With the market prices of hydrocarbons soaring, accelerated by the Russian invasion of Ukraine, the federal government is once again extending the deadline for making a decision about the future of the Bay du Nord project off the shore of Newfoundland. Division within the Prime Minister’s Office on this project is certainly one of the factors explaining the always lengthening delay. But this division must not lead to rejection.
The substantial economic benefits of this project are crucial for the population of Newfoundland and Labrador, a province whose unemployment rate is the worst in the country. Whereas the Canadian unemployment rate hit 5.5 per cent in February 2022, the rate in that province was 12.3 per cent. Qualified workers, therefore, want the project to be approved. The importance of the oil and gas sector should not be ignored, as it has contributed 25 per cent of the province’s GDP and 41 per cent of its exports over the past 20 years, making it a key sector for provincial economic development.
For its part, the Newfoundland government welcomes this oil project that would replenish government coffers, and with good reason. The province’s offshore oil royalties fell by $380 million for the 2020-2021 fiscal year due to reduced demand related to government restrictions aimed at curbing the COVID-19 pandemic. This represents a 40 per cent drop in a single year, which certainly had some serious repercussions.
The Bay du Nord project, sometimes characterized as a megaproject, would allow from 300 million to one billion barrels to be recovered, guaranteeing colossal royalties for the province for decades. More precisely, the project’s lifespan is evaluated at approximately 30 years, which would allow workers to continue to pursue their careers in this field for a long time yet rather than using billions of dollars of public funds to retrain in other fields.
Moreover, the province is heavily in debt relative to the size of its economy, with the highest combined debt per person in Canada. Increasing royalties is, therefore, a necessity. The economic emergency Newfoundlanders are living through is unambiguous, and the solution is simple: Ottawa must give this oil project the green light. The Environment Minister’s rejection of this project would represent the abandonment of the population of Newfoundland and Labrador.
Such a decision would be out of touch with reality, given the demand projections for this resource in the years to come. Indeed, according to OPEC, the demand for oil in 2045 will be nine per cent higher than in 2020. The global demand will be there, so why prevent the workers and the population of Newfoundland from supplying it and enriching themselves in the bargain?
Newfoundland’s Bay du Nord a bad investment by Conor Curtis
The Bay du Nord project is an environmental disaster waiting to happen, but it also doesn’t make economic sense
The federal government has to see reality as it is and not fall into the trap of demonizing oil. Because not only would the Bay du Nord project provide undeniable economic benefits, but the Environmental Assessment Report carried out by the Impact Assessment Agency of Canada in August 2021 concluded that it “is not likely to cause significant adverse environmental effects.”
This is to be expected, as oil produced in Canada is subject to a very strict environmental regulatory framework, something that cannot be said for other countries such as Saudi Arabia and Qatar.
There must be no more delaying of the decision regarding the future of this project. On April 13, 2022, Canada’s Environment Minister has to give the population of Newfoundland and Labrador the hope of a better future by approving the Bay du Nord project and giving the province’s economy a shot in the arm.
Miguel Ouellette is Director of Operations and Economist at the Montreal Economic Institute.
Miguel is a Troy Media Thought Leader. For interview requests, click here.
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