Offshore oil rescues maritime province from economic woe

Gary Park

Petroleum News Calgary correspondent

Once the most economically depressed region of Canada, and now boasting the fastest growing gross domestic product of any province, Newfoundland has reaped a valuable harvest from its offshore oil industry.

Petroleum Research Atlantic Canada said that since oil first flowed from the Hibernia field in 1997 the province of 530,000 has benefited to the tune of C$1.9 billion a year and gained 13,900 jobs in the process.

The Halifax-based research agency said oil lopped 2.4 percentage points off Newfoundland’s chronic unemployment rate, which has climbed to almost 20 percent at its worst, and boosted total annual personal income by 6 percent.

The survey also found that: Capital spending on oil projects has ranged from C$900 million to C$1.4 billion a year; annual operating expenditures have been C$136 million to C$234 million; wages, salaries and benefits have been C$171 million to C$272 million a year; and direct employment has fluctuated from 2,957 to 3,871.

The conclusion is that Newfoundland’s population is 8,000 above where it might have been without oil and retail sales have grown by 6 percent or C$264 million a year.

The study said work on the Hibernia, Terra Nova and White Rose fields has put a competitive edge on Newfoundland firms and individuals, opening the door to jobs in the petroleum sector and other industries, locally, across Canada and internationally.

“The direct and spin-off effects of industry activity will last at least another 20 years,” said Petroleum Research.

That does not take into account prospects of a ChevronTexaco-led consortium proceeding with the C$3 billion Hebron-Ben Nevis project, where recoverable reserves are estimated at 400 million to 600 million barrels, or of accelerated development of the Labrador Shelf, which holds about 123 million barrels of oil and 4.2 trillion cubic feet of natural gas.

ChevronTexaco has been seeking more favorable royalty terms from the Newfoundland government to resume work on Hebron-Ben Nevis, while a tentative aboriginal land claim settlement could allow governments and industry to initiate and complete projects more expeditiously.