The owner of the largest offshore oil drilling bid in Newfoundland and Labrador’s history is set to abandon his plans – although that means he will pay a hefty fine.
According to a report from news site allNewfoundlandLabrador, Australian oil company Woodside Energy has dropped plans to drill in the Orphan Basin, located in northeastern Newfoundland, and move key personnel out of the province.
In 2018, BHP Billiton won two lots totaling $822 million, including one record bid of $621 million. At the time, Minister of Natural Resources Siobhan Kawadi described this year’s record performances as evidence of the continued growth of the offshore oil industry. In June, BHP announced that its oil and gas business would be merged with Woodside.
CBC News asked Woodside Energy for comment.
In an interview with CBC News, Regional Energy Secretary Andrew Parsons said the news was disappointing, but after the merger between Woodside and BHP, it was no surprise.
“They made a strategic decision that this is not where their interests lie,” he said.
Parsons said he met with BHP representatives prior to the merger, but did not have discussions with Woodside about the decision to abandon the exploration. He said there was nothing the county government could do to keep the company going.
“We’re going to keep moving forward and we’re going to find some silver lining in that.”
Parsons said that when companies choose not to proceed with offshore exploration, they are required to waive 25 percent of the bid value. He said Woodside will now only have to waive more than $200 million to the county government.
“This is going to be a significant amount and we will look at it internally,” he said.
Climate scientists and the Intergovernmental Panel on Climate Change have called for an end to fossil fuel exploration worldwide, but the Newfoundland and Labrador government has not indicated that it intends to halt marine exploration.
Parsons said Woodside’s decision shows the volatility of the oil industry, but remains optimistic about future explorations.
Prime Minister Andrew Faury declined an interview request.
While speaking to reporters on Wednesday, Progressive Progressive Conservative Party leader David Brasil said Woodside’s decision was “disturbing”.
“It would mean potentially billions of dollars lost to our revenue coffers here, and thousands of jobs lost to Newfoundlanders and Labradorians who depend on this industry,” he said.
Brazil said it didn’t know why Woodside pulled out of Newfoundland and Labrador, but wanted the provincial government to find out.
“There are some questions here that the government should ask and answer at the regional and federal levels,” he said.
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