© Gary Kean
Patrick Laracy of Vulcan Minerals discusses challenges the oil and gas industry in western Newfoundland faces on Thursday, Sept. 12, 2013.
CORNER BROOK — Patrick Laracy is optimistic that a revived American economy will lead to a resurgence in oil and gas exploration in western Newfoundland.
The chairman, president and chief executive officer of Vulcan Minerals Incorporated made those remarks when he spoke to fellow delegates at the 8th International Symposium on the Oil and Gas Resources of Western Newfoundland at Humber Valley Resort Thursday.
Laracy’s presentation was titled “Western Newfoundland Petroleum: Nobody Said it Would be Easy” and he discussed the challenges junior public companies face in trying to develop the industry in the area.
“The challenges are not engineering and they are not geological,” said Laracy. “They are ones that may not be obvious to you unless you are raising money or spending money in this area.”
He said the targets in western Newfoundland are too small to attract the major oil and gas companies and the junior companies have to carry risks for a long period of time. Factors like volatile markets have made it hard to attract capital investment lately, while the imposition of more regulatory constrictions and environmental assessments in recent years mean those involved are dealing with increased costs to do their business.
“All these costs accumulate so that we end up spending much more money on corporate issues, rather than exploring,” said Laracy.
Access to land for exploration is also becoming more of a challenge with governments having to strike a balance with the growing need to protect certain areas for parks and reserves.
The industry is also under attack on the environmental front, whether it is people opposed to the controversial practice of hydraulic fracturing or who simply do not want to see any sort of industrialization happening in their backyard.
“Again, that requires more money to deal with, and time and energy,” said Laracy.
Despite all those challenges, not to mention those who think the economy will not rebound any time soon, Laracy believes the American economy is on the verge of a resurgence. That, he added, will help inject vitality into the energy sector.
“The United States is still by far the largest and richest country in the world and, when it decides to move, it’s going to bring along a lot of passengers, including Europe and Asia,” said Laracy. “There is going to be demand increasing for commodities, which is good for the Canadian economy.
“It’s going to be great because it is going to increase the availability of capital and, at the end of the day, western Newfoundland needs capital.”