The day before millions of people across the world hit the streets for the first day of Climate Strike protests, Newfoundland and Labrador’s natural resources minister delivered a speech to members of the St. John’s Board of Trade outlining the provincial government’s success so far in doubling oil production offshore by 2030.
“In the past two years alone, there has been a commitment of $18 billion in investment in oil and gas and mining projects,” Siobhan Coady told members of the St. John’s Board of Trade at a Sept. 19 luncheon.
With record bids for exploration drilling and eight new companies after an estimated 49.2 billion barrels of oil so far, “opportunity surrounds us,” Coady said. Applause broke out as she folded her notes, waved and stepped off the stage.
But data from a U.K.-based non-profit called Carbon Tracker indicates that if the climate protesters got their way and the world was able to reduce it use of fossil fuels, there may not be much demand for oil from projects on the horizon in Newfoundland’s offshore.
Breaking the Habit, the group’s latest report, looks at the economic viability of oil and gas projects in a world whose leaders have upheld their Paris Agreement commitments to curb greenhouse gasses and keep global warming well below 2 C, with an eye on limiting that increase to 1.5 C.
Mike Coffin, a former BP geologist and a co-author of the report, said the high cost of extracting oil from Newfoundland’s offshore won’t be justified by the demand for oil in a Paris-aligned world.
“With the province being a frontier area for oil and gas … we would expect high costs and I think that’s reflected in some of these projects,” Coffin said. “These projects that are high-cost potentially risk losing significant amounts of money if they go ahead and the world does follow a Paris Agreement scenario and therefore demand for oil and gas falls.”
The report’s analysis assumed that in a world with a much lower demand for oil, projects with the lowest break-even costs would tapped to supply that demand.
The analysis highlights 18 newly-sanctioned projects — including ExxonMobil’s Aspen oil sands project in Alberta and Shell’s liquified natural gas projects in British Columbia — that would be left “deep out of the money in a low-carbon world.”
The report also concluded that the world’s already-sanctioned oil and gas projects will take the earth past the 1.5 C mark if carbon capture and storage techniques don’t improve.
Though they aren’t highlighted in the report, Coffin had a look at Carbon Tracker’s data for Atlantic Business Magazine and found that, according to their analysis, oil from projects on the horizon in Newfoundland and Labrador — including the Equinor-led deepwater Bay du Nord project and Husky Energy’s West White Rose Extension — wouldn’t be in demand in a world that heated by 1.6 C, 1.7 C or 1.8 C.
Siobhan Coady said that the demand for oil is forecasted to increase through to 2040, but that “the global outlook for energy is changing and a greening of fossil fuels is anticipated.” The per-barrel emissions from Newfoundland’s offshore projects are some of the lowest in the world, she said.
Numbers from Nalcor Energy show that per barrel, oil from Hibernia emits 12 kilograms of carbon dioxide. The world average is 18 kilograms per barrels, while oil sands emissions are, on average, 44 kilograms per barrel.
Coady said oil and gas is going to be around for the next few decades and that she’d rather see the world using lower-emission oil from Newfoundland’s offshore in that time.
According to the National Energy Board, emissions from oil and gas production account for 25 per cent of the province’s greenhouse gas emissions.