World Oil editorial: Newfoundland and Labrador province inexplicably ceases seismic funding

Sooner or later in this type of job (editor), even the few governmental officials that you thought were good will eventually disappoint you. Such is the case with the provincial government of Newfoundland and Labrador (NL). On Jan. 6, 2022, the Newfoundland and Labrador Oil and Gas Industries Association (Noia) put out a statement, saying that it had “recently learned that the Government of Newfoundland and Labrador is not allocating funding for the 2022 offshore seismic program and as such, the program will cease for this year.” This news sent shockwaves throughout the province and into the global E&P industry.

Provincial officials’ math is faulty. As Noia CEO Charlene Johnson noted on Jan. 6, “A benefits study required by the seismic program proponents shows that in 2020, over 125 Newfoundlanders and Labradorians were employed by the seismic program, resulting in millions of dollars in wages, while an additional 45 other Canadians were also employed.....The seismic program generated approximately $17 million in spending in [NL] and roughly $1.4 million in the rest of Canada.” She said this [NL] spending included “over $1 million for services, such as medical care; mammal, seabird and weather monitoring; $685,000 for hotel accommodations and $144,000 in freight storage and import/export. That is significant revenue lost to Noia members this year, including in rural areas of the province, where a lot of the service and supply work for this program occurred I call upon the Government of [NL] to keep its commitment to continuing the seismic program for this year and beyond. It is not too late to reverse this decision and continue a program that has provided significant benefits to our province.”

Indeed, the seismic program operated by PGS-TGS and coordinated by OilCo has been ongoing for over a decade. It has produced significant geophysical data and world-class prospectivity, causing operators to commit to over $4 billion in investment in the province.

A promise broken. What seems to infuriate Johnson and the NL industry is that under a year ago, provincial Premier Andrew Furey committed to Noia that the seismic program would continue. Back during the 2021 provincial general election, Noia send a letter to Furey and asked him, “Will you commit to maintaining the offshore seismic survey program currently undertaken by the Government of NL through the Oil & Gas Corporation?”

Accordingly, Furey replied with some platitudes about the value of the program, and at the end of his answer said, “We are committed to continuing this program and working together to advance our resource industries.”

So, what happened? This editor sent a note on Jan. 10 to a number of NL officials, asking for an explanation on their seismic decision. As of Jan. 17, we had heard nothing—crickets. One has to wonder why the entire NL government is suddenly tongue-tied. After consulting several folks in St. John’s, this editor now believes that the problem rests with the good Mr. Furey. Consider these facts: the NL government is broke and desperate to save money; the seismic program was an “easy grab,” although the amount saved is only about $20 million; the regime of federal Prime Minister Justin Trudeau is pushing a renewable/climate agenda that has no room for hydrocarbons; the federal regime may be holding other NL spending programs hostage, unless the province slows down hydrocarbon development; Furey is well-connected politically and behaving accordingly; and Furey is a good pal of Trudeau.

On the second-to-last item, we should point out that Furey’s father, George Furey, has not only been a federal senator from NL since 1999, he also has been Speaker of the Canadian Senate since December 2015 when—you guessed it—Trudeau nominated him for the position. Furthermore, Furey’s uncle, Chuck Furey, represented a district in the NL House of Assembly from 1985 to 2000. Thus, this situation takes on an odor of political connectivity.

World Oil has been extremely supportive of the NL province and its offshore industry since this editor made his first trip up there in 2004. We have authored roughly 10 articles on NL’s offshore industry in the last six years. And, we will continue to be supportive. But the NL government has a lot of explaining to do. Andrew Furey may be one heck of an orthopedic surgeon (his original occupation), but he is showing himself to be a lackluster governmental official with poor decision-making.

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com