Newfoundland and Labrador offshore oil industry hoping election brings sea change

ST. JOHN’S — Members of Newfoundland and Labrador’s offshore oil industry are hoping a new federal government focused on Canadian economic sovereignty will reignite a sector they say has been stymied by unfavourable policy.

Charlene Johnson, chief executive of the sector’s industry association, Energy N.L., said policies from the Liberal government under former prime minister Justin Trudeau have had a chilling effect on oil and gas development in the province.

However, energy security is now “top of mind” for Canadians as trade tensions persist with United States President Donald Trump, she said in a telephone interview Thursday. And there are untapped oil and gas resources in Newfoundland and Labrador.

“The way to energy security is by developing more Canadian oil,” Johnson said. “With more certainty in the investor climate, we can produce more oil for Canada, and the world, in 18 to 24 months.”

Newfoundland and Labrador is home to four offshore oilfields located between 300 and 350 kilometres off the province’s east coast. The government expects the fields will collectively produce about 83.9 million barrels in the 2025-26 fiscal year, with royalties accounting for about 15 per cent of the province’s revenues.

But momentum in the sector is lagging. There have been no bids on offshore licences in the past few years, and Equinor’s Bay du Nord project is still on hold. The federal government approved the $16-billion deepwater development in 2022. The following year, Equinor announced it would put the development on hold for up to three years as it figured out a way to make it more affordable.

On April 29, the day after the federal election, the company is co-hosting the first of two local information sessions about the project.

Johnson pointed to several Liberal policies she felt dissuaded oil companies from investing in more exploration off the coast of St. John’s. Proposed emissions cap legislation, which would force oil and gas companies to slash their greenhouse gas emissions, is largely seen as a cap on production, she said. And Bill C-69 — which was adopted in 2019 and requires resource projects be assessed for environmental, health, social and economic impacts — will only stall development by making the approval process longer, she said.

Johnson sent a letter to the three major parties in March asking for their stance on these issues. Two parties responded: the NDP, whose answers focused on renewable energy, and the Conservatives, who vowed to scrap the proposed emission rules and shorten project approval times.

“Our members are still hoping for a response from the Liberals,” she said. “(We’re) disappointed that we didn’t get a response. These are very important questions.”

In the meantime, Johnson has kept a close eye on Liberal Leader Mark Carney’s comments during the campaign. He has given mixed messages about the emissions cap, but said in March that he would keep it, if elected, and fast-track investments in emissions-lowering technology. Carney has also said he would not repeal Bill C-69. Instead, his government would follow a “one project, one approval” principle, eliminating duplication in environmental assessments and other processes.

Johnson said she feels there is room for discussion and that Carney will make that room. She is also encouraged by vows from both Carney and Poilievre to build more pipelines amid pledges to make Canada more self-reliant in the face of U.S. tariffs and Trump’s threats to annex Canada.

Rob Strong, an industry consultant with decades of experience in Atlantic Canada, was blunt: the positions and policies of Steven Guilbeault — Trudeau’s environment minister — and Natural Resources Minister Jonathan Wilkinson have got to “disappear,” he said.

When he held the environment portfolio, Guilbeault introduced the emissions cap proposals, and Wilkinson said last year that his department would not subsidize more liquefied natural gas (LNG) projects.

Strong said he was “a little bit frightened” when the Liberals did not respond to Johnson’s questionnaire.

However, he said there are factors beyond Liberal policies influencing companies’ decisions to drill wells off Newfoundland, including global oil prices and the cost of offshore exploration. New oil discoveries are now much farther offshore — the Bay du Nord field is about 500 kilometres off the coast — and so they are much more expensive to harvest, he said.

“The relaxation of some of the rules and emission caps and the speeding up (of approvals) is going to help,” Strong said in an interview. “But we also need elephants rather than minnows — we need big finds to justify the costs.”

This story by The Canadian Press was first published on April 25, 2025.

Sarah Smellie, The Canadian Press