“Supporter Spotlight” features Canadians with a passion for Canada’s Natural Resource sector. Our spotlight this month is Charlene Johnson, CEO of NOIA (Newfoundland and Labrador Oil & Gas Industries Association). Charlene talks to us about the importance of oil & gas for our communities, economy and environment.
1. Canada Action: Charlene, thank you so much for taking the time today. You are CEO of the Newfoundland and Labrador Oil & Gas Industries Association, the largest offshore oil & gas industries association in Canada. You studied at the University of New Brunswick, where you were awarded a Bachelor of Science degree in Forest Engineering and also obtained a Masters of Applied Science degree in Environmental Engineering from Memorial University of Newfoundland. How did you get into the oil & gas space?
Charlene: I used to work in government and during my time there it was very obvious to me how important the natural resource sector is to the province both from an economic and social perspective in terms of the revenues and how they are used to help support our social programs. So I was very keenly aware of it when I was in government.
I then left government and lived in a country that was very dependent on oil; Brunei. 95% of the GDP came from oil so I was surrounded by it there and I always kept a close eye in terms of what was happening in our province and this opportunity came up for this job.
When I read the job description it was just an opportunity for me to help give back to the province and advocate for an industry that’s so important to our province.
2. Canada Action: Newfoundland and Labrador are home to several offshore installations. Although the oil and gas industry has not existed in Newfoundland and Labrador for very long, it is a key component of the provincial economy. St. John's is the commercial hub of Canada's offshore oil industry and since offshore production began in 1997, 1.7 billion barrels of oil have been produced and the industry accounts for 25% of provincial GDP and 41% of exports over the past 20 years. Newfoundland and Labrador is producing 25% of Canada's conventional light crude. There are currently three offshore oil-producing projects; Hibernia, White Rose and Hebron. How important are offshore projects for Newfoundland and Labrador
Charlene: Extremely important to our province; 25% of our GDP and 41% of total exports are a result of our projects. These three producing fields have brought in 20 billion dollars in offshore royalties to the provincial government since 1997 and there has been 63 billion dollars worth of expenditures in just the petroleum sector alone.
So of course with all those expenditures there are tremendous spin-offs. Significant contributions to research and development - 600 million dollars has been spent in the province on research and development and 24 thousand people either directly, indirectly or because of induced spin-offs are employed in the province.
The most recent numbers we have are for 2017 and 2 billion dollars worth of labouring income in that year alone came from this sector. So for a province of a little over 500k people with about 225k working people, 2 billion dollars worth of labour income is certainly significant. And of course, when people are having that sort of income they are spending into the economy.
So in 2017, 1.4 billion dollars of consumer spending was attributed to the oil & gas sector. There have been reports that have come out recently about the financial situation of the province so while it has been very historically important, going forward we need it even more so to help bring finances to the province.
This industry started up at a time when it was a very crucial time for our province because we were suffering from the closure of the cod fishery back in 1992 and the offshore industry at that time offered a lifeline and you saw many people getting retrained and finding employment in the offshore sector.
3. Canada Action: A quick google search will generate thousands of pages that are against offshore drilling, yet I am 100% certain that technologies have evolved and offshore drilling - just like all other extractions of natural resources - isn’t what it used to be. What are some of the misconceptions about offshore installations?
Charlene: Our industry here has a tremendous international reputation, particularly around safety and the environment. Those who work here know what is required to operate offshore. We have a very harsh weather environment; high sea states, icebergs and so on.
We often hear from folks who work in the North Sea or the Gulf of Mexico and they mention that they thought the work there was unique and challenging but then they come to work in the North Atlantic! So I think the people who work in our offshore enjoy what they do and the contribution that they make to the province. They provide good livelihoods for their family and they give back to their communities.
Our offshore installations are extremely safe and have strident environmental practices and that's just not for offshore Newfoundland Labrador. I think Canada overall when it comes to our oil and gas sector we rank very high when it comes to environment, social rule of law, regulatory regime. I think that's one of the misconceptions. We need to do a better job of talking us up.
It would be to the world's advantage to have oil come from a place that ranks so high when it comes to environment and safety.
4. Canada Action: Newfoundland and Labrador’s first offshore installation ceased drilling operations late last spring and layoffs of contractual drilling personnel began in June. Terra Nova has not produced oil since December 2019. Husky also stated that first oil would be delayed by a year, to 2023 and construction season for the West White Rose project was cancelled. COVID-19 and the drastic decline in oil prices has had a devastating impact on the offshore oil & gas industry. It has clearly been a rough year. What are some of the challenges that the offshore oil & gas industry faces?
Charlene: Yes - you just named pretty big challenges! Unfortunately, there were others. The refinery here has closed and the future is still uncertain and there were exploration projects that have been delayed. Drilling has been stalled at Hibernia which of course you need drilling to find future oil for production. Terranova's future is uncertain, West White Rose is on hold and Bay du Nord, which is the Equinor project, has not been sanctioned yet and has been delayed with the pandemic. So numerous challenges!
Many of these challenges have been laid out in two recent reports that were issued in the province both in the last 2 weeks actually. The oil and gas industry recovery task force report and the Premier’s economic recovery team report. These reports clearly state the restrictive regulations that are hampering our global competitiveness and the economic recovery report specifically talks about how we are in danger of missing a window of opportunity to develop our offshore resources. The report also spoke about how important it is to have the necessary support from all levels of government and it spoke to the need for the establishment of an entity to leave the development of our industry.
So marketing exploration development - similar to entities that you see in Norway and UK offshore Industries. In the economic recovery team report which was led by Dame Moya Greene, she states that the offshore oil and gas industry is foundational to providing significant revenue to the province and she actually said that if we don't act now we will strand a tremendous amount of resources and financial benefits.
So we really need our elected officials to support the industry, help it grow, help it prosper and I would see that as one of the biggest challenges going forward.
5. Canada Action: According to the Canadian Natural Resource website, the Emissions Reduction Fund provides support through the economic impacts of COVID-19. The $75 million offshore investment will help Canada meet its environmental commitments, rebuild the economy, and create a lower carbon economy, especially towards reducing greenhouse gas emissions (GHGs). On May 26, the Government of Newfoundland and Labrador announced its commitment to achieve net zero emissions by 2050 in a letter to Prime Minister Justin Trudeau. When we talk about a green future, what can we look forward to from the offshore oil & gas industry?
Charlene: Well certainly NOIA and our members have long been supportive of helping our industry further reduce its carbon emissions. I’m really confident in the ability of NOIA members to be part of the net zero pathway and to help our province, our country and the world achieve net zero. So a lot of the skills are transferable from our service and supply sector to other forms of energy.
Even over the past year NOIA has been working with the Newfoundland and Labrador Environmental Industries Association and we've been collaborating on establishing a pathway to net zero so this has been a keen focus for both of our associations and really collaboration is imperative as we go forward.
Our offshore oil, as you may know, has a lower carbon footprint at extraction than the global average and we’re certainly aggressively pursuing other ways that we can further lower those carbon emissions but between both associations we are looking at measures such as electrifying offshore facilities with power from shore using hydro or using offshore wind as a power source to power the platforms.
We are planning to keep studying these and other opportunities and other possibilities to help us achieve net zero. We did release reports on both of those and it shows that both are technically feasible but now we need to hone in and do some further more detailed research.
The emission reductions fund that you mentioned does play an interesting role in the work and I certainly look forward to seeing the results of some of the work taking place from the recent funds that were announced; there were 16 projects totalling over 24 million dollars recently and some NOIA members received some of that funding.
One example is Atlantic Towing. They've been funded to do a battery hybrid retrofit of one of their supply vessels that go to the offshore rigs so it's a first-in-kind integration of multiple battery technologies and it will integrate spinning reserves and all-electric transit on a multifunctional offshore supply vessel. So looking forward to watching the results of that over time. There are two components to the emission reduction fund. One was that it is non-repayable and the other was interest-free loans. So good to see this fund and the province has a fund as well so hopefully they'll be projects announced soon.
So there are things that are happening in every aspect both on the platforms and all throughout the supply chain to always focus on lowering the carbon footprint. There are plenty of opportunities going forward to lower the already low carbon footprint.
6.Canada Action: What does the future hold for the offshore industry in Newfoundland and Labrador? Are there any new technologies we can look forward to?
Charlene: I see companies looking at things like electrifying cranes, the crane operations on the platform or companies that supply lighting to the offshore platform. The supply vessels have significantly reduced the carbon footprint of those lights and of course, it’s not only beneficial for the environment but there are cost savings to be found there as well.
The companies in the supply chain are transforming how they power their own warehouses with geothermal heating… It doesn't have to be big transformational changes. Every little bit counts and we're seeing a lot of that in the supply chain.
7.Canada Action: NOIA often shares the hashtag #myoffshoremyfuture. How important is advocacy for the oil & gas industry?
Charlene: It's extremely important because we must ensure that policymakers and decision-makers understand the industry, its importance and the role that it can play in our future. Energy mix is critical.
NOIA has advocated for the industry and it's mainly what we do here. It's a big component of what we do, in particular in the past 18 months and it became really clear that many policymakers do not really have a true understanding of the importance of the industry. It's also important to our advocacy that we showcase our abilities and what we have to offer even to the international industry.
We do have tremendous support throughout Newfoundland Labrador and that has been demonstrated through yearly polling that we do, but we do need to keep illustrating why our resources should be developed, how it’s helping our people and our communities and how it can help Newfoundland and Labrador’s finances.
So advocacy is a key component for education and awareness.
8. Canada Action: Why do you think all Canadians should care about Canadian natural resource development? Is there any kind of message that you want to tell Canadians reading this?
Charlene: They should care for a number of reasons. One is energy security and energy supply.
Back in 2019, 19.8 billion dollars worth of oil was imported into Canada for our uses. So having our own energy security and not being dependent on other countries is something that could become an issue in the future and something that we should be aware of.
Again as I mentioned earlier the oil that is produced in Canada is done so in very high environmental standards, very high safety standards. There is a lot of discussion on the transition - and yes a transition will happen - but a transition takes time and while the demand for oil continues I think it's important that we talk about having that oil come from Canada.The last barrel of oil should come from Canada because of all those reasons.
9. Canada Action: Is there anything else you would like to share with our readers?
Charlene: Yes. To continue on about the transition. I think it's not an issue of either-or. It's not oil and gas or renewables. I think we need all forms of energy to provide for the demand that we as consumers have.
It has been a very challenging time both on the east coast and on the west coast and again, advocacy is so important to ensure that our policymakers and decision-makers understand the importance of this industry. But you know I do feel that there is optimism in our future going forward. Certainly, the price of oil is better today than where it was even a year ago.
We do have some exploration happening offshore right now. The biggest reason for hope in our offshore is that we have 60 billion barrels of unrest oil and that’s in only 7 or 8% of the offshore that's been explored so tremendous opportunity there. Hopefully, as I mentioned earlier, Bay du Nord will be sanctioned soon so that will be another producing platform providing all benefits in terms of jobs, royalties and taxes to the province.
We have six exploration programs that have already been through the environmental assessment process so that could be dozens more of exploration wells that will be drilled in the coming years and of course, everything starts with exploration; that's how you get to production.
So lots of challenges but lots of reasons for optimism too.
Canada Action: Charlene it’s been a pleasure. Thank you so much for your time today.
Charlene: Thank you!
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