What lies beneath
Riding the wave of offshore oil
Newfoundland and Labrador is betting on the sea — or, rather, what’s underneath.
Below the choppy waters off its coast, the province hopes to uncover billions of barrels of oil that could help it climb out of dire financial straits. If all goes according to plan, Newfoundland and Labrador could double its offshore production by 2030.
Right now, that means opening up huge swathes of ocean so companies can look for oil beneath the seabed. This week, Cloe and John mapped out what’s already happening offshore — from exploration and production to significant oil discoveries — along with a look at where future development could take place. Take a look at their work here.
I also caught up with Cloe and John to get a sense of how the province’s plans are playing out on the water and what they could mean for Canada and its climate goals. Here’s what they had to say:
Dana: So, there’s this huge push to expand oil exploration off the coast of Newfoundland and Labrador. Is Big Oil coming? Do we know what kind of interest there is from fossil fuel companies right now?
John Woodside: Because Ottawa recently approved Bay du Nord, we can expect to see a lot of interest in a region of the offshore called the Flemish Pass. Equinor is the majority owner of the parcel of ocean where Bay du Nord is located (Cenovus is a minority partner), and the map shows several nearby parcels also owned by those companies. A state-owned Chinese oil company announced in April it was abandoning Newfoundland’s offshore after it came up empty on a well in the Flemish Pass, so it’s unclear what projects in that region will progress. We don’t know what interest there will be yet in the new regions the offshore regulator has opened up for bidding, but in recent years, there’s been some attention from new players. Traditionally, the offshore has been dominated by mostly North American oil companies like Suncor, Cenovus or Exxon, but others like BP are shifting out of the oilsands and into the offshore. Qatar’s state-owned energy company is also invested in the offshore.
Cloe Logan: What I’d add is whether Big Oil is coming or not, these companies sure hope so or they wouldn’t commit the tremendous resources required for exploration. As the map in our story shows, there is a great deal of planned exploration off the coast of Newfoundland and Labrador. I think it’s hard to say what will come of it, especially whether potential projects will get federal approval. Regardless, companies gunning for an oil boom at a time when we should be extracting less fossil fuels, not more, is concerning. It spells a lot of seismic testing and tons of exploratory drilling, which experts say will likely harm marine life and poses some similar risks to actual projects.
Money is tight for Newfoundland and Labrador these days, and Canada needs to find a new way to produce oil and gas if it wants to keep that industry growing (even though climate science says we shouldn’t). How are the province and the feds explaining this push for oil exploration off the coast against Canada’s climate goals?
CL: For the federal government’s part, when they approved Bay du Nord, they included over 100 conditions, including a requirement the project achieves “net-zero greenhouse gas emissions by 2050.” That same day, they announced the requirement would also apply to all future oil and gas developments. Of course, no fossil fuel project can be emission-free. Even if companies could make their products without any emissions, which so far none have, all oil and gas produces sizable harmful emissions when burned. The federal government is seemingly using Bay du Nord as a benchmark for “clean” offshore oil, insisting we need some new projects during the energy transition.
JW: On the provincial side, the rationale is all economics. Newfoundland and Labrador is in dire fiscal shape and last year was considering selling off valuable provincial assets for quick cash. The province’s leadership is all in on oil being the ticket to financial security. There’s, of course, plenty of opposition in the province to these plans, but the province’s history of long being a have-not province until its oil boom paid off means many think the industry is vital. Similar to Alberta, the oil industry has cultural pride for some in Newfoundland and Labrador.
If all goes to Newfoundland and Labrador’s plan, offshore oil doubles by 2030 and the province gets a boatload of money from fossil fuel production. But what are the economic and financial risks of this plan? What does the province (and the country) stand to gain or lose by going all-in on offshore oil?
JW: The way to understand this is that it’s a bet the world will fail to meet its climate objectives. To avoid catastrophic warming, the science is undeniably clear: emissions from burning fossil fuels need to be curbed to zero as soon as possible, with the goal being to cut global emissions in half by 2030. For us to be planning on starting new oil production in the late 2020s means we’re planning to extract oil through the 2030s and 2040s, at least, to make back the initial investment. That oil needs a market, but who are we going to be selling to as the world transitions? There’s a real risk these projects will be squeezed out of the market by lower-cost producers elsewhere, leaving them as stranded hunks of junk in the ocean representing lost revenue and lost potential for other industries. If the project can make back all its money for investors, it will be on a timeline that is incompatible with keeping warming below 2 C.
What are … carbon offsets?
The short answer
A carbon offset is an accounting mechanism that allows countries, companies, organizations and individuals to neutralize their greenhouse gas emissions — by, say, restoring a degraded forest to pull carbon out of the atmosphere.
Offset schemes have helped to solve environmental problems in the past but never one with the scale or complexity of the climate crisis. They do not reduce emissions, which is ultimately what climate science requires, but instead are meant to buy time — or delay climate action, depending on who you ask.
A good explainer
Can you really negate your carbon emissions? Carbon offsets, explained. | Vox (from 2020)
A carbon offset that works
Cold Hard Cash for Your Greenhouse Gas | How to Save a Planet
A carbon offset that doesn’t
Reads of the week
Can Charles be Climate King? "One of the core questions right now at play is: Will it hurt or help modernize the monarchy for him to be an advocate for climate action?" says Canadian climate advocate and environmentalist Tzeporah Berman.
Danielle Smith wants to turn Alberta into Quebec. “Those who cannot remember the past are condemned to repeat it.” So are those who never properly understood it in the first place, writes columnist Max Fawcett.
Trudeau hints at more police funding to combat harassment against journalists. Advocates argue money isn’t the problem. “The police don't have a resource problem. They have a resource allocation problem,” said Erica Ifill, Hill Times columnist and co-host of the Bad + Bitchy Podcast.
The Liberal government must find ways to earn support from undecided voters. Winning another election would be challenging for the federal Liberals, writes Abacus Data chairman Bruce Anderson, but far from impossible.
Critics say Ontario moving too slowly on old oil and gas wells. “It’s a ticking time bomb, literally,” said Ontario Green Party Leader Mike Schreiner. An explosion last summer — believed to have come from an old, forgotten well — levelled several buildings in a small southwestern Ontario town.
Why an eroding Liberal brand in the provinces could threaten Trudeau’s prospects. With the onerous task of crafting a winning electoral strategy ahead for the federal Liberals, never has the party faced such shaky, disparate organization in its provincial counterparts, writes public affairs strategist Andrew Perez.
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