Page 5 - NorthAmOil Week 16 2021

NorthAmOil COMMENTARY NorthAmOil

Newfoundland and
Labrador’s future as
an oil producer looks
increasingly uncertain.

in the US – is expected to lift most of its restric- closed at the start of 2021.
tions this summer, though the latest news from Cenovus is now carrying out a review of West
Washington suggests cases there are rising White Rose, an extension of the producing
again. White Rose field that would have peak capac-
While the impacts of this are temporary, ity of 75,000 bpd of oil. The possibility that the
the shifts are resulting in growing volumes of project could be scrapped altogether has been
unsold crude in the Atlantic Basin. The trend raised.
is being exacerbated by seasonal maintenance Other projects such as Equinor’s Bay du Nord
taking place at various refineries across Europe discovery also remain uncertain, though the
and Asia – typically the buyers of Atlantic Basin Norwegian company says on its website that it
crude. expects to take a final investment decision (FID)
“The Atlantic Basin imbalance and continued on developing Bay du Nord in 2021.
lockdowns in Canada are creating a temporary Meanwhile, Newfoundland and Labrador’s
crude market dislocation,” Rapidan Energy Lieutenant Governor, Judy Foote, talked in
Group’s director for global oil service, Zachary a speech last week about investing in “growth
Rogers, was quoted by Bloomberg as saying. industries” that will eventually replace the ailing
“Even faraway refiners would buy it at the right oil and gas sector.
differential.” “This green transition will drive the economy
Bloomberg also cited Jefferies’ senior with clean growth,” Foote said. “Newfound-
vice-president of equity research for energy land and Labrador will bring its surplus energy
maritime, Randy Giveans, as saying that East- – clean energy – solutions to help its partners
ern Canadian oil was travelling further to find across the federation meet their global climate
a buyer. He added that sellers would have dis- objectives.” The oil industry
counted prices to offset the extra cost of the long Despite the accelerating pace of the energy
journey via the Panama Canal. transition and a push for economic diversifica- remains
tion, however, the oil industry remains impor- important to
Longer-term outlook tant to Newfoundland and Labrador, given the
Newfoundland and Labrador is Canada’s main jobs and royalties that flow from it. Recently Newfoundland
oil production region outside Western Canada, re-elected Newfoundland Premier Andrew
accounting for around 6% of the country’s total Furey has supported using taxpayer money as and Labrador,
output in 2019, according to the CER. All of its incentives to keep oil companies active. His
five producing projects – as well as undeveloped government has also expressed hopes that the given the jobs
discoveries – are located offshore. dormant Terra Nova field will go back into pro- and royalties that
The province’s future as an oil producer duction, and that drilling will resume again at
looks increasingly uncertain, however, as Hibernia. flow from it.
Canada raises its targets for reducing green- On the demand side, it will be interesting to
house gas (GHG) emissions, while operators see how patterns play out in a post-pandemic
remain hesitant about making major new world. It seems unlikely that Eastern Canadian
investments. Indeed, construction on the West crude will be in high demand in faraway loca-
White Rose project offshore Newfoundland tions if more economic options are available.
and Labrador was stalled by the pandemic last However, the current shipments of Eastern
year, with the project’s future thrown into fur- Canadian oil to the US West Coast show that
ther doubt when operator Husky Energy was surprises are still possible, even if more normal
acquired by Cenovus Energy in a deal that patterns resume in the longer term.™

Week 16 22•April•2021 www. NEWSBASE .com P5