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MARK VAUGHAN-JACKSON: Oil and water do mix

The West Hercules offshore drilling rig. A new report examines the competitiveness of Newfoundland and Labrador’s offshore oil industry in comparison with other jurisdiction.
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Industry leaders say better environmental protections and more efficient regulation can co-exist

Back during Budget 2017, the federal government announced it was looking for some advice to on where Canada’s economy should be headed.

From there it created economic strategy tables to research and make recommendations on how to support innovation in six areas: advanced manufacturing, agri-food, clean technology, digital industries, health/bio-sciences and resources.

On Wednesday, the St. John’s Board of Trade and Newfoundland and Labrador Oil and Gas Industries Association (Noia) co-hosted an event where two members of the strategy table on resources gave the audience an update on their findings and recommendations.

Lorraine Mitchelmore, chair of the resource table, is a former senior executive with Shell Canada with 30 years in Canada’s oil industry. She was joined at the podium by table member Jim Irving, co-president and co-CEO of J.D. Irving Ltd.

Both spoke of the work their group carried out over the last year and of the recommendations they presented to the federal government in September.

The table’s membership ran the gamut, from government, academic and aboriginal representatives to industry leaders in the oil and gas, mining, forestry and electricity sectors.

“The goal was really to lay out an economic roadmap for growth, … across mining, oil and gas, electricity and forestry,” Mitchelmore said of the table’s work

“We created a vision for 2025 with a key target of growing our resource sector — which is truly the foundation of our economy, which it’s been for generations — and to set it up for the future, to reinvent it so it’s competitive in the future. We set these targets of 40 per cent growth to $350 billion of exports. Right now it runs at about $250 billion, we’re talking about another $100 billion in the next seven years.”

To get there, the report made recommendations in five key areas: regulatory certainty; strategic infrastructure; innovation for competitiveness; indigenous people and communities; attracting and re-skilling talent.

If you’re interested in details of their findings and recommendations, the full report from the strategic table on resources can be read here: https://www.ic.gc.ca/eic/site/098.nsf/eng/00026.html.

“We are recommending that we retain our stringency on the environmental assessment regulations while making the execution more out-come-driven, more agile, more efficient and more predictable. We need to have a culture, across our country, in our regulatory environment everywhere that absolutely detests inefficiency while driving for this environmental leadership that we can feel proud about. You can have both, you just have to be smart.”

Lorraine Mitchelmore, chair of the economic strategy tables on resources of the future

But comments by both Mitchelmore and Irving focused on two critical areas where the resource sector needs to change: regulatory certainty; strategic infrastructure.

A recent factoid that was mentioned several times at Wednesday’s session was Canada’s world ranking as an easy place (or not) to do business, regulation-wise.

On the World Bank’s ease of doing business index Canada ranks 34th out of 35 Organization for Economic Co-operation and Development countries in the average time to get regulatory approval for construction projects.

And the leading reason for this ranking? Our regulation structure.

“The simple fact is we’re 34th out of 35 in regulatory red tape from around the world. (That’s) terrible, just awful so we’ve got to fix that … this regulatory inefficiency just doesn’t work and anybody who’s in business here knows that” Irving said. “I keep saying it’s like snow in front of a plow. You get enough snow, the plow stops — and we’ve got some pretty big plows here in the offshore oil and gas business, biggest in the world. But there’ll come a point in time when it just becomes too much, too expensive so it doesn’t work.”

After the speeches, Mitchelmore put things into perspective when it comes to the impacts of choking regulation and infrastructure, or lack thereof.

“The best I can speak to is from the oil and gas sector. Right now, because we don’t have pipelines that can actually take our products to market, we just had to do a most drastic thing and actually shut in production. That could have an effect — and a number just came out recently — of a half a per cent of growth of our GDP. That’s significant,” she said. 

“Our resources are 10 per cent of our economy. The auto industry is one per cent. That gives you a scale of what we’re talking about. We have to make our industry competitive — environmentally competitive, which we have done so much work on and is world-leading, but also economically competitive, and right now we’re losing on the economic side

And contrary to what some people might think, the sector isn’t asking for less environmental regulations — just smarter ones.

“We don’t ever want to reduce our high regulatory standards when it comes to environmental assessment. That is who we are as Canadians and I think that is really reflective of our values. But that doesn’t mean we can’t look at the other side which is we need to reduce the uncertainty and delays in the process. That doesn’t mean you have to reduce the environmental standards. We’re not talking about the what, we’re talking about the how. It’s the execution, that’s truly what’s broken in this country,” she said.

“We are recommending that we retain our stringency on the environmental assessment regulations while making the execution more out-come-driven, more agile, more efficient and more predictable. We need to have a culture, across our country, in our regulatory environment everywhere that absolutely detests inefficiency while driving for this environmental leadership that we can feel proud about.

“You can have both, you just have to be smart.”

Mark Vaughan-Jackson is The Telegram’s business editor. He can be reached at mark.vaughan-jackson@thetelegram.com.

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