The Husky gambit last week presents the province’s leaders with a fundamental challenge. Do we continue on the current path or do we change? This is not just a question of oil development versus some nebulous, pseudo-intellectual gibberish called “decarbonization”.
It is the question from 1984: who will control the Newfoundland and Labrador offshore and with it the future of the province itself?
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Husky is in such serious financial trouble that the company is thinking about walking away from established, profitable fields offshore Newfoundland and a project to expand one of them that is already more than halfway to first oil.
That is
precisely what the company announced last week.
In a statement,
the company said that delays in the West White Rose project caused by COVID-19
and what the company described as “market uncertainty” left it “no choice but
to undertake a full review of the project and, by extension, our future
operations in Atlantic Canada.”
What is most
striking about the statement is that Husky acknowledges all the reasons why
White Rose and the extension project are attractive financially now and in the
future: the field produces “light crude
oil at low incremental cost and with lower greenhouse gas emissions intensity
than other North American crude oil projects.”
In comments
to media, Husky CEO Rob Peabody said
that the project’s fundamentals remained attractive.“
The common local reaction to this news was, in every respect, predictable. The local oil industry association, headed these days by former finance minister Charlene Johnson, wants the federal and provincial governments to spend unlimited billions in tax incentives and bailouts to prop up the industry at the levels before the market down-turn that started before COVID hit.
