The owner of the largest offshore oil exploration bid in the history of Newfoundland and Labrador is set to abandon its plans — even though that means it will pay a hefty financial penalty.
According to a report from news website allNewfoundlandLabrador, Australian petroleum company Woodside Energy has dropped plans to drill in the Orphan Basin, located northeast of Newfoundland, and moved key employees out of the province.
In 2018, BHP Billiton won two parcels totalling $822 million, including a record single bid of $621 million. At the time, Natural Resources Minister Siobhan Coady touted that year's record bids as evidence of continued growth of the offshore oil industry. In June, BHP announced its oil and gas business would be merged with Woodside.
CBC News has asked Woodside Energy for comment.
In an interview with CBC News, provincial Energy Minister Andrew Parsons said the news was disappointing, but after the merger between Woodside and BHP, it wasn't a surprise.
"They've made a strategic decision that this is not where their interests lie," he said.
Parsons said he met with representatives BHP prior to the merger, but hasn't had discussions with Woodside about the decision to abandon exploration. He said there's nothing the provincial government could have done to make the company stay.
"We're going to continue to move onwards and we're going to find some silver linings out of it."
Parsons said when companies choose not to move forward with offshore exploration, they're required to forfeit about 25 per cent of the value of the bid. He said Woodside will now have to forfeit just more than $200 million to the provincial government.
"This will be a significant sum, and we're going to look at it internally," he said.
Climate scientists and the Intergovernmental Panel on Climate Change have called for an end to fossil fuel exploration around the world, but the Newfoundland and Labrador government has not indicated it intends to stop offshore exploration.
Parsons said Woodside's decision shows the volatility of the oil industry, but he's still optimistic about future exploration.
Premier Andrew Furey declined an interview request.
While speaking with reporters on Wednesday, interim Progressive Conservative Leader David Brazil said Woodside's decision is "alarming."
"It's going to mean the loss of billions of dollars potentially to our revenue coffers here, and thousands of jobs lost for Newfoundlanders and Labradorians who are relying on this industry," he said.
Brazil said he doesn't know why Woodside pulled out of Newfoundland and Labrador but he wants the provincial government to find out.
"There's some questions here that need to be asked and answered by the government, provincially and federally," he said.