Canada's Richest Poor Province

While Newfoundland and Labrador is often thought of by the rest of Canada as the Country’s newest and poorest province, it is also the oldest settlement in Canada and may just be its richest.

Newfoundland and Labrador was first visited by outsiders over 1,000 years ago when Norse settlers landed on the northern coast of the island. Later, explorer John Cabot arrived and sent word of the riches he found in the waters off its coast. Although the fish that drew settlers to the area 500 years ago have been all but eradicated, the sea is still providing a rich bounty to the province.

According to industry analysts, Newfoundland and Labrador’s offshore oil industry accounted for between 12 and 13 per cent of all Canadian production last year and 37% of the Country’s light crude production. With an estimated 90,000+ barrels a day expected from the new White Rose project slated to begin producing by year end and talks of development on Hebron Ben-Nevis in the works, Newfoundland and Labrador is quickly becoming the center of the Canadian oil industry.

The story doesn’t end there of course. In addition to current and known reserves, other areas off the coast are being actively explored and are expected to produce even more hydrocarbons. Exploration will be taking place over the next few years in the Jeanne d’Arc Basin and seismic work is already moving ahead in the Orphan and Laurentian Sub-Basins. Each of these areas has long been suspected of containing massive reserves, larger perhaps than those already developed.

At this point in its history, Newfoundland and Labrador is uniquely positioned to leave its legacy of being a “have not” province behind forever, but only if the right decisions are made and key opportunities are not missed.

Currently the province is experiencing financial growth due to its oil production and a recently negotiated deal with the federal government allowing it to retain a reasonable portion of revenues from the offshore, however this alone will not be enough to turn the tide.

To date there has been no concerted effort to develop the natural gas reserves also located off the coast, reserves which are estimated to be worth billions. Add to this the fact that many financial analysts blame current record oil prices on a world wide under-capacity in refining, and one has to wonder why a province with so much oil has not pushed harder for development in the secondary processing arena.

Will the right moves be made to ensure the long term viability of this province?

Will natural gas production become a reality?

Will the province ensure that refineries are built and just as importantly, will they look beyond oil and gas to sustainable revenue streams?

These are the questions that need to be answered.

Recently I met an individual who likened the situation today to what has happened in places around the province like Buchan’s and Bell Island. Both of these towns, and others like them, were once booming mining towns riding a wave of growth and wealth. Today, with their resources depleted, these towns are all but dead. Children often ask why people even settled in them. As this individual said, “One day your children or your children’s children will ask what Hibernia was”.

Eventually the current offshore revenue sharing deal will end and although it will happen much later, so to will the provinces offshore reserves be depleted, just like the mines of Bell Island.

The key to the future will be to ensure that all the revenues, industry clout and political leverage that these reserves now bestow on the province are used to full capacity in planning and developing for the future.

Projects like the Lower Churchill River will need to be developed in a way that ensures the lion’s share of all revenues and the generating capacity are available to the province rather than sold off to other interests. If this means developing the project with Newfoundland and Labrador dollars, so be it.

Some of the billions of dollars in revenue generated by the offshore need to be re-invested in the industry. Why does the province need to depend only on royalties and taxes from oil production? If some of the province's revenues were used to buy a 10 or 20 per cent stake in these developments wouldn’t that buy a further 10 or 20 per cent share of the profits?

It’s time to begin thinking outside the box. To find new revenue streams and to use the provinces electricity, oil, gas and all of its other riches as a spring board to developing a production based economy rather than a resource based one.

If our leaders give away the Lower Churchill as they did the Upper, if they use the revenues from our offshore to placate the electorate, pump money into politically motivated projects and appease public sector unions rather than in developing future revenue streams, the next few years may be rosy and bright, but I sure don’t want to be around when the oil wells start to sputter out their last few precious drops.

Much of the billions from these resources, which belong to every citizen of the province, should be ear marked for long term, stable and renewable growth. It is not difficult to imagine major industries such as smelters, factories, auto plants and many others opting to setup shop in an area with abundant electrical reserves, massive amounts of raw material, in the form of ore, thousands of square miles of open land, abundant supplies of fresh water, a readily available workforce and year round shipping ports.

It costs money to make money and it’s time for our leaders to step up to the plate and see that the opportunities we now enjoy are not wasted.

Industrial growth will need to be the new backbone of the province’s economy, but there are other opportunities to be found. Some work has already been done by the private sector in developing the provinces tourism industry through highlighting our rich cultural and geographical resources. This is another area where sustainable growth should be nurtured.

The province has great diversity in its native culture which includes Inuit, Innu, Metis and Micmac residents, along with its European heritage in the form of its Irish, Scottish, British and French cultures. Add to this a land rich in ocean vistas, endless forests, abundant wildlife, wide open spaces and some of the continents lowest crime rates and you have a visitor’s, not to mention a developer’s dream.

Newfoundland and Labrador has been on the receiving end of hard times since time itself began. It continues to sit in Canada’s basement and settle for a few bones tossed its way by Ottawa, but if the people of this province can force our elected representatives to make the right decisions, if we can direct our well honed survival instincts toward building for our future and if we can apply pressure on outside interests, including Ottawa, then we need not face a future as bleak as our past.

When we the people see to it that this is done, then and only then will the people of Canada’s poorest and richest province finally come to understand just how wealthy they truly are.

By Myles Higgins and Greg Byrne