What's the Long-Term Health of Newfoundland & Labrador's Oil & Gas Industry?
Learn more about the long-term health of the industry and ways Newfoundland and Labrador can be competitive.

About

The purpose of the Keep NL Competitive campaign is to present the obstacles our oil and gas industry is facing and to challenge all Newfoundlanders and Labradorians to learn more about the industry and work together to help keep Newfoundland and Labrador competitive in the global competition for oil and gas investment.

The Long-Term Health of NL’s Oil & Gas Industry

Let’s Stay Competitive

The oil and gas industry has always had its challenges. This is especially so in Newfoundland and Labrador (NL), where the high costs and high risk of its formidable climate combined with the remoteness of its offshore basins, make it a tougher sell to many investors.

The offshore oil and gas industry has also been struggling in recent years due to a long list of policy and regulatory changes that have added significant cost and uncertainty to investment opportunities. While the industry struggles to deal with these changes, even more changes are anticipated.

Newfoundland and Labrador’s ability to compete for investment may be permanently compromised if governments, regulators, the supply & service community and other players do not work together to try to find a way to improve NL’s competitive position.

CAPP is calling on all parties to work to improve the oil and gas investment climate in the province to ensure that the oil and gas industry can compete with other leading producers on a global scale, not just today but for years to come.

Want to help keep NL competitive?

“We all have a part to play in order to make our industry a sustainable one. That’s the oil and gas companies, the regulator, the provincial government, the supply community.”

Cathy Mandville
Commercial & Joint Interest Manager, Husky Energy

Related Articles

Layering of New Costs

The introduction of new regulations and policy changes that add cost, have an immediate effect on the feasibility of developing an oil and gas discovery. In Canada, a number of new costs have been introduced in recent years and more are expected which makes it more difficult to turn discoveries into operating fields.

Note: Added costs are not ranked chronologically or in order of importance

Continuous Improvement Leads to Competitiveness
Jason Muise, TechnipFMC, and Mike Ryan, ExxonMobil, provide their views on how Newfoundland & Labrador can be more competitive globally.
Continuous Improvement is Critical

Falling Behind Isn’t an Option

It has been proven time and time again that Newfoundland and Labrador’s (NL) offshore oil and gas industry has notoriously long development cycles. How can the industry compete on a global scale when the industry can’t keep pace with other leading offshore oil and gas jurisdictions?

One such example of the competition the industry is facing is Norway. With more than 80 operating fields, Norway has refined new systems and practices to speed up projects, without risking the safety of their workers or the environments they develop. Since 1960, Norway’s average development cycle, from discovery to first oil, is 13 years. How can Newfoundland and Labrador contend when it’s average development cycle is 24 years?

As global competition heats up, development cycles are becoming shorter all around the world. To keep up, the province must address the fact that its oil and gas industry is at risk of falling behind. If the province hopes to attract investors and grow, it must pick up the pace.

That is why CAPP is calling on all levels of government and regulators to work together to improve the efficiency and effectiveness of regulatory processes. The province must look for opportunities to make potential developments more economic and find ways to improve timelines. This issue must be addressed quickly, or the Newfoundland and Labrador oil and gas industry may be left behind in the global competition for investment.

Want to help keep NL competitive?

“Newfoundlanders and Labradorians, have had challenges in the past, and we’ve risen to that. And, I think collectively, we have to do that again.”
Mike Ryan
Vice-President, ExxonMobil Canada

Oil Production World Map

With over 160 countries producing oil and gas resources around the world, Newfoundland and Labrador faces the ongoing challenge of attracting investment to the region because of the stiff competition from places as far away as the North Sea in Norway or eastern Russia.

Competing for Investment in the Global Oil & Gas Industry
Cathy Mandville, Husky Energy, provides her views on competitiveness and how Newfoundland & Labrador can grow its oil and gas industry.
Compete Globally for Investment

The World Needs Energy

The world is growing at an expedited pace. By 2040, the population of our planet is predicted to hit 9.3 billion people. In addition, the global middle class is expected to double. Demand for energy around the world is increasing every year.

Energy stability is more paramount then ever as people rely on more and more energy to sustain their lifestyles. Paired with a rising use of airline travel and shipped goods, global energy demand is expected to increase by 30 per cent in the next 22 years.

Enter the renewable energy market. While renewables will play an integral part in meeting future energy demand, renewables alone can’t meet future global energy needs. Oil and natural gas demand will increase.

As a major energy exporter, Newfoundland and Labrador (NL) has an opportunity. That opportunity is to help meet global demand for energy around the world today and in the future. To do so, the province must do everything it can to make sure our oil and gas projects are competitive and attracting the attention of the world’s oil and gas players.

Want to help keep NL competitive?

“Safe, reliable and environmentally responsible development that attracts investment is a responsibility of operators, but it’s one we share with all stakeholders including governments, regulators, suppliers, contractors and the community as a whole. By working together, we can address competitiveness challenges while strengthening the local supply chain and thereby local benefits.”
Steve Hogan
VP, East Coast, Suncor Energy and Chair, CAPP Atlantic Canada Executive Policy Group

Global Energy Mix From 2016 - 2040

The need for energy is on the rise due to a growing population around the world. Major industries and urban infrastructure are major energy consumers and that’s why global demand for energy is expected to increase by 30% over the next 22 years.

Each Compared to 5,000 Million tonnes of oil equivalent

Source: International Energy Agency 2017 World Energy Outlook, New Policies Scenario

Moving to Performance-Based Regulations
Daryl Attwood, Lloyd's Register, provides his views on performance-based regulating.
Move to Performance-Based Regulations

It’s Time For A New Direction

Currently, the Canadian offshore oil and gas industry is governed by a primarily prescriptive regulatory regime. This means that the regulations and rules that all oil and gas operators must adhere to outline very specific requirements, many of which were developed decades ago and do not take into account changes in technology or the nuances of specific oil and gas installations. The governments of Canada, Newfoundland and Labrador (NL) and Nova Scotia are taking steps to modernize the regulatory framework for oil and gas activity by moving to a more performance-based regime.

While any offshore activity will continue to require approvals by regulators, which involves reviewing detailed plans and management systems designed to protect workers and the offshore environment, a more performance-based system provides flexibility to customize requirements to fit specific environments and installations. By focusing on goals and outcomes that operators must meet, a performance-based regime shines a spotlight on how operators will achieve these milestones. This enables the regulators of the oil and gas industry to determine whether or not goals and outcomes are being accomplished and puts the responsibility on operators to demonstrate how they’re complying. Regulators and certifying authorities will continue to have key oversight roles to ensure performance based outcomes are being achieved.

Adopting a more performance-based regime can reduce inefficiencies, allows operators to keep pace with the competition and implement new technological innovations, while ensuring the industry is keeping people safe and protecting the environment. CAPP applauds this regulatory shift and believes it will help improve the investment climate as oil and gas companies look carefully at a region’s regulatory regime before committing their time and resources.

Want to help keep NL competitive?

“One of the beauties of a safety case approach is that by definition it’s not prescriptive. You don’t tell people how to make their platform safe. You tell people that they must make their platform safe.”

Daryl Attwood
Shell Prelude FLNG Project Director, Lloyd’s Register

Related Articles

Hebron Development Cycle

A variety of factors can influence project timelines. Newfoundland and Labrador’s most recent project, Hebron, took over 30 years to go from discovery to first oil. In today’s world, a long development cycle is becoming less attractive to oil and gas companies because of the length of time it takes to get a return-on-investment and the risks involved.

Credits

What's the Long-Term Health of Newfoundland & Labrador's Oil & Gas Industry?
Stephen Lush, Voiceover Artist
Continuous Improvement Leads to Competitiveness
Mike Ryan, Vice President of Operations,
ExxonMobil Canada
Jason Muise, General Manager,
Subsea Canada, TechnipFMC
Competing for Investment in the Global Oil & Gas Industry
Cathy Mandville, Commercial & Joint Interest Manager, Husky Energy
Moving to Performance-Based Regulations
Daryl Attwood, Shell Prelude FLNG Project Director, Lloyd’s Register

Ask a Question

Do you have a question about Newfoundland and Labrador’s offshore oil and gas industry? The goal of this website is to provide insightful information about NL’s offshore industry and your question may be the basis for a new video or article. So ask away!