More than 160 countries produce oil and gas and are all competing to see their resources developed by companies, such as ExxonMobil, Chevron, Suncor, Statoil and Husky Energy.
Even within Canada, provinces are also competing to develop and market their oil and gas resources to the world. Newfoundland and Labrador is part of this global competition and faces the ongoing challenge of attracting investment from the world’s oil and gas companies.
Did you know?
- Did you know that oil and gas companies in Newfoundland and Labrador have to compete with their global counterparts around the world?
It’s true. The companies producing and exploring here have operations in more than 160 countries around the world. So the local team here is competing with those other regions for the company’s investment dollars.
- Did you know that it can take 20 years or more to move an exploration discovery to a development?
The current developments (Hibernia, Terra Nova, White Rose, Hebron) off the coast of NL were all discovered in the 1970s and 1980s. In some cases, it’s taken more than 30 years for owners to start seeing a return on the millions of dollars spent in building up these projects. Imagine building a new house and having your money tied up for 30 years before you could move in!
- Did you know it takes more than a discovery of oil to get a project sanctioned?
The amount of oil has to be large enough to be commercially viable. That is, the cost of the project has to be less than the profits to be made by selling the oil. Companies have no control over the price of oil, or the amount of oil in the ground.
The only way to influence whether or not a project goes ahead is to ensure the cost of the development is as low as possible.
- Did you know other countries in the world actively incentivize oil and gas development?
To encourage companies to explore and develop in their regions, other countries in the world have clear and consistent guidelines, regulations and royalty regimes.
Places like Norway and the United Kingdom also offer tax discounts and other incentives to attract investment dollars to the regions.
- Did you know oil and gas companies do not receive 100% of the profits from their projects?
Of course, companies receive some profit, but in recent years, those profits have been declining in our region. All the items below take away from the competitiveness of projects in Newfoundland and Labrador; companies will invest in places where they can make more money.