Benefits of offshore drilling can take a long time to surface
Don Cayo
Vancouver Sun
Friday, March 03, 2006
If B.C. begins exploring for and then exploiting offshore oil and gas, the benefits may still be a long time coming, says a researcher who has tracked the petroleum industry in Newfoundland.
But, says Mark Shrimpton, a principal in the big East Coast environmental consulting firm of Jacques Whitford, when the full impact is finally felt it's likely to be profound.
Those two realities -- the time it can take for this industry to develop, and its potential to transform the economy -- are lessons B.C. should take to heart as Victoria and Ottawa contemplate lifting the moratorium that is blocking offshore activity here.
"There's a huge difference between the nonsense people are spouting about what will happen in B.C. and the reality on the other coast," Shrimpton told me during one of his increasingly frequent visits to this coast to advise British Columbians who're thinking about offshore opportunities.
"The Newfoundland economy is being transformed in a very positive way," he said. "This is not a flash in the pan that will peter out in five years. It's a genuine transformation."
The gains, his studies show, aren't confined merely to a healthy boost in the GDP, or to better government revenues -- they include substantial diversification, which makes the economic improvement sustainable.
And, "I see no reason why it shouldn't happen in B.C."
But, he warned, don't hold your breath expecting to see things unfold quickly. Offshore exploration began off the coast of Newfoundland in 1963, and the first well was drilled in 1966. Yet it was the late 1970s and early 1980s before the first substantial oilfields -- Hibernia, Terra Nova, Wild Rose and Hebran -- were discovered and defined.
Nor did production follow hard on the heels of discovery. It was 1990 before the first oil began to be pumped from Hibernia, which had been discovered more than a decade earlier, and it was 1997 before this oilfield came to be fully exploited.
In other words, it took nearly 40 years to build up to the profound economic effects -- about $3.8 billion in direct and indirect impact on the economy in 2004, and employment that hovers in the high four figures -- that Newfoundland is seeing today.
The transformation includes a big contribution to infrastructure -- not just pipes and piers and shipyards associated directly with the offshore, but also sophisticated research facilities.
Hand-in-glove with the new labs is a boom in highly specialized education and training, and the emergence of a cadre of companies to focus on ever-broadening research and development.
The upshot, Shrimpton says, is that Newfoundland, which once had to import all of its offshore expertise, now has home-grown companies that do a big percentage of their highly technical work in places as diverse as the Black Sea and the China Sea, Brazil and Kazakhstan, the Southern U.S. and South Korea.
A not-so-upbeat aspect of Shrimpton's message, however, is that although economic benefits such as higher government revenue might benefit the whole province, the gains in jobs and diversification are concentrated in St. John's and its suburbs.
For example, St. John's, with just under 100,000 people, houses 18 large petroleum companies that pay about six per cent of the total the city collects in property tax. And the neighbouring suburb of Mount Pearl, with about a quarter the population, gets seven per cent of its revenue from petroleum-based companies. But there are few oil company assets and not many jobs outside Newfoundland's capital region.
And Shrimpton warns that, even if the moratorium is lifted and British Columbians are content to wait patiently for the years it takes an offshore industry to develop, "There are no guarantees.
"It might turn out that there isn't any oil or gas."
© The Vancouver Sun 2006