Newfoundland and Labrador needs to chart a future away from its offshore oil industry to avoid a "chaotic crash out," says the author of a new book about Canada's oil-producing provinces that sounds alarm bells about what lies ahead.
Fossilized: Environmental Policy in Canada's Petro-Provinces dissects Alberta's, Saskatchewan's and N.L.'s oil and gas industries, with author Angela Carter — a Newfoundlander whose father worked in the offshore — examining their environmental track records and looking at how prepared, or not, those provinces are for a world rapidly shifting toward greener priorities.
"We've got to make a plan for managing the wind down of the sector. If we don't create a managed decline plan, we are going to have a chaotic crash out, and it's going to be really painful for the people in this province, and the governments that we're depending on to try to bring us services," Carter said in a recent interview with CBC Radio's On The Go.
In many ways, chaos has defined the sector's past year, with 2020 feeling like a constant scramble to find footing on a storm-slicked ship's deck.
There's been a global price war, pandemic-related upheaval, layoffs and stalled projects. As awful as 2020 has been, the year's unpredictability could be a harbinger of what's to come for the offshore, warns Carter.
"The coming decade is likely to be very difficult," Carter writes in her book.
Carter, a University of Waterloo professor originally from Conception Bay South, splits her time between Newfoundland and Ontario. Several of her family members work in the oil industry, and she dedicated Fossilized to her father, who was a pipefitter in the offshore and helped build the Terra Nova platform.
That vessel went into service in 2002, and 18 years on, a lot has changed.
Speaking to CBC, she said the time is now to take a hard look in the mirror, as economic and environmental signs grow ever stronger of a swifter shift away from fossil fuel production.
"We have based our economy and we've staked our future on an industry that is no longer consistent with climate stability. We are at a really risky place right now," she said.
Rewind to the Nineties
While thoughts of transition may be trickling into the provincial government's consciousness — and we'll get to that — the offshore oil industry, as Carter points out, has had overwhelming public sector support, despite strong signals elsewhere of changes ahead.
Take 1997, for example.
The Hibernia platform's production began to great fanfare in November of that year — complete with toasts and streamers the day oil first flowed. That came just weeks before the Kyoto Protocol dominated global headlines with its signing on Dec. 11. (Canada signed on, and later dropped out of, the Kyoto agreement to reduce CO2 emissions.)
"This is really telling and I think it's really important to think about that, that moment," Carter said of the offshore's kickoff just as countries began to attempt collective action against climate change.
VIDEO: From 1997, see how the 'first oil' discovery at Hibernia was celebrated in St. John's:
In the years following, oil revenue buoyed provincial coffers and signs of prosperity popped up, from new restaurants to infrastructure investments to the coveted status in 2008 as a "have" province — that is, joining the ranks of provinces that no longer received equalization payments.
While the cash rushed in, Carter says it's been a trickle compared to other jurisdictions' royalties.
"This is very complex and economists themselves will argue over this. But Newfoundland and Labrador, when you compare what our take is —what we get out of the sector compared to other countries, and Norway is a premier example — it is much less," she told CBC, pointing to statistics that show Norway earns as much as 72 per cent of the value of its extraction efforts, compared to N.L.'s 16 per cent.
The initial boom's blush has certainly faded, but one thing has been a constant: Carter says offshore environmental initiatives to regulate the offshore were, and are, slim.
The word "dearth" comes up a lot in her writing about the provincial and industry environmental policies, from a "dearth of protections for marine areas," to a "dearth of environmental expertise" on the industry regulator's payroll, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB).
Carter notes between 2005 and 2015, "Newfoundland had the largest share of emissions originating from large industry" among the provinces, and that provincial emissions policy was crafted "in close, frequent consultation" with industry players.
To extract, or not to extract
Newfoundland and Labrador's oil is often touted as being one of the least carbon-intensive in the world — a metric that looks at the amount of emissions created just to bring it to market — a claim that stands up in scientific analysis.
It's gut-wrenching, what's happening. - Angela Carter
So, industry and politicians argue, it should continue to be sucked up from beneath the ocean's floor and sold as the world transitions, even as all three of the province's parties pledge to reduce emissions (a pledge that excludes the offshore's contributions to the atmosphere.)
The desire to develop disregards volumes of information from scientists about how the majority of the Earth's fossil fuels need to stay in the ground to keep global temperatures from rising beyond a point of no return, she says.
"This is a really, really hard message for oil-producing places like Newfoundland and Labrador," Carter said, adding this message about extraction is circulating globally.
"Two thirds of the reserves that we know were out there, we cannot extract them. We definitely need to stop looking for more."
Investors losing interest
If that environmental message is hard, the economic one may be even harder.
In 2019, the province pledged to double offshore production by 2030 and get into the natural gas game. But even before the halfway mark of 2020 hit, a top oil exec said that 2030 goal was "extremely jeopardized" by recent events. Just weeks ago, with 17 exploration bids up for grabs, only one was claimed, creating disappointment in the local industry.
"They are trying to hold on to their right to extract. But all of the justifications for doing so are being undermined, and radically so, actually, by the month," said Carter.
The interest isn't just dwindling in North Atlantic oil — 2020 is the most dismal year on record for Alberta oilpatch drilling.
And that isn't all due to environmental pressures on the industry, as the world of finance shows increasing distaste for fossil fuels: BlackRock, the world's largest asset firm that manages $7-trillion in funds, announced at the start of 2020 it was pulling out of coal investments and would use climate change to dictate decisions going forward.
Why? Clients are asking for it.
"We are at a really new moment in human history," said Carter.
BlackRock's is a big move, but it isn't the first, nor the last. With a change in leadership in the United States signalling a shift toward more climate-friendly policies, Carter says there's more change to come.
"The question then for Newfoundland and Labrador is, are we going to be a part of this great global transition away from fossil fuels toward low carbon and green energy? Or are we going to be left behind and not able to keep up with what's happening in the world around us?" she said.
LISTEN | Political scientist Angela Carter outlines her thinking to CBC Radio's Ted Blades:
Those questions are on others' minds, like those at the Newfoundland and Labrador Environmental Industry Association (NEIA) who are working to grow a green economy in Newfoundland and Labrador.
But the head of that non-profit group said there are huge opportunities with hydroelectricity and other renewable energy sources — if transmission out of the province can be improved, perhaps via the Atlantic Loop concept that the federal government is floating — but realistically, offshore oil needs to be part of the transition conversation.
"I think that to close the door on any one industry would be irresponsible," said Kieran Hanley, NEIA's executive director.
Hanley notes the offshore has innovated to reduce its carbon footprint, and his group has worked with the industry on such initiatives as a recent knowledge-gathering trip to Norway to keep tabs on initiatives that might be applied back home.
"I think that everyone has a role to play as we pursue emissions reductions. And the mix of skills, resources and capital that exists in oil and gas are really such a benefit as we look to other industries that we want to develop in pursuit of that energy transition," he told CBC News.
Amid layoffs, what's next?
The capital that Hanley describes is key in a province where the words "cash-strapped" hardly do justice to Newfoundland and Labrador's fiscal problems.
We're staring down a near-record deficit set for 2020, the pandemic has decimated tourism and other economic engines, and oil revenues continue to provide 30 per cent of the GDP, playing a major role in keeping us barely afloat.
Added on top is the pain of layoffs in the offshore sector, with people losing high-paying jobs they trained for and hoped would provide long-term stability in a province where so many have had to go elsewhere.
"It's gut-wrenching, what's happening," said Carter.
Take oil industry arguments that it's a job creator with a grain of salt, she said, as between 2014 and 2019, it shed a quarter of its jobs, Canada-wide.
"In good times, workers are considered costs to be shed by companies to save money. Where the industry can automate, they will in every case, prefer to have a machine than a worker," she said.
But well-trained workers are an asset, and as Memorial University and the College of the North Atlantic have honed programs to support the offshore, so too she says could they pivot to retraining programs and green economies.
"Since the 1960s, we've been giving public money to the oil and gas sector. Now we need to turn all of that effort and that money towards a green and just transition," she said.
The talent to transition
This has been happening elsewhere for years, Carter argues, and it's time to play catchup.
"We could have been doing that, but we haven't. So now we are a little bit late to the party, but we still have an opportunity here," she said.
Carter urges the premier's economic task force, an initiative announced this fall, to consider that opportunity.
There are signals that that committee may be up to the task. Its membership includes entrepreneurial heavyweights like Verafin CEO Brendan Brothers and Shorefast Foundation CEO Zita Cobb, who represent successful innovation in the tech and sustainability sectors, respectively. (Verafin's success was affirmed last week in a multi-billion dollar acquisition by Nasqaq.)
Moya Greene, who chairs the task force, spoke publicly in early November about the need to transition, and swifter than we have in the past.
While the province can do its part to enable innovation, NEIA sees people and private industry — like Mysa, the smart-thermostat company based in St. John's that has become another clean tech success story, as well as the province's first carbon-neutral business — leading the charge for change.
"I think that's what's going to fuel the transition. It's people who are able, and willing to do, what is required to move the needle," Hanley said.
But the raw materials are there, Hanley said, with ample natural renewable resources that could provide a template for the rest of the country, if taken advantage of.
"What we do here tells the story of Canada's approach to energy transition," he said.
Both Hanley and Carter agree any departure from fossil fuels will take planning, and time.
That's something scientists warn is in short supply.
Report after scientific report shows an increasingly warming world within most people's lifetimes, such as one released in September that found the globe may exceed a temperature limit global leaders set sooner than expected — within the next decade or so — adding another layer of urgency to the challenges that lie ahead for this little province in the North Atlantic.