Way Forward Commitment:
The oil and gas industry is very important to our province’s economy, making up 25 per cent of our GDP and accounting for 41 per cent of our exports over the past 20 years. Through Advance 2030: The Way Forward on Oil and Gas, our government is working with oil and gas partners to promote the development, competitiveness and sustainability of the industry in this province. We have set a number of long-term targets, including the direct employment of at least 7,500 people in operations and the drilling of over 100 new exploration wells by 2030.
Our government knows the potential of our undiscovered and undeveloped oil and gas reserves. We will leverage our globally competitive position and our highly competent and professional workforce to double production to over 650,000 barrels of oil per day by 2030. To support the achievement of this goal, in 2018-19, our government is transitioning the oil and gas subsidiary of Nalcor Energy to a stand-alone Crown corporation with a mandate to accelerate the growth of the oil and gas industry.
Our government will also enhance Newfoundland and Labrador’s regulatory framework by implementing a Generic Offshore Oil Royalty Regime and regulations.
Our government will also complete an assessment of the province’s benefits and equity arrangements to align with vision goals by March 31, 2018. Also in 2018, we will complete a review of international regulatory standards to identify opportunities for enhancement.
What We’ve Accomplished:
- Chaired by the Minister of Natural Resources, the Oil and Gas Industry Development Council was appointed on December 21, 2016. Since then, the Council has held regular meetings, provided strategic advice and has been involved in stakeholder consultations to develop a vision, set goals and identify key focus areas, actions and timelines.
- On February 19, 2018, the Provincial Government launched The Way Forward on Oil and Gas: Advance 2030. The 17 immediate, mid-term and long-term actions areas outlined in the plan focus on accelerating exploration drilling and fostering a culture of collaboration and entrepreneurship that will increase our global competitiveness, drive innovation and supplier development capabilities, and reduce the time from prospectivity to production. Implementation of the actions is progressing with oversight from the Oil and Gas Development Council.
- Government has also approved implementation of the Generic Oil Royalty Regime (GORR) and regulations. These regulations were published in the Gazette on November 1, 2017 and apply to future offshore oil developments. The new regime provides fiscal certainty, transparency, predictability and stability to companies looking to invest in offshore exploration and development and provides an appropriate balance of risk between developer and province as resource owner. It also provides future developments with a simplified approach to royalty calculations, a more progressive system that accounts for changes in costs and oil prices, and reduced legal and audit costs.
- On July 26, 2018, the Provincial Government signed a framework agreement with Equinor for the development of the Bay du Nord project with first oil anticipated in 2025. The project holds reserves of nearly 300 million barrels of oil and opens a new basin offshore NL – the Flemish Pass. It also represents our first offshore project in deepwater with R&D/E&T expenditure commitments to position the province as a centre of excellence for deepwater oil and gas development. Key economic benefits during construction and operations include: 11,000 person years of employment, $3.5 billion in government revenues (royalties, taxes and 10% equity) and $14 billion in economic activity. The project holds reserves of nearly 300 million barrels of oil and opens a new basin offshore NL – the Flemish Pass. This is the first project to be negotiated under Newfoundland and Labrador’s generic oil royalty regulations.
- On September 19, 2018, the Provincial Government launched the Innovation and Business Development Fund (IBDF). The IBDF will provide $60 million in funding over 10 years to strengthen and diversify NL’s oil and gas supply and service capabilities.
- On October 16, 2018, the Provincial Government signed an MOU with the Government of the Cooperative Republic of Guyana to further our respective oil and gas industries.
- On October 26, 2018, the Department of Natural Resources launched a Virtual Data Room to provide information on the province’s prospectivity to offshore oil and gas explorers.
- On November 8, 2018, a record $1.38 billion in exploration licence bids were received including a record single bid of $621 million from BHP Billiton, a new entrant in the NL offshore.
- Strategic investments in offshore petroleum geoscience continues to attract exploration investment. In November 2018, the CNLOPB received record bids of $1.38 billion and a record single bid of $621 million. In total, more than 650 leads and prospects have been identified and more than 20 basins mapped. There have been eight new entrants in the past three years and outstanding work commitments total $3.9 billion with significant drilling planned over the coming years.
- A Request for Proposals is currently being developed to conduct studies regarding international standards/best practices regarding fallow field initiatives and third-party access to infrastructure.
- On March 11, 2019, the Provincial Government introduced legislation to establish a new corporation focused on maximizing opportunities for growth in the province’s offshore oil and gas industry. The introduction of a separate oil and gas corporation will enable Nalcor Energy to focus on its core business.