$38M for Hibernia from oil recovery fund to restart work on rig

·5 min read

The Hibernia offshore platform will get $38 million from the oil and gas industry recovery fund in order to restart work on the rig, create more jobs after a year of layoffs and downturn, and extend the life of the project, officials announced Wednesday.

That $38 million comes from a $320-million fund announced by Ottawa in September to support oil and gas industry workers during this year's economic downtown, as well as reduce carbon emissions.

The government money is about 40 per cent of the cost of the $93-million project, to be paired with a $56-million investment from the Hibernia Management Development Corporation, which manages the platform in Newfoundland and Labrador's offshore.

According to Steve Edwards, president of HMDC, the investment will mean the restart of well work needed for any potential future drilling operations, which were halted earlier this year — resulting in workers being laid off — when the company tried to save money amid plummeting oil prices.

This is not a charitable endeavour. This is a wise investment. - Seamus O'Regan

The investment will also mean HMDC can resume work on rig upgrades to enable the oil platform to access resources under its licence area that are currently inaccessible, while upgrading wireless technology on the rig, Edwards said.

Edwards said the funding will also allow them to maintain employment "that would otherwise go away," while adding 120 full-time-equivalent jobs in 2021 — or 300,000 hours of work over 18 months. The number of jobs by 2022 will be 148.

"It's been an incredibly tough year," Edwards said, adding that he doesn't know the exact number of workers laid off, but the impact "has been significant."

The money will mean jobs as early as January, Edwards said, adding that the work "will continue to ramp up over the next year."

'Not aware of any pending layoffs'

Earlier this month, Husky Energy got $41.5 million from the Newfoundland and Labrador government's oil and gas recovery fund to keep the idled West White Rose offshore oil project going. Husky made an equivalent investment, meaning a 50-50 split to "protect the option of restarting" in 2021.

Days later, dozens of workers at the West White Rose construction site in Argentia received layoff notices.

Husky Energy
Husky Energy

Edwards said he is "not aware of any pending layoffs" for Hibernia.

HMDC has submitted another proposal to the province's oil and gas recovery task force, which decides where the federal monies will be invested, but Edwards said he would "rather not comment" while it's going through the review and evaluation process.

Premier Andrew Furey said this investment of the funding "is the exact intent of this money" but it won't ease the external pressures facing the oil industry on a global scale.

Rather, it's meant to ensure the province's stake in the industry is secure when COVID-19 is under control and the industry rebounds, Furey said.

Government of Newfoundland and Labrador YouTube
Government of Newfoundland and Labrador YouTube

As for other uses of the federal money, provincial Natural Resources Minister Andrew Parsons said at least two or three other proposals are forthcoming, but there's still a year left on the funding.

"There's no rush in having to get it out the door," Parsons said, adding that any haste is self-imposed to "keep people working."

Parsons doesn't expect any more decisions from the fund before the end of the year, but added there will likely be more decisions announced in early 2021.

'This is not a charitable endeavour'

Federal Natural Resources Minister Seamus O'Regan said Wednesday's announcement is "welcome news" as the holidays approach, and while recovering from COVID-19 is the biggest immediate threat to the province's sustainability, "longer term, it's climate change."

"Climate change is real and people are already adapting to it," O'Regan said.

The N.L. government supplied a recording of the announcement Wednesday:

O'Regan also pointed to the funding as an attempt to keep skilled and talented workers in the province.

"This is not a charitable endeavour. This is a wise investment," O'Regan said, adding that the province runs the risk of losing people it needs to retain in order to reduce carbon emissions.

"They are some of the best in the world at what they do in the offshore," O'Regan said.

Hibernia has been producing oil in the province's offshore since 1997. Back then, O'Regan said, he worked for former premier Brian Tobin, and they expected the project would last for maybe 20 years.

"Hibernia is the gift that keeps on giving," O'Regan said Wednesday.

'It's short-term help': PCs

Progressive Conservative Barry Petten, the Progressive Conservative critic for industry, energy and technology, said any support for the struggling oil industry is good, but wonders what guarantees were made.

"Any time there's an investment into our oil industry is good, we support the oil industry and the workers, and I mean it's creating jobs, which is also good, so I won't be negative on that part of it," Petten said.

"But it gives me some other worry. We have other projects that are out there looking for funding, but also the last time they announced money at the West White Rose, we had layoffs the next day."

Petten said the funding doesn't go far enough to secure the industry in the long-term.

"There's the travelling road-show with these announcements of $30 million here and $28 million here, like really what is it about? Is this going to solve our problems?" he said.

"It's short-term help and it helps the people involved right now, but we've got much, much bigger problems."

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