Canada’s production and delivery of oil products, natural gas and electricity contributes about $170 billion to Canada’s GDP. The energy industry is one of the most important contributors to Canada’s economy and provides the foundation for our health care, education, and other social services in the country. According to Natural Resources Canada:
Renewable energy is also extremely important and it’s oil and gas that’s going to get us there. The new energy mix will see renewables rise as well as oil and gas production increases. Together they will make up our new energy future.
Based on energy demand, Canada’s Energy Future predicts that we will have increases in the production of crude oil and natural gas from 2018 to 2040. Crude oil production will grow by nearly 50%, to around seven million barrels per day. Natural gas will increase by over 30%, to over 20 billion cubic feet per day.
That translates to massive-opportunity for Canadians and it is the critical baseline of infrastructure needed for renewable energy success.
The more oil wells drilled offshore Newfoundland, the higher the probability of finding oil. So the answer to Eastern Canada’s prosperity in terms of energy is simple: drill more!
In the past, we have had the problem of not reaching our drilling potential because of extremely slow environmental approval processes; sometimes up to 10 times slower than other places in the world. When environmental assessment approvals take too long oil companies will decide to invest in other regions where they can go from oil exploration to discovery much faster; places like Guyana for example.
It’s not anybody’s fault that these processes were long and labourious. It came out of the strong demand for a safe and environmentally conscious way forward. Today we have the challenge of ensuring both faster exploration time frames and the highest environmental stewardship takes place. These are the tasks of the day and the challenge of the provincial and federal governments combined.
Speeding up environmental approvals in Newfoundland and Labrador is the key to ensure drilling offshore Newfoundland meets its potential. That and having more skin in the game. For example, Canada could be more like Norway and be a primary investor in its oil and gas resources. Norway has had upwards of 60% equity shares in many of its North Sea projects which have also led to them becoming the strongest nation on earth with a $trillion+ trust fund. This fund is not only the foundation of the countries prosperity but it is the most powerful asset they have for bringing in renewable energy. They can afford to do so.
The good news is, environmental assessment protocol in Canada is about to change. To be globally competitive and environmentally responsible at the same time, Canada’s new approach will be more like other successful oil and gas offshore regions of the world. For example, Norway’s offshore drilling environmental assessment process usually takes an average of 90 days. In Australia, it’s about 110 days. Comparatively Offshore Newfoundland’s has been 900 + days.
Offshore Newfoundland drilling assessment processes are being transformed from red tape and too many cooks in the kitchen to a more streamlined environmental assessment approach which is predicted to be less than a year. That’s huge! Not only will that make offshore Newfoundland globally attractive to oil companies to set up shop and drill here, but it will also most likely put us at the top of the list of places to invest ‘in the world’ given the nature of our stable economy and government infrastructure.
The old model offshore Newfoundland of taking 905 days for an exploration well to be approved, is thankfully dead and gone. Everyone recognizes it is simply not sustainable. We finally all agree! How refreshing.
Today, it’s clear that stakeholders in the oil and gas industry in eastern Canada are committed to speeding up environmental assessments so that oil companies will be far more excited to drill and explore in the region. That’s extremely good news for Offshore Newfoundland given that we currently have 43 exploration wells approved to drill offshore and with a new approval process we can most likely predict an offshore drilling boom in 2021-22.
With our offshore oil drilling-to-discovery ratio of 1 discovery to every 7 wells drilled, I predict the opportunities offshore Newfoundland will not only bring new oil discoveries but the attractive offshore opportunities will be a hotbed of activity where exploration and discovery numbers will double if not quadruple over the next decade.
Currently oil and gas are 25% of Newfoundland and Labrador’s overall GDP. It’s one of the most important assets in our bailiwick. With the new investment, exploration drilling, oil discoveries, and growth that number will rise and bring with it a lucrative future for our province and our kid’s futures. And most importantly it will address climate change with low impact operations and new energy regimes coming into play. This, in turn, will pave the way for a sustainable new energy future which the entire world needs.
SOURCE: NOIA, Government of Canada, CER, Natural Resources Canada
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