about pipelines would and it feels like there's a different tone of the conversation. Do you see that? I think that's pressure coming from industry to use yet another moment in time of another crisis basically. This is what we see, Matt, and we've seen it when it was COVID.

Every calamity that's happening globally, it's an opportunity for the oil sector to say, OK, we need more oil. We need it from here. So when people talk about nation-building projects, but also the idea of energy security, you don't see the two of those connected in some ways. Danielle Pletka How can it be that we would have an oil project that is nation-building? How can we call it nation-building at a time when we have provinces under emergency measures

for fires? How can we say that the oil and gas sector is giving us any kind of future when we know for a fact that oil and gas and also coal, so fossil fuels, are the lead drivers of the climate crisis? We now know have – we have the research now that says that the wildfires that are burning now in Manitoba, Saskatchewan, Alberta, British Columbia, they are five times more likely because of the climate crisis. And the climate crisis is caused by rising emissions. 90% of those emissions come from the fossil fuel sector.

So we know what is causing the climate crisis. It's oil, it's gas, it's coal. And so how can we pretend that we're building a nation by trying to extract and export more of the very fuel? This is nation-destroying, I would argue, Matt. And yet, that conversation is happening. It's happening at the highest level.

The prime minister asked for those nation-building projects and people— So he asked for nation-building projects, energy of all sorts. But remember where Carney is coming from though. In 2014, 2015, he's saying to the financial community that the greatest threat to financial stability is climate change. He himself has said that to hold temperatures at some level of stability, we've got to keep vast amounts of fossil fuels in the ground. And then later as he goes more into the details and he sees what's unfolding internationally—so now I'm looking at 2020, what's he saying?

He's indicating again to the financial leaders of the world that the greatest commercial opportunity of our age—I'm quoting him here—is energy transition. So I don't know what the long game is here that Prime Minister Kearney is playing. What he does know and what we know as well if we look closely at the evidence is that we are at a changing moment of global energy systems and that is actually putting Newfoundland and Labrador at risk. What's changing here, if we continue in this path of depending on oil and gas extraction is putting us at economic risk here?

But what is the way forward then just finally if – for this province, if expanding fossil fuel production isn't the way forward because Newfoundland Labor has struggled financially over the years and people see this as – as you said, maybe it's not about jobs, maybe it's about revenue but people see this as an opportunity to get out of that hole. If this, you believe, is not the way forward, what is? It's not about what I believe. It's what the numbers are telling us, right? OK, so there's – it's one thing for the government and the oil sector to say we

aspire to double oil production by 2030, which is apparently the policy, and then double it again by 2050. It's one thing to want that. It's another thing to pay attention to what the firms are actually doing. And what we see along the whole phase of development from bidding on those early parcels to then explore and so forth is that firms are actually withdrawing their activity from the offshore in Newfoundland. Why is that?

It is a high cost, really in fact dangerous place to extract oil and these firms can get that oil cheaper and more of it in other locations. This is exactly why Equinor has been postponing and postponing its big betanor project. So what's the other option than for Newfoundland and Liberia? There are plenty of other options, which is why we have countries like for example, Denmark, who is you know, and they saw early on, writing on the wall, they had an oil sector in decline. So what do they do?

They start investing in new growth sectors. So in the case of Denmark, that's wind. And so we need to find that, the next growth opportunity for a sector that is in decline, a sector that is sun setting. We can see this even in our government statistics. Less and less revenue coming into the province as oil production declines. One thing to want it. It's another thing to see what the firms are actually doing.

Aaron Ross Powell I asked at the end of our conversation to Charlene what she thought was at stake. What do you think is at stake for this province? Charlene Hicks Oh, well, absolutely the same things that that first intervener, you know, this first gentleman mentioned. This is about our families. It's about the sustainability of our society. It's a terrifying moment and that includes climate crisis. I mean, if you take the climate cost, the carbon cost of the Newfoundland oil sector, we are talking millions and millions of tons of CO2 that that sector has thrown into the global atmosphere.

There's just been no accountability for that and now at a time when – the community across the bay for me, Matt, was on fire last month. There has to be a change and a recognition that we are on the wrong path here to continue expanding in this sector and a sector that on its own doesn't look to be viable for economic reasons. So yes, a point of change, very scary and a lot at risk. I have to let you both go. But I mean I just wonder whether there is – is there anything

that either of you – that the two of you agree on? You're both sitting side by side talking about this province that you both love but from very different perspectives. Is there anything that you agree that Charlene said? That's a long pause. Yeah, it is. Because I am diametrically opposed on so, so many of these issues. I mean even the notion that Trudeau had a chilling effect.

I mean Prime Minister Trudeau bought a pipeline for $34 billion to try to facilitate the oil and gas sector. And Charlene, is there anything that you agree with when it comes to what Angela is saying? I think we can agree that these projects do cost a lot of money, but where I fundamentally disagree is that there isn't interest here anymore and it was declining because of the cost. It was declining because of the message that the federal government was sending and we now see renewed interest in our offshore with all of the signals that Prime Minister Carney

is sending. I have to let you both go. This is a conversation that, as I said, is happening across this country and it feels like one that will continue here but elsewhere as well. Thank you both for being here. You're welcome, Matt. Thank you. That's Angela Carter.

She's candidate research chair in equitable energy governance and public policy at Memorial University of Newfoundland. And we heard as well, Charlene Johnson, who's the CEO of Energy NL. You've been listening to The Current Podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon.