How John Crosbie's influence helped save Hibernia and propel a transformative industry

Submitted by Rex Gibbons

Many agree that John Crosbie's influence in Ottawa in the late 1980s and early 1990s helped pave the way for what some say is his greatest legacy in this province: the Hibernia oil project, and the beginning of a transformative industry.

"I think his legacy is the fact that we truly got a different economy now than we had at any time since Confederation," said Peter Kennedy, retired provincial bureaucrat and leading Hibernia negotiator.

"Without him, we would not have an oil industry. That's my view," added former mines and energy minister Rex Gibbons.

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Crosbie died Friday morning following a long, storied and sometimes controversial career as a politician. He was 88.

He's being remembered for a political career that took him from the chambers of St. John's city hall to the provincial legislature and then the House of Commons as an influential cabinet minister in the Progressive Conservative government of former prime minister Brian Mulroney.

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He's connected to some of the biggest political stories of his era, including the North American Free Trade Agreement and the closure of the northern cod harvest that displaced thousands of fishermen.

But his role in advancing the offshore oil industry was, according to some former politicians, bureaucrats and business leaders, his greatest political achievement.

"Hibernia started the industry, and anything else that has grown from Hibernia is John Crosbie's legacy as well in the development of oil and gas for Newfoundland," said Gibbons.

Inking a Hibernia deal

The pivotal moment came in September 1990, with the signing of the Hibernia development agreement. It was preceded by years of tough negotiations between both the federal and provincial governments and a group of oil companies that were gun-shy about investing billions into an offshore area that was unknown and untested, at a time when oil prices were barely breaking double-figures.

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But after the federal government agreed to billions in grants and loan guarantees, something that was unprecedented at the time, the deal was done, and the ink flowing from the pens used to sign the Hibernia agreement in St. John's would soon be followed by oil flowing from the Grand Banks.

They would not have been secured without a very skilled political leader at the helm, and that in fact was Mr. Crosbie. - Peter Kennedy

Crosbie, as Newfoundland and Labrador representative in Mulroney's cabinet, was influential in the Hibernia talks, which resulted in $1.6 billion in loan guarantees and a $1-billion grant from Ottawa.

"They would not have been secured without a very skilled political leader at the helm, and that in fact was Mr. Crosbie," said Kennedy.

Newfoundland businessman Fraser Edison, who was part of a joint venture that built the Hibernia concrete gravity-based structure at Bull Arm, agrees.

"If you didn't have somebody like John Crosbie, we would have had a big challenge to get that project off the road," said Edison.

So when the deal was signed on Sept. 14, 1990, Crosbie was front and centre. And so was Gibbons, who signed on behalf of the provincial government, along with then premier Clyde Wells.

Gibbons said Crosbie deserves credit for the three producing fields that followed Hibernia.

"His legacy ties into the legacy of Hibernia. And in my view, if Hibernia had not been done, when it was done, I doubt if any of the others would have been done," said Gibbons.

Kennedy, meanwhile, who was the lead Hibernia negotiator for the provincial government, was applauding quietly in the background.

"If you look at all the accomplishments we've made and tally them up, I don't think you'll find any greater accomplishment than the Hibernia project," he said.

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But even after the Hibernia deal was signed, the project was dogged by uncertainty, and nearly collapsed two years later.

Gulf Canada, with a 25 per cent equity stake in the project, got cold feet and withdrew in 1992.

It was fantastic how he convinced them all. - Fraser Edison

"We were the contractor to build the platform itself, and all of a sudden we were informed the project is now stopped," Edison recalled.

Other companies stepped up to fill most of the void left by Gulf, and in the face of harsh criticism from nearly every corner of the country, Mulroney's government agreed to take an 8½ per cent share in the project — with some of the credit due to Crosbie.

"It was fantastic how he convinced them all," said Edison.

"They got it done. So again thank you to John Crosbie," added Gibbons.

A mountain of gratitude

Hibernia turned out to be a very rewarding gamble for everyone involved. The project has produced more than one billion barrels of oil, and counting, and has generated revenues far in excess of even the most optimistic projections. Observers believe the true potential of the offshore industry has not yet been tapped.

Hibernia began producing oil in late 1997, and continues to be a money-maker for the oil companies, the provincial and federal governments, and the hundreds of direct jobs that it supports.

Terry Roberts/CBC

But if Hibernia had failed, say insiders, the province would be a very different place today.

"To say that Newfoundland owes John Crosbie a mountain of gratitude is an understatement," said Rob Strong, a longtime oil industry consultant in St. John's.

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