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National Observer
11 hours ago
- Business
- National Observer
Newfoundland and Labrador's big offshore gas bet clashes with climate reality
Offshore natural gas is Newfoundland and Labrador's latest pitch for development that it claims will be 'part of the solution to the global path toward-net zero emissions' despite ample evidence that fossil fuels like oil and gas must be phased out to reach climate targets. Last week, the province announced findings from its natural gas resource assessment, which looked at the recoverable volume of natural gas from previously discovered deposits in the Jeanne d'Arc Basin, about 340 kilometres off the coast. The assessment concluded the natural gas resource base ranges from 8.1 to 11.3 trillion cubic feet, and that other adjacent deposits were also discovered. As a comparison, Nova Scotia's Sable Offshore Energy Project recovered two trillion cubic feet of natural gas during its 20-year lifespan, the N.L. government noted. Following the assessment, Minister of Industry, Energy and Technology Steve Crocker said that natural gas is considered a transition fuel and that the discovery could help extend the life of oil projects in the area by justifying the business case. 'In the future, natural gas production may play a crucial role in ensuring that the oil and gas sector continues to support the province's economy and revenue streams,' he said. The oil and gas industry applauded the assessment, calling it a positive step forward for the sector. Energy NL CEO Charlene Johnson said there is already expertise in offshore oil, which could be applied to the development of the gas industry as well. The rhetoric fits into a broader push by the province to significantly expand offshore fossil fuel production. The province is committed to doubling offshore oil production by the end of the decade to even out its struggling balance sheet, which experts say would be a significant blow to Canada's emission reduction targets. The province touts its offshore oil as low-carbon, because extracting oil off the shore of N.L. emits fewer greenhouse gases compared to Alberta's oil sands (which generate 2.2 times as many emissions per barrel than the average crude extracted in North America). However, the claim refers only to emissions during the production phase and ignores those generated when oil and gas is burned, which is the primary source of climate change. And while Crocker and others dub natural gas a 'transition fuel' from fossil fuels to renewables, it is made mostly of methane, which is responsible for approximately a quarter of global warming and is over 80 times more powerful than carbon dioxide (CO2) for the first 20 years in the atmosphere. Natural gas production is a huge source of methane leaks in Canada and the gas also produces CO2 when burned. Offshore natural gas is NL's latest pitch for development that it claims will be 'part of the solution to the global path toward-net zero emissions' despite ample evidence that fossil fuels like oil and gas must be phased out. 'The problem is that when people say we are going to start developing low-carbon fuels, they have no mechanism or control to do that in place of the high-carbon fuels,' explained Memorial University Geography professor, Joel Finnis, referencing the prospect of offshore natural gas. 'In Canada, Saskatchewan plans to ramp up production. Alberta plans to ramp up production. Nobody's talking about ramping down production … that's always left to somebody else.' N.L.'s insistence on developing offshore natural gas — which would take years to reach production — ignores the fact that the world needs to reduce the production of fossil fuels, said Finnis. According to the International Energy Agency, worldwide oil and gas demand is set to peak by 2030, and no new fossil fuel projects are needed for the transition to net-zero greenhouse gas emissions by 2050. 'I suppose you could make a case for closing some fields and opening others, but there is not any system of cooperation in place that would allow that to happen,' said Finnis, explaining that offshore oil and gas isn't replacing onshore fossil fuels, it's just adding to them. '...there's no instance where I can imagine that Alberta is going to say, 'Oh, great, you take over this production. We'll shut down this' — right?' Meanwhile, a 2020 International Institute for Sustainable Development analysis also found that after 2030, global demand for oil will start to sharply decline, and stresses that Canada needs a plan to avoid these big upfront investments becoming stranded assets. Meanwhile, there are signals from the offshore industry itself that these types of projects might not be worth pursuing, said Jim Dinn, the leader of the provincial NDP. One example is the Bay du Nord project, which was approved by the federal government in 2022 but is currently on hold due to cost increases and is still waiting to be sanctioned. He notes that any fossil fuel — including offshore natural gas or oil — produces harmful greenhouse gases when burned. Dinn says the province should be focusing on a just transition away from fossil fuels, but notes that it's been resistant to that framing in the past. In 2022, Dinn put forward a private members resolution asking the province to adopt just transition planning, which was defeated. 'How do we protect our own economy, our workers, the environment?' he said, noting that workers should be supported to transition to working in renewables. 'We've already got a planet that's warming.'
CBC
4 days ago
- Business
- CBC
Bay du Nord FPSO contract will be awarded in months but future undecided, says Equinor
While the future of the stalled Bay du Nord project has yet to be decided, an Equinor Canada representative says there are positive signs for the project's future, including a major contract that the oil giant will award in the next few months. The project's hiatus was announced in May 2023 and at the time, the company blamed "challenging market conditions" that forced project costs skyward. "We are now pretty much ready to select a tier-one FPSO contractor," Equinor Canada's country manager Tore Løseth told reporters on Thursday. Løseth, who was attending the final day of Energy N.L.'s annual conference in downtown St. John's, also reiterated previously announced plans for a phased approach, first launching production in the two most promising fields: Bay du Nord and Cambriol. "We have now a path forward that we think can work. We really hope so. We're not there yet," he said. Equinor says it will make a financial investment decision by 2027 and if it moves forward, first oil would come in 2031. Even without the decision, Løseth says issuing contracts for work is necessary in Bay du Nord's case. "Since this is a complicated project to get across, we need all the good ideas we can have and we need all the experts on board. So this project, we are getting the contractors on board a little bit earlier than we usually do." Løseth says his team has done a lot of work to change the project and it's now stronger, but prices have continued to climb in the last two years. That means additional work with contractors. "I cannot promise you today, but I really hope that we can make it a sanctionable project," said Løseth. 'We'll be shattered' Rob Strong, the founder of Rob Strong and Associates, says much is riding on the project for the province more broadly, adding companies will be "devastated" if it doesn't go ahead. "I think we'll be shattered, basically. We need another project. Yes there's lots of activity and lots of employment and ongoing steady, stable operations for Hibernia, Hebron, Terra Nova and White Rose," he said. "But many companies here in Newfoundland are gearing up for the actual fabrication and the subsea installations." Strong is optimistic the project will ultimately be approved, though he says the company has a tight deadline if it wants to get first oil by 2031. "It's a very tight timeline for three years to finally commit for construction and get [the FPSO] constructed," said Strong. Premier John Hogan, speaking to conference attendees before Løseth's update on Equinor, had a positive outlook on the project's future. "At the first ministers' meeting this week in Saskatchewan I was proud to explain to my fellow premiers and the prime minister the real, substantial, nation-building opportunity we hold here in Bay du Nord," said Hogan. When speaking with reporters, Prime Minister Mark Carney included Bay du Nord on a list of potential projects that could be fast-tracked under a new approval process because of their nation-building importance. Løseth says he appreciates Carney mentioning the Bay du Nord project, but added it wasn't for Løseth to decide if it should be considered a "nation-building project." "We are just focused on delivering Bay du Nord," he said.
National Observer
25-04-2025
- Business
- National Observer
Poilievre pitches doubling offshore oil production and new East Coast LNG
The Conservative Party platform published Tuesday committed to doubling oil production and greenlighting a proposed LNG facility in Newfoundland and Labrador to 'generate another billion dollars in revenue for Newfoundland's economy, and create thousands of new jobs.' The promise echoes the NL government's commitment to double offshore oil production by the end of the decade in an effort to even out the province's struggling balance sheet, which experts say would be a significant blow to Canada's emission reduction targets. This federal election has been dominated by debate over the future of oil and gas in Canada, with the front-running party leaders pitching visions for the country to 'unleash' its resources or become a 'clean and conventional energy superpower.' Western Canada has dominated the conversation, including pitches for new pipelines to get Alberta crude to new markets and LNG export terminals dotting BC's coast. But also important, though far less discussed, is the future of fossil fuels off the East Coast as plans to develop new oil fields continue to swirl. Data reviewed by Canada's National Observer shows new oil leases are about to come up for auction — but whether there will be many buyers is an open question, as is whether leases would ever be developed. That hasn't stopped the politics from factoring into the election. Poilievre's offshore dreams are shared by the province's industry association, Energy NL, which sent a letter to each of the federal parties late last month. The letter highlighted the group's opposition to the federal emissions cap and questioned whether each party leader would support the use of the province's 'lower carbon offshore oil to meet global demand.' In the Conservatives' response, the party highlighted the 'need to get out from under America's thumb' by expanding Canada's natural resources, making the country 'sovereign and self-reliant to stand up to Trump from a position of strength.' Fossil fuel development has been a hot topic, both regionally and federally, in the Maritimes. Now, it's landed in the Conservative Party's platform — a 'jarring' development that has some experts challenging it on an economic and ecological basis. On Thursday, Charlene Johnson, CEO of Energy NL, told St. John's-based radio station VOCM she likes what she's hearing from the Conservatives. 'They answered all the questions with exactly what we wanted, and then some,' she said. 'But again, we're hearing some positive signals from the Liberals too. Not as definitive as we would like to see, not specifically 'the emissions cap is gone,' but I think there's something there to work with.' Offshore oil's potential to diversify Canada's trading partners away from the US was a sentiment shared at the recent right-wing Canada Strong and Free Network conference by former president of the Canadian Association for Petroleum Producers Tim McMillan, now a partner at Garrison Strategy. Speaking to a room full of Conservative supporters, McMillan said Atlantic offshore oil 'has global capacity because it is seaborne.' He said rather than a new east-west oil pipeline, Eastern and Atlantic Canada should produce more oil and gas themselves. 'We could build an east-west pipeline. Would that be the most efficient next pipeline for Canada? Probably no,' he told the room. 'I think that it would be putting a band-aid on a bigger problem when we could be producing very high-value economic resources in our large provinces in Eastern Canada, as well as in Atlantic Canada.' 'A powerhouse in the clean economy' Meanwhile, there is no response from the Liberals on Energy NL's website, and the party did not respond to multiple requests for comment by deadline. Under Justin Trudeau, the Liberals approved Bay du Nord, Canada's first deepwater offshore oil project, which is about 500 kilometres east off Newfoundland's coast. The party has maintained a level of strategic ambiguity around its stance on oil and gas development. The NDP, which did not provide a response to questions from Canada's National Observer on offshore oil in Atlantic Canada, also wrote back to Energy NL. While the Conservatives said they would 'immediately scrap Bill C-69,' which includes the Impact Assessment Act, the NDP said it 'supported Bill C-51, ensuring Atlantic Canada can harness renewable offshore energy, and be a powerhouse in the clean economy.' (The party was presumably referring to Bill C-69, as Bill C-51 relates to the criminal code.) The party did not take a stance either way on the offshore oil and gas industry, and instead said it will work with NL on 'critical minerals, wind and hydrogen, electrification and [carbon capture and storage],' which the province has highlighted as 'key priority areas.' While the other federal parties maintain varying levels of commitment to supporting NL's offshore oil and gas industry, Green Party Leader Elizabeth May says her party is the only one 'that's called forever for a moratorium on any offshore drilling.' She said her party did not receive Energy NL's letter. In an interview with Canada's National Observer, she emphasized how 'extremely incompetent' both NS and NL's offshore energy boards are, both of which are responsible for releasing and rewarding bids for companies to explore the Atlantic for oil and gas deposits. She says both are 'pro fossil fuel organizations … they are mandated in their creation to expand offshore oil and gas.' Meanwhile, the Atlantic Ocean off the coasts of NS and NL is teeming with marine life — leatherback sea turtles and North Atlantic right whales. The area 'is just an ecosystem that cannot tolerate any development,' said May. And while Poilievre says billions will be generated by expanding the offshore industry, May says the International Energy Agency, the IPCC and the World Bank have said that 'no country should be creating any new fossil fuel infrastructure.' The International Energy Agency's most recent forecast shows oil, coal and gas demand peaking before the end of the decade. This scenario, based on world governments' existing policies, still overshoots the global goal to limit global warming to no more than 1.5 C to avoid the worst impacts of climate change. The IEA has repeatedly said that if the world is going to avoid crossing that dangerous 1.5C threshold, there is no room in the global carbon budget to develop new oil and gas fields — a finding squarely at odds with Newfoundland and Labrador's stated plan to double offshore oil production by 2030. New exploration licenses up for bid Data obtained by Canada's National Observer shows 33 exploration licenses for Newfoundland and Labrador and Nova Scotia's offshore will be made available to companies this year, which if developed, would add emissions equivalent to nearly 51 million cars per year over their lifetimes. The figures were originally sourced from the Rystad Database and were included in the International Institute for Sustainable Development's Carbon Minefields Newsletter. Angela Carter, Canada research chair in equitable energy governance and public policy and an associate professor at Memorial University of Newfoundland and Labrador, called those emissions globally significant and dangerous. 'If we want to preserve some amount of climate safety there can be no new exploration, no new fields developed, and indeed existing projects have to be wound down to align with climate safety,' she said. 'There's no room in the global carbon budget for these projects, that's the fact of the matter.' Carter said she is concerned because pro-oil and gas rhetoric is ratcheting up in Newfoundland and Labrador. 'We are still major players when it comes to producing oil. That is important for Canada, for the world and for the climate,' Newfoundland and Labrador Premier Andrew Furey told the Empire Club of Canada in December. 'This is the product the world needs right now, and it would be irresponsible for us not to develop it.' In June, Furey made similar comments at the Energy NL conference, framing the province's oil as 'pipeline-free' and pledging to 'be all-in on oil and gas for decades and decades to come.' 'This is very jarring,' Carter said. Instead of doubling down on oil and gas, she said, the province needs 'an exit plan' from financially volatile fossil fuels — which accounted for 14 per cent of the province's GDP in 2023 according to its most recent budget. Even with no exit plan in sight, the public could be watching the industry's last gasps. Over the past decade two trends have emerged: the offshore regulator has increased the number of exploration licenses up for bid while at the same time, there is a clear decrease in the number of parcels actually being awarded. 'Basically what's happening — not because the board is somehow becoming more careful — it's that firms are not acquiring the lease blocks anymore,' Carter said. On top of that, major fields expected to hold billions of barrels of oil have turned out to not be commercially viable. 'I think we're seeing evidence of firms slowly withdrawing from the offshore here,' she said. 'The exploration that is occurring is coming up dry, and so now [oil proponents] have a lot of aspirations for Bay du Nord,' she said, because if that project proceeds, it would open up a region called the Flemish Basin, which to date has no active oil development. Bay du Nord is a proposed project owned by Equinor that the federal government approved in 2022. The company has not decided whether to proceed with it, after determining there would be major cost increases from its original $16 billion estimate. As part of its goal to improve the economic justification for Bay du Nord, last year Equinor began drilling nearby deposits. In November, Equinor announced it had completed its exploratory drilling without finding significant deposits.
