THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, November 20, 2025
The Standing Senate Committee on Energy, the Environment and Natural Resources met with videoconference this day at 8:01 a.m. [ET] to examine and report on Newfoundland and Labrador’s offshore petroleum industry.
Senator Joan Kingston (Chair) in the chair.
[English]
The Chair: Good morning.
Before we begin, I would like to ask all senators to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure to keep your earpieces away from all microphones at all times. Do not touch the microphone. Activation and deactivation will be managed by the console operator. Finally, please avoid handling your earpiece while your microphone is on. Earpieces should either remain on the ear or be placed on the designated sticker at each seat. Thank you all for your cooperation.
I’d like to begin by acknowledging that the land on which we are gathered is the traditional, ancestral and unceded territory of the Anishinaabe Algonquin Nation.
I am Joan Kingston, senator from New Brunswick and Chair of the Standing Senate Committee on Energy, the Environment and Natural Resources.
Now, I would like to ask my colleagues to introduce themselves, please.
[Translation]
Senator Verner: Josée Verner, from Quebec. I am deputy chair of the committee.
Senator Aucoin: Réjean Aucoin, from Nova Scotia.
Senator Miville-Dechêne: Julie Miville-Dechêne, from Quebec.
Senator Youance: Suze Youance, from Quebec.
[English]
Senator Lewis: Todd Lewis, Saskatchewan.
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator Arnot: David Arnot, Saskatchewan, the home of the 2025 Grey Cup champions.
The Chair: Congratulations.
Senator Arnot: I will be using that for the next six months.
The Chair: That’s the spirit.
I’d like to welcome everyone here today, as well as those who are listening online on sencanada.ca. Pursuant to the order of reference received from the Senate on October 8, we are pursuing our study of the Newfoundland and Labrador offshore petroleum industry. For the first panel, we are pleased to welcome Katie Power, Industry Relations Representative, Fish, Food and Allied Workers Union. She is joining us by video conference.
Ms. Power, welcome. Please begin with your opening remarks of about five minutes.
Katie Power, Industry Relations Representative, Fish, Food and Allied Workers Union (FFAW-Unifor): Honourable senators, thank you for the opportunity to speak today on behalf of Fish, Food and Allied Workers Union, or FFAW-Unifor, and the thousands of inshore harvesters, plant workers and coastal families whose livelihoods depend on a healthy, well-managed marine environment.
The fishing industry and offshore oil and gas sector have coexisted for decades in Newfoundland and Labrador. Our union is not opposed to offshore development. We recognize its importance to the province and to many of our members’ families, but we are equally clear: The growth of one industry cannot come at the expense of another. A sustainable fishery is not just an economic pillar; it is a renewable resource and the cultural backbone of coastal Newfoundland and Labrador.
As senators examine the offshore petroleum industry, we urge you to keep three principles at the forefront: precaution, accountability and shared stewardship.
First, precaution must guide decision making. Our marine ecosystems face increasing pressures: climate change, warming waters, shifting species distributions and cumulative industrial activity. In this context, regulatory decisions cannot rely on outdated assumptions or narrow, project-specific assessments. We need robust, independent science that integrates harvester knowledge because people on the water often see the earliest signs of ecological change.
Fish harvesters are increasingly concerned about how ocean space is being allocated. Calls for nominations are advancing into areas that include marine refuges, conservation zones where fishing access is fully restricted. At the same time, certain industrial activities continue in those very same areas. This inconsistency does not reflect a coherent conservation strategy, and it undermines trust in the system meant to protect vulnerable habitats.
Our members are asking reasonable questions: If a marine refuge is too sensitive for fishing, how can exploratory drilling or seismic activity be justified? What safeguards are being proposed, and how will regulators verify that they work? These are not oppositional questions. They are responsible ones.
Second, accountability and transparency must be strengthened. Coastal communities depend on timely, accessible environmental information. Too often, monitoring results and scientific data are released long after decisions are made or in formats inaccessible to the public. For those whose livelihoods depend directly on the ocean, timely information is essential to responsible resource management.
We also ask the committee to consider cumulative effects, not only project-by-project impacts. The ocean is a connected system. Seismic surveys, drilling programs, vessel traffic, climate-driven species shifts and pressures on forage species all interact. Without a firm understanding of cumulative impacts, we risk approving individual projects that seem manageable in isolation but harmful when viewed together.
Climate change further complicates this picture. As species like snow crab and lobster shift northward, future fisheries will depend on areas that today may appear peripheral. Land tenure decisions must reflect where fisheries are going, not only where they have been.
Third, shared stewardship must be embedded in the regulatory system. Meaningful consultation with the fishing industry must be early, substantive and ongoing — not procedural or symbolic. Harvesters’ knowledge is place-based, detailed and rooted in generations on the water. Incorporating that knowledge leads to better decisions, reduces conflict and supports safer coexistence.
To be clear, cooperation between our industries already exists, and we value it.
The Fisheries Guide Vessel and the Fisheries Liaison Officers programs are strong examples of how collaboration works in practice. Guide vessels staffed by experienced harvesters communicate directly with offshore vessels to avoid gear conflicts and ensure safe operations. Fisheries liaison officers help map fishing activity, communicate project plans and identify sensitive periods and areas before work begins. These programs work because they respect lived experience and ensure fish harvesters have a real voice in planning and safety.
These programs should be a baseline, not the ceiling. The same collaborative spirit must be reflected in regulatory decisions around land tenure, environmental assessment and cumulative effects.
As one example, substantial ocean real estate has already been allocated for industrial use in the Jeanne d’Arc Basin region, including areas that overlap with productive cod and crab grounds. Once these areas are licensed, access for fish harvesters is effectively restricted for decades. For coastal communities, this represents not a temporary inconvenience but a long-term economic loss. Decisions about allocating ocean space must recognize that the fishery is a renewable industry and that displaced fishing grounds cannot simply be shifted elsewhere.
Industrial benefits must be assessed realistically. Offshore development provides important economic opportunities, but so does a thriving fishery. If ecological impacts reduce stock abundance, disrupt traditional harvesting grounds or alter species distribution, those changes translate directly into economic losses for rural Newfoundland and Labrador. Industrial benefits must include the long-term viability of renewable ocean industries.
Our goal is not to choose winners and losers. Our goal is to ensure that coexistence is real, not assumed. Responsible development requires a regulatory structure that is transparent, science-based and grounded in the protection of the marine environment that both industries rely on.
Honourable senators, we believe offshore oil and gas and the fishing industry can both have strong futures in this province and in this country. However, that future depends on maintaining healthy ecosystems, respecting the people with lived experience on the water and ensuring that risk is never shifted from one industry onto another.
Thank you for your time. I look forward to your questions.
The Chair: Thank you, Ms. Power. Now I would like to turn it over to questions from the senators.
Senator Arnot: Good morning, Ms. Power. From your vantage point and what you hear from fish harvesters, is there adequate assessment of the cumulative environmental and socio‑economic effects on offshore activity with respect to the coastal communities where the fish harvesters live? Secondly, what would the offshore regulator need to do to change, restore or maintain trust among coastal communities regarding spill transparency, marine impacts and consultation?
Ms. Power: The first question was about whether they are doing enough? I’m just trying to remember.
Senator Arnot: That’s correct.
Ms. Power: A lot is being done. From a fish harvester’s perspective, there is always more that can be done. As I mentioned in my speaking notes, we often see environmental assessments for major projects offshore one at a time. It would be helpful from a member’s perspective who has generations of families out on the waters for decades, for something to be done that takes into account the 50 or 60 years during which we’ve had oil platforms producing on our fishing grounds. What are the zoomed-out and longer-term impacts?
Viewing the projects in isolation, things may seem okay, but when you look at the collective impacts of all these oil fields over a long period of time on the hundreds of species that they are affecting, we don’t really know what is going on in that space because there is not a lot of research being put into that space. An effort to understand holistic effects offshore in Newfoundland and Labrador in particular, where we have fishing activity and oil and gas activity overlapping constantly, would be greatly appreciated by our membership. What was the second part of your question?
Senator Arnot: Would the offshore regulator need to change, restore or maintain trust among the coastal communities?
Ms. Power: The biggest part of that is early involvement and engagement. By having members with this lived experience — by members I mean our union members, so fish harvesters — at the table as part of these conversations when decisions are made, or before decisions are even thought of, will build trust and make them feel like they are being considered and are part of the decisions that are being made. Often, in the past, members have felt that — particularly with offshore oil decisions about projects or exploratory drilling and things like that — these decisions come down without adequate engagement and consultation with members, or we provide them with our feedback, and that feedback isn’t quite listened to, or they don’t listen to it in the way that makes it seem meaningful.
There are two parts. One part is ensuring you have fish harvester voices involved in decision making, and another part is effectively listening to that and using that feedback in the decision making so that there is a balance between industry, and it doesn’t feel like it is pulled one way or the other.
Senator Arnot: Can you comment on this: Do existing compensation processes for lost gear, lost access or displaced effort provide real, timely and predictable relief, or are fish harvesters still forced to fight for every claim, tooth and nail?
Ms. Power: It can be a bit complicated, but generally speaking, when you refer to “direct loss,” that would be direct damage. If gear is snagged or a catch is lost due to a towing operation or things like that, those sorts of claim mechanisms exist. They are quite straightforward, and from my experience at the Fish, Food and Allied Workers, or FFAW, these claims are paid out relatively quickly and without much trouble. For cases involving direct losses in which someone claims their gear was in this position, and the oil company says that their tow route did go through that position, and there is direct loss, it can be straightforward.
It becomes more complicated when we get into areas of lost access or lost economic opportunity due to industrial activities. Those kinds of payouts have been challenging in the past year because they are indirect losses, so to speak. Trying to prove that you have had a reduced catch this year as opposed to last year, and proving that it was undoubtedly due to industrial activity, can be a bit challenging because of the nature of our membership. They are not accountants; they are fishermen. The paper work and the computer literacy bogs down that process, so that isn’t quite so straightforward. There are positive experiences in compensation, and there are some negative experiences from compensation. But having these frameworks to lean on, says a lot about how the two industries coexist and try to work together.
Senator Arnot: Thanks very much.
[Translation]
Senator Miville-Dechêne: You recently expressed concern about a vessel that grounded near Cedar Cove, near Lark Harbour, because if fuel, debris or contaminants from MSC Baltic III were to spill into our fishing waters, the impact on the crab and lobster fisheries could be catastrophic.
Can you explain to us the specific impacts that spills can have in your fishing areas?
[English]
Ms. Power: Yes. The MSC Baltic III has beached in Lark Harbour on the West Coast in Newfoundland and Labrador. I did actually go out there and visit the ship.
The threat of an oil spill to adjacent fisheries could be catastrophic. From our perspective, any drop of oil in the ocean is too much, and we consider that a spill. It is a precarious situation happening out there. Lobster fishing in particular is done near the shore, within 20 metres or so of the coastline. That’s the biggest concern because the lobster fishery is becoming increasingly productive and lucrative on the West Coast in particular. Members are very concerned with how this can affect that.
Of course, oil slicks can damage habitat. For future recruitment, that serves as a major concern. The oil can simply kill the species, and then there is nothing to catch. For the families, particularly on the West Coast, but, generally speaking, for coastal communities across the entire province, shellfish is their bread and butter. Shellfish is the core species for them. Without reassurance that fishery is not going to be negatively impacted, it is a difference in being able to put food on the table for their families and to be able to turn on taps in their houses. It is a scary situation for people when there is risk and uncertainty about what is going to happen.
[Translation]
Senator Miville-Dechêne: What’s being done to secure that vessel? Have you seen anything being done? You’re worried about a spill. Does that mean the boat has been abandoned? What’s happening?
[English]
Ms. Power: We’ve been maintaining fairly consistent communication with the MSC, and there is a large group of salvers. There are many moving parts, so to speak, in terms of who is doing what out there, but they have maintained a very good channel of communication with us. We speak with them regularly. So we do get updates. We can then provide these updates to our members to say, “This is where the cleanup is right now. This is what they are doing.”
Something that may not be thought about as often is that the Baltic folks don’t want a massive oil spill either. We are on the same side here. They want this cleaned up in the most effective way possible, and so do we. We’re working toward the same goal, which is helpful. Again, members forget that sometimes, so reminding them of that does ease the nerves and the anxiety.
The Canadian Coast Guard is working out there very diligently. Again, we receive regular updates from them in terms of boom protection and all sorts of safety protocols that are in place. We get routine updates, and we maintain a very active channel of communication to ensure that we know what’s going on and when it is going on, and we get the most live updates for that. We are able to communicate that directly to our membership.
[Translation]
Senator Aucoin: First, in the Bay du Nord region, where more exploration may be planned, are you aware of any studies that have been done on snow crab? What are the results of those studies in terms of drilling or seismic testing?
[English]
Ms. Power: Are you asking about the effects of seismic activity and drilling on crab, or are you asking in the context of the Bay du Nord?
Senator Aucoin: Both. You can answer both questions.
Ms. Power: Okay, two parts. I can handle it, though. With respect to the Bay du Nord, the production sites that could be, potentially, are very far offshore in the Flemish Pass. It is in much deeper water, and it is not in an area where our inshore fishing membership even access. In terms of fisheries overlap with that production facility, there would not be very much. It is far beyond our scope.
From an FFAW perspective, we have members’ families who work in the oil and gas industry who would probably like to see that go forward for the province and the economy here.
With respect to how it impacts fishing, there would be virtually minimal impact considering the Bay du Nord, solely because of the location. It’s quite far away. That’s not to say that there would be no impacts. Of course, vessel traffic, towing things to and from, would obviously interrupt fishing activity if they were doing that during active fishing seasons. However, in isolation, the Bay du Nord is outside our fishing area. With regard to seismic survey and drilling, it is an absolute disruption to fishing activity when it does occur in open fishing areas and active fishing zones.
Of course, drilling creates a safety zone whereby fishers can’t access that area. Unfortunately, that can pop up where oil fields and fishing tend to be. They don’t avoid each other, so often there is an overlap, and it does create these ad hoc exclusion zones.
From our perspective, what ends up happening is that you go into an exploration licence with the hope that you will find a significant discovery and you can produce that. It becomes troubling for us when exploration licences are being pursued in areas that have productive fishing grounds, because, if they find something and then want to produce on it, that’s an entire area of ocean real estate offshore that we are going to lose. That certainly poses a threat.
Again, it just depends. It’s time and place-based. It all depends on the timing and where it is. With respect to the Bay du Nord, it is farther offshore than our membership fishes.
[Translation]
Senator Aucoin: With respect to snow crab, have any studies or tests been done on the impact of seismic testing? I understand that crab can be harvested further inland than the Bay du Nord region.
[English]
Ms. Power: There have been some studies. There is not a robust amount of information that exists out there in terms of data with respect to snow crab and seismic survey, because with Newfoundland and Labrador’s environment, oil and gas and fishing is quite unique. We have a very specific coexistence of industry here, but we do have some great research done by DFO and Dr. Corey Morris. He has been fantastic and does a lot of research on how seismic affects groundfish, how seismic affects shellfish. There have been a few studies. Again, there have just been a few studies. There is not a robust amount of data to compare things to when we consider how long seismic testing has been taking place offshore, but it is something.
With respect to crab, the data is generally inconclusive. It doesn’t necessarily indicate one thing or the other. It highlights and emphasizes that we need more of this research. It is difficult to get these sorts of projects and research programs started and going on, because in order to understand and measure how seismic activity is affecting shellfish, for example, you need to have a seismic program happening over fishing grounds, which is largely what we avoid when we are doing engagements and consultations with seismic companies. So it can be challenging to collect the data that you need to test these hypotheses.
Senator Aucoin: Thank you.
Senator Fridhandler: I just want to follow up on Senator Arnot’s later questions on how we deal with conflicts of interest between holders of fishing licences and holders of exploratory or other related permits in the oil and gas business. Can you explain what the adjudication structure is? Is this a provincial body? Is it DFO? Is it the offshore board? When an issue comes up, who adjudicates the issue, and what is the process?
Ms. Power: Essentially, there are a few pieces to this. Fishing licences are all handled by DFO, and they are location-based. We have Northwest Atlantic Fisheries Organization, or NAFO, fishing areas and then we have crab management areas and lobster management areas that are just smaller blocks around. That’s independent of how the Canada-Newfoundland and Labrador Offshore Energy Regulator now, the C-NLOER, put borders and boxes in parcels and how they have their licences drawn out. They’re separate, but we often overlap them when we’re trying to measure and mitigate.
When we have exploration licences that directly overlap with active fishing areas, once we get to that point, there’s not a lot that can be done besides communication, because once an exploration licence has been awarded or decided, and it’s in a fishing area, that’s just it: they just overlap. There is not a lot that can be done about that. So when the exploration licence is pursued, all we can do is engage with our membership and the operator to ensure that we are aware of mutual activities when, and as early as possible, so that we can avoid as much as possible.
The time to make the decisions regarding avoiding overlap and mitigating potential conflicts starts much earlier. When we have these areas-of-interest calls at the C-NLOER and these parcels that go up for potential bid or nomination, that’s when — we always supply written feedback and have good meetings with that group — the considerations need to be given to whether we want to put this parcel up for nomination if it’s overlapping with prime crab fishing grounds.
It’s striking that socioeconomic balance with pros and cons. That’s why, when the decisions are ratified, they come ratified by provincial and federal governments. There are many things that have to be approved and thought about when the decisions come down. It is a complicated system.
Senator Fridhandler: Let me push on that here, because I am assuming there has been an exploration permit granted for drilling on fishing grounds where people hold licenses for. Obviously, the fish harvesters are going to lose a little bit here.
Ms. Power: Yes.
Senator Fridhandler: It seems that there is no specific compensation structure that deals with that. We have already made the decision that the exploration activity trumps fishing, and there is going to be an isolated zone. Do the fish harvesters have to walk away and suck it up? I’m interested to know if there is a structure in place to address that, specifically. Secondly, are there specific examples where this issue arose and compensation was granted or denied? The factual items.
Ms. Power: Unfortunately, once an exploration license has been awarded and exploratory drilling moves ahead, if it is in a prime fishing area, the fish harvesters are forced out and lose access to that area.
It did happen a number of years ago. There was a drilling unit called the Hercules, which was drilling offshore Newfoundland, and it directly overlapped with crab fishing areas for many of our 3L, which is a lucrative crab fishery for many folks in that area. To put it plainly, they were upset, of course. It is unfortunate, but the timing of fishing, and when it is best to go out on the water in an oil platform, is all the same. When the weather is good, the weather window is good for everybody. Unfortunately, one does get forced out. More often than not, it is the fishing community that is pushed out of these areas.
Unfortunately, when we have taken steps to go through consultations whereby there is an area of interest and we provide comments, saying, “No, we do not want this,” but then it moves forward, and that same area is included in a call for nominations. Then, it ends up being included in a call for bids. Then a license is awarded. Once we get through all of those hoops and opportunities to say, “No, this is a fishing area. We should not do this,” they say, “We are going to do it anyway.” When we get to the time that the drill rig is going out to drill in the fishing area, there is nothing that can be done from our side, and no, there is no compensation mechanism in place for that.
Senator Fridhandler: Thank you.
Senator Lewis: Thank you for your comments.
It is interesting. You talk about the uniqueness of the Newfoundland situation, but as I sit here, I think about the similarities between producers and landowners in western Canada and how they deal with industrial users on their land. You don’t own the ocean, but certainly, your last answer was about compensation. If you have had a fishing license for generations, and it is no longer feasible because of oil and gas development, I would think there should be some kind of compensation package in place.
You mentioned DFO, and I suspect your members and DFO have a relationship where DFO is doing fish and species counts, and those kinds of things, which affects where your members are able to harvest. Is there much coordination between the oil companies, the drillers and people with DFO to share information, for example, what DFO is seeing in the ocean, and is there coordination between the activities of the oil and gas people, DFO and your membership?
Ms. Power: I cannot speak for what engagements go on between the operators and DFO because I am not privy to those conversations. I would hope they take place. From my understanding, they lean on the FFAW for that sort of information. A lot of the time we — I in particular, but also my co-workers and staff — are the ones who reach out to DFO for information to liaise with the oil companies when it is needed.
I do not know how much interaction they actually have because I do not work at either entity, so I cannot speak to that. The oil companies largely lean on — for inshore fishing information anyway in Newfoundland and Labrador — the FFAW to provide the details they need or to outsource it to DFO for them on their behalf.
Senator Lewis: Would it be helpful if there were a more coordinated approach between the three different groups and something more formalized?
Ms. Power: Absolutely.
[Translation]
Senator Youance: Ms. Power, there was a bill in the House of Commons on the interaction between wind development and fisheries. Is there an impact on the fishery over and above oil and gas development? To what extent do you think you’re on a level playing field with the various operations happening alongside the fishery?
[English]
Ms. Power: You are saying, in addition to oil and gas, what other entities impact fishing in the offshore? Is that correct? Okay.
While oil and gas has a major interaction with us, there are, of course, other things. Inshore, it is not as much of a problem, but we do have marine shipping and transportation. As you know, exports and imports are ramping up. Vessel traffic has increased. Another large driver — maybe the more important one — is climate-driven changes we are seeing at sea.
As I mentioned, shellfish — lobster and crab — are some of our most critical species at the moment in terms of commercial significance and profitability. Due to the nature of warming oceans and changing currents, we are seeing a shift northward of many of these coldwater species like crab and lobster. That changes who has access to the quota.
It can be challenging for folks who have larger crab and lobster quotas. It can change the time of the year they are able to get them. Maybe they are not able to catch them all. The economic opportunity there is changing. I mentioned earlier that we have management areas for particular species. For example, there are 8A, 8C and 14B. You have small areas broken down where your fishing license allows you to catch that species. These areas do not change. However, where the commercial species are located among these areas, due to warming oceans and climate change and other impacts, is changing. There is a disruption to what folks are used to catching or the profitability year to year. It is changing a lot now. That can be scary because it is not reliable, and they have families to feed and a livelihood to support. That is a major concern, certainly.
[Translation]
Senator Youance: Are fishing products going to areas where there is to be new drilling, for example in the Bay du Nord region? I’m trying to understand: Will the fishing industry be forced to move to new areas to steer clear of oil and gas development?
[English]
Ms. Power: Essentially, fishing cannot just be shifted or moved. Fish are distributed everywhere throughout the ocean. They have congregant areas, but these habitats are always changing. Fish migrate differently, and these changes and variability that we see regarding where populations are, where they forage and where everything happens for them is changing, and it’s changing more rapidly now with the environmental changes we are seeing.
Unfortunately, when an oilfield, an oil project or exploration drilling takes place, if it does take away a fishing area for us, that fishing area does not just reappear somewhere else. That is an area that is lost.
What happens is that it’s lost for decades, generations and forever — when you think about it — for a fishing industry. We may never be able to fish that area again. When we look at the major producing oilfields right now, they were all located on what were once prime cod fishing grounds. However, they were erected during the moratorium when nobody was fishing cod.
It is tricky when oilfields appear in areas where fishing access takes place, because, by way of exclusion zones and safety, it removes that economic opportunity for fish harvesters. You cannot just fish somewhere else and expect to catch the same amount of fish. Fish travel in groups. Species have areas they prefer. It depends on habitat and many different factors. The fish do not just leave and go next door to be caught. It is, obviously, very complicated, and it can make it very challenging.
The fishing industry is competitive. The fishing industry is not something that can just be moved elsewhere. Once we lose an area, the area is lost, and entirely new productive grounds need to be discovered in order to support a family who previously relied on that area.
[Translation]
Senator Miville-Dechêne: I’m quite surprised by what you said about the lack of compensation for fishers in areas explored and developed by oil companies. I imagine it’s a matter of balance of power. Have you tried to change the system? Have you approached the industry for compensation? It’s very direct, as you say. There are fish stocks, there are fishers who depend on them, and the stocks are disappearing. It’s true that you may find more, but generally, when people are struggling, they get compensation. Have you explored that avenue, which seems important to me?
[English]
Ms. Power: Yes and no. It is a very complicated way forward.
What largely happens is that — as I mentioned previously — there are many steps in the engagement process where we give feedback and advice, saying, “No, we do not want you to move this forward in these fishing grounds for whatever reason.” If things keep moving forward, once a decision is ratified and comes down, unfortunately, there isn’t a lot we can do to say that we want compensation.
In areas where there is an overlap with exploration drilling, we are expected to stay out during that time and then revisit once it is over. Who is to say if the crab will still be there or not? We don’t know.
It is a good conversation to have. The barrier to that would be timing, because if, for example, an exploration drilling program were to take place this summer offshore, I would find out about that in the spring — probably March or April. The drilling program would probably take place in June or July. Beyond all the regular information that needs to be shared with members — in terms of where this is, where the exploration drilling is happening, when it is happening, these are the positions, please avoid, et cetera — then I receive feedback from members, saying, “Oh my goodness, this is over my crab fishing ground; what are we going to do?” The amount of time given to us in terms of preparation to then try to propose a compensation framework specific to that drilling program isn’t enough. We are not given enough lead time to do something like that, unfortunately.
[Translation]
Senator Miville-Dechêne: I understand that it’s difficult and that you’re up against major interests. Have you considered using the courts to establish a compensation system? I’ll say it again, I find it rather odd that there haven’t been any negotiations to that effect. Is Fisheries and Oceans Canada on your side, or is it all being done above your head to satisfy greater interests, those of oil and gas?
[English]
Ms. Power: I do not want to speak for Fisheries and Oceans Canada, or DFO. I’m not sure where their interests lie. However, when it comes to fighting for our rights in areas that have been acquired by offshore groups, we are certainly the loudest voice. Sometimes we feel like we are a voice fighting in isolation. Again, it is about striking balance. The oil and gas industry is significant to the Province of Newfoundland and Labrador, as is the fishing industry. Finding that balance and equal opportunity is challenging. That is why we put those decisions in our governments because they are the ones that have the best information in front of them.
I don’t think we have considered putting anything through a court process. I don’t know how much exploration drilling in the future will take place over fishing grounds. That is not to say that there won’t be. Our members would certainly appreciate something. Again, we don’t receive much other stakeholder support in that field and area. A lot of it is instructions to avoid the area and move out of the way. That seems to be the way it is mitigated. Historically, that is all that has been done; it is avoidance and, if you can’t avoid it, that’s it. It is unfortunate, you are right.
[Translation]
Senator Aucoin: I’d like to continue discussing compensation.
When this committee studies the fishing industry, our mandate is to look at regulations, including health and safety, but also impacts on marine ecosystems. We’re talking about traditional fisheries, not necessarily commercial fisheries. I believe it’s part of our mandate as well.
For example, if wind turbines are installed on land, the municipalities will negotiate compensation, and often, royalties are paid to individuals, even those who are not necessarily affected since the turbines are not on their land.
I had assumed that there was compensation in all fisheries. Do you support a two-part recommendation? On the one hand, there would be the obligation to consult your association when companies are exploring or conducting seismic testing, and on the other, there would be discussions about compensation from companies that do exploration.
I think the percentage that’s been negotiated for the future is 12.5%. I believe for the province that’s a decrease, because it used to be 18.5%.
What do you think of those two aspects? Is that something we should include in our report? I’m talking about consultation and compensation for your industry.
[English]
Ms. Power: I believe the first point about consultation is absolutely fine. That is what happens in practice right now anyway. There is that level of communication and consultation ahead of seismic activity and drilling. Absolutely, I’m supportive of that.
With respect to the compensation, again, that too would be a fantastic thing to include. I appreciate your words about wind development. When we had offshore wind conversations in Newfoundland and Labrador — I do not know if it was two years ago or whenever that was — the expectation for the fishing industry is that avoidance is the first thing, and if you can’t avoid that, then you mitigate. If you can’t mitigate, then, as a last resort, you compensate — and in that order. It is important to have conversations ahead of compensation, but when there is no other option, compensation is needed.
It is an interesting conversation to have about compensation for lost fishing access due to drilling or seismic. It is not something that’s ever considered to my knowledge and in my position. I think it would be well received. It is logical and makes sense. It is appreciated that it is something even being considered because, for a long time, the lack of conversation around it has made fish harvesters feel like they are being left behind, not included or not considered as critical to the economy as oil and gas. That is something that will resonate well and be well received by our members.
[Translation]
Senator Aucoin: I have a quick follow-up question. Would your comments apply to the construction of offshore wind turbines as well? Legislation was passed to allow wind development by building offshore wind turbines. Would your comments apply to wind turbines as well?
[English]
Ms. Power: I think so, yes. Offshore wind development in Newfoundland and Labrador is particularly complicated for a number of reasons. Our members are well versed in that because we were involved in the regional assessment for offshore wind development in Newfoundland and Labrador.
It comes down to absolute avoidance where necessary, and when avoidance is not necessary, we must impose mitigation. When mitigation is insufficient, then compensation, and, as I mentioned, again, in that order. Fish harvesters are not particularly keen on compensation for offshore wind because it almost feels like when you get to that point, you are already agreeing to lose fishing access. The priority for them would be to maintain as much fishing access as possible.
[Translation]
Senator Aucoin: I come from a fishing community, so I understand exactly what you’re saying. That may be an industry problem. Fishermen have always been against exploration or industrialization, so as a last resort, they would be interested in compensation, but maybe they should negotiate that up front.
Thank you.
[English]
The Chair: Ms. Power, you are popular. We have three more questioners and not much time. We will ask that the questions to be as short as possible and the answers as well.
[Translation]
Senator Youance: Actually, my question is about sending documents. I read one of the oil and gas impact assessments. It mentions several times that reports on the state of the stocks or populations of the various species are outdated, or it says that the studies are based on previous data, but not on the fishers’ experience.
To what extent can you send us more recent documentation? Have you done any assessments yourself based on your experience with the loss of fishing areas?
[English]
Ms. Power: To start, regarding the first part of your question about impact assessments and the fishing information that oil companies or proponents have drafted these words, the fishing data they include comes from the Department of Fisheries and Oceans. It comes from DFO. They are the data holders of fishing information.
The challenge with that, as I mentioned in my opening remarks, is that this DFO fishing data is not well maintained. It is not easily accessible. It is not super accurate. I believe there is a multiple-year lag in a lot of the commercial fishing data that DFO is able to provide to proponents. I am not sure what the lag is there. We are a few years behind. I believe the most recent commercial fishing data available from DFO right now may be 2001-22, and we’re in 2025 at the moment. This is increasingly concerning when we consider increased changes due to climate change and species distribution. Year to year, these annual variation in species population and dynamics are critically important, and we are not getting that information. We are not able to apply that to environmental assessments, and we are not able to apply that to fisheries and oil and gas engagements and consultations when it comes to developing projects.
Of course, it can be tricky when you do not have the right information to make decisions. The wrong decisions are made. In our membership at FFAW, fish harvesters see many gaps and inconsistencies in the DFO science versus their lived experience and what they see on the water. We have many discrepancies from our side. The DFO science can be delayed. Again, I believe there have been cuts to DFO science. I am not sure how that is going to look moving forward.
Fisheries, species, data and science collecting about where fish are and what they are doing are critically important for resource‑management decisions. That spills over into oil and gas interactions with our industry. It can be frustrating when we don’t have the right data at the right time.
Senator Lewis: My question is about First Nation membership within your group. Are there individual members or bands who are members of your union?
Ms. Power: Yes and no. We don’t have any official affiliation with First Nations. They manage their fisheries group by group, individually. That is not to say that we don’t have individual members who are members of certain Indigenous groups, but to say we have an official affiliation, no, we do not have anything like that.
Senator Fridhandler: I want to return to compensation and get clarity for the record. When we are talking about compensation, it is not like we are looking to the licensee companies doing the exploration or production, and providing significant revenue accrues to both the provincial and federal governments. The governments have made decisions on granting licenses. I believe that part and parcel of that should be, if their decision is adverse to a group they have already granted some licensing rights to, it is the government’s responsibility to set up a compensatory scheme that they fund, not something that is foisted onto industry. What are your thoughts on compensation, and who should bear responsibility?
Ms. Power: That is a complicated question because oil and gas and fisheries are managed by separate entities. Fisheries are managed by DFO, and the oil and gas sector is managed by a number of different groups. We have the energy regulator. Again, striking the balance between who takes responsibility for what can be challenging.
I’m not sure who would bear the root of that. From our perspective, when we’ve tried to get answers on these sorts of things, unfortunately, it is the passing of the buck: “You need to discuss it with these people. This is not our responsibility.” The siloed management of oil and gas and the fishing industries makes that more difficult.
The Chair: Thank you, Ms. Power. You’ve been a very informative witness, and we appreciate your presence here today. We will now turn to our second panel. Thank you again.
Ms. Power: Thank you.
The Chair: I welcome our second panel. We have Paul Barnes, Director, Atlantic and Northern Canada, Canadian Association of Petroleum Producers, Bob Fiander, Executive Director, Trades Newfoundland and Labrador, and Rachelle Cochrane, Director of Policy, Innovation and Economic Research, Trades, Newfoundland and Labrador. Welcome.
You can each have five minutes for opening remarks, after which we will open a question period for the senators. If you would like to begin, Mr. Barnes.
Paul Barnes, Director, Atlantic and Northern Canada, Canadian Association of Petroleum Producers: Good morning, honourable senators. Thank you for the opportunity to speak with you today. My name is Paul Barnes and I am the director of the Atlantic and Northern Canada for the Canadian Association of Petroleum Producers, or CAPP. I am based in St. John’s, Newfoundland and Labrador.
CAPP represents Canada’s oil and natural gas producers from coast to coast, including those companies currently operating in the Newfoundland offshore petroleum industry.
We will also be providing a detailed written submission that will contain a comprehensive overview of the industry and its significant economic benefits. Today I will simply highlight some of the key information for you that demonstrates the economic importance of the industry to the province and its future potential.
Since 1997, when offshore petroleum production began, royalties to the provincial and federal governments have reached more than $26.5 billion. The industry is responsible for over 17,000 direct, indirect and induced jobs. The GDP impact from the industry is immense. Although the offshore industry is responsible for just 4% of Canada’s overall oil production, since 2007, total gross domestic product impact has ranged from 17% to 26% in the province. To put this into context, the oil and gas industry in Alberta accounted for 19% of the total GDP in Alberta in 2024. Although the industry in Alberta is responsible for a much larger share of Canada’s petroleum production, its provincial GDP impact is comparable to Newfoundland and Labrador’s. This industry is truly the backbone of the province’s economy and stands ready to play a key role in establishing Canada as an energy superpower.
The Newfoundland offshore petroleum industry is also becoming an even more important player on the global stage. Over $7.5 billion in crude oil was exported from Newfoundland and Labrador to international markets in 2024, representing 55% of the province’s total exports.
Newfoundland and Labrador has the significant benefit of direct access to international markets via tidewater, meaning the province’s exports are not dependent on building new pipeline capacity, as is the challenge in other parts of Canada. European markets have been the primary customer for the province’s exports in recent years, thereby contributing to international energy security.
Newfoundland and Labrador also has significant untapped petroleum resource development potential. Developing these resources could ensure that further economic benefits from this industry continue decades into the future, but capitalizing on that potential will require a full government policy reset.
Uncertainty and regulatory complexity in Canada have made it incredibly difficult to attract investment to the Newfoundland offshore petroleum industry. This is evident in recent offshore land sale results where no bids have been received on parcels for the past three years. This is worrisome given that beyond the potential Bay du Nord project, which is touted to be the next major offshore petroleum project, there are no additional projects on the horizon.
While global offshore petroleum investment has been strong in recent years, investment into Newfoundland and Labrador’s offshore petroleum industry is not keeping pace. We were pleased to see in the recent federal budget that government is focusing on economic investment and growth, and this budget sends a positive signal to our members as it takes steps toward increasing competitiveness and improving Canada’s investment climate. However, more clarity is required on how government will align its economic and environmental objectives and encourage new investment.
Offshore petroleum projects require years of planning, billions of dollars in capital investment and certainty that the rules won’t change for the projects before they can even start construction. Stimulating investment may also require unique solutions such as investment tax credits to account for regional productivity challenges. It is our hope that we can create the right conditions to enable future growth.
The companies working in the Newfoundland and Labrador offshore petroleum industry have also significantly invested in research and innovation to manage greenhouse gas emissions from their operations. Emissions from Newfoundland’s petroleum production accounted for just 0.19% of Canada’s total greenhouse gas, or GHG, emissions in 2023 and 0.68% of Canada’s upstream oil and gas sector emissions. We have seen innovative work in emissions reduction, including efforts to use artificial intelligence to monitor emissions in real time, the replacement of diesel-burning equipment with electric, such as the cranes used on some offshore facilities, and significant investment in emissions reduction research, including opportunities for electrification and the use of renewable energy for facility power generation.
We are also engaged in other environmental research to better understand and mitigate the potential impacts of our industry on the fishing industry. We continue to seek opportunities to raise the bar on environmental performance and opportunities to work collaboratively with Indigenous communities, the fishing industry and others.
While offshore petroleum has been produced in Newfoundland and Labrador for almost 30 years, the industry has much greater future opportunities, and now is the time to capitalize on that potential.
We have been encouraging both the federal and provincial governments to work with our industry to ensure we create the right conditions to encourage growth. If successful, Newfoundland and Labrador’s offshore petroleum industry will continue to significantly contribute to Newfoundland and Labrador’s and Canada’s economic growth for generations to come, as we collectively set out to become an energy superpower and the strongest economy in the G7.
Thank you, senators, for your time. We are pleased to answer any questions.
The Chair: Thank you, Mr. Barnes. Mr. Fiander, the floor is yours.
Bob Fiander, Executive Director, Trades NL: Thank you for this opportunity to appear before the Senate Standing Committee on Energy, the Environment and Natural Resources.
My name is Bob Fiander. I am the executive director of the Newfoundland and Labrador Construction Trades Council, also known as Trades NL. Our membership consists of 14 member unions representing over 50 skilled trades, 14,000 union members, and we are proud leaders in diversity and inclusion with three Indigenous skilled trades offices and targets on projects as high as 20%, supporting diversity and inclusion across the board.
I am a product of the oil and gas industry in Newfoundland and Labrador. My dad was a high-pressure pipe welder; he and my mom moved our family back home to Newfoundland and Labrador from Alberta in 1987, betting on the Hibernia project for our future. I got my start in the industry as an apprentice pipefitter during the construction of the Terra Nova FPSO. Can you imagine the feeling when your union office calls you up and asks you if you are interested in going to work constructing an offshore oil installation right in your home province? I can tell you that there are few words to describe it.
The Terra Nova FPSO construction project, because of its complexity and technical requirements, allowed me to enhance my skills so much that the project changed my life forever. I wasn’t alone; there were many thousands just like me, with the ultimate benefit of learning new skills transferable to any industrial setting across our great country.
With newly developed skills, it allowed me to work in the Newfoundland and Labrador offshore sector as a maintenance technician on both the Hibernia platform and the Terra Nova FPSO for several years. What a satisfying feeling to work full circle in the new and exciting industry that is Newfoundland and Labrador’s offshore oil sector.
When we construct the infrastructure to develop our natural resources in Canada, from engineering through to construction, testing, commissioning and integration, we become the most qualified people in the world to operate and maintain these facilities. Our workforce is prepared for whatever comes: sharp, skillful, qualified, productive and safe — all because someone had the foresight to ensure that the work on our resources largely stays in the hands of Canadians.
Production of oil and gas in Newfoundland started with the Hibernia oil field, which was discovered in 1979 on Newfoundland and Labrador’s Grand Banks, more than 300 kilometres from St. John’s.
In 1986, to create certainty and encourage investment, the Governments of Canada and Newfoundland and Labrador signed the Atlantic Accord to govern the management of offshore oil and gas resources. The accord ensured that residents of Newfoundland and Labrador would benefit from jobs and training opportunities. A key component is that it recognizes the rights of the province as the principal beneficiary of the resources off our shores.
Within the accord, proponents must file a development plan, which includes a benefits plan, of which industrial and employment benefits are critical components.
The federal-provincial offshore board guides proponents in developing this plan. The guidelines include construction, production and operations, noting they offer significant procurement and employment opportunities for businesses and residents of the province. These are detailed plans and capture the work to be constructed and operated in the province, and the labour demand, person hours and headcount in comparison to the entire project to ensure the province is the primary beneficiary.
Development of Hibernia became a reality in the early 1990s when the federal government acquired an 8.5% interest in Hibernia, using $2.7 billion in loan guarantees. The development of this project would have collapsed without this federal investment, and the Province of Newfoundland would have experienced severe economic challenges.
Leading up to this federal investment, Newfoundland and Labrador was described as a resource-based economy with the harvesting of fish, forestry and the extraction of minerals being the cornerstone of the economy.
The province had faced a number of difficult challenges, and new problems were emerging. The fishing industry was in trouble with groundfish quota reductions and closures, and the forest industry was weakened by the international newsprint market. Recognizing these challenges, governments dedicated significant efforts to stimulate oil and gas development.
Development of the massive Hibernia oil field project was approved by both levels of government, and the Mobil consortium negotiated the terms of a final benefits agreement. Construction and production started to create higher levels of personal income, further stimulated by higher consumer spending.
The most significant economic blow that faced the province during this period was the full closure of the northern cod fishery. In July 1992 tens of thousands of people lost access to their livelihood. The economic impact was described as equivalent to the shutting down of the auto sector in Ontario.
At that time, the unemployment rate in the province was high by any standard of comparison, and workers had to rely on part‑time, seasonal jobs, income support, unemployment insurance benefits and adjustment programs to survive. Many of the displaced fishery workers were retrained and became the skilled trades workers of today.
In 1993 the unemployment rate was 20.1%, by far the highest of any province in Canada, and nearly double the national rate of 11.4%. In 2024 Newfoundland’s unemployment rate stood at 10%, with Canada at 6.3%; we have certainly narrowed the gap, and oil and gas has been the largest contributor to this success.
The investment made by the Government of Canada in the Hibernia project had more than its share of critics. However, in 2022, when reflecting on this investment, former prime minister Brian Mulroney noted that Hibernia was a transformational initiative that enabled the province to survive massive unemployment with the cod moratorium and become a “have” province by 2008.
As of 2022, the Hibernia project has been a financial windfall, having contributed more than $15 billion in revenues to the provincial treasury and another $4 billion to the federal government. The full social and economic impact remains a proud moment for all Newfoundlanders and Labradorians. In 1997, when first oil was produced, Newfoundland’s gross domestic product was $16.3 billion.
Ten years later, in 2007, it was $27.3 billion — a full $10 billion more. When construction started in the early 1990s, Hibernia was supposed to last for 18 to 20 years and produce just over half a billion barrels of oil. But a quarter of a century later, the project surpassed 1.2 billion barrels and is expected to keep producing for another two decades.
Hibernia spawned a larger oil and gas industry that now includes four other producing oil fields and the possibility of a fifth as Equinor inches closer to a final investment decision on the massive Bay du Nord project.
Recently, Trades NL completed an economic assessment of the employment benefits created by the construction of the five oil and gas projects since Hibernia. This research was important to Trades NL given the negotiations of a benefits agreement for the Bay Du Nord project, as yet to be finalized, and given the construction sector is so critical to our economic development; it is the fifth-highest contributor to our GDP.
The construction of oil and gas projects have played a major role in creating employment and ensuring Newfoundland and Labrador maintains a highly trained and productive labour force.
Since 1990, all five of the oil and gas production platforms that remain in operation today have been constructed in Newfoundland by highly skilled tradespeople, including Hibernia, Terra Nova, SeaRose, Hebron, and most recently West White Rose.
Taken together, construction costs totalled more than $28 billion and created more than 195 million person hours of work, excluding Hebron where data wasn’t available. Nearly 70% of these hours were worked in Newfoundland and Labrador.
The Chair: We won’t have enough time for all the senators to ask questions, so are you almost finished?
Mr. Fiander: I’m almost there.
Looking at the projects individually, we have had great success with each project, creating significant annual employment in Newfoundland and Labrador. No less than 2,500 jobs every year for eight years on Hibernia project from 1990 to 1997; 900 jobs every year for four years on Terra Nova from 1998 to 2002; 1,300 jobs for four years on the SeaRose; 3,300 jobs for seven years on the Hebron project; and 850 jobs for eight years on West White Rose from 2017 to 2024, with the interruption of Covid, of course.
When looking at peak employment, Newfoundland and Labrador saw the highest peak construction employment on the Hebron project in 2015 at 6,018 jobs.
Our research found that Newfoundland and Labrador has been the chief and primary beneficiary of employment; during construction of the SeaRose floating production system, 68% of jobs were created in our province. That is quite an amazing accomplishment for an island with just over 500,000 people.
The oil and gas industry has had a transforming effect on the province, not only the large scale and long-term nature of the economic effects of the activity, but there has been a very wide range of benefits and beneficiaries. These capabilities are not limited to this industry, as the oil and gas sector projects have made our firms and people highly competitive, obtaining work, including construction on other projects locally, nationally and internationally.
While the province is still working to fully establish itself at levels similar to other jurisdictions in Canada, the oil and gas industry has taught us we can diversify our economy, deliver projects on time, on budget and in the safest manner.
We are excited by the Government of Canada’s 2026 budget stating that Canada is a proud nation of builders, and it is time we start building again. Investments in strategic infrastructure, fast-tracking projects and ensuring major projects are built in Canada for the benefit of Canadians is certainly the way to go.
Construction of the Bay Du Nord needs to occur at home in Canada, and we are ready and able to build it. We want to provide our construction workers jobs, our autoworkers wanting to retool to construction, our steel and aluminum workers and other industrial Canadian suppliers providing the materials during construction.
Building in Canada supports Canadians. Thank you.
The Chair: Thank you. Ms. Cochrane, do you have anything to add?
Rachelle Cochrane, Director of Policy, Innovation and Economic Research, Trades NL: No, I’m good. Thank you.
[Translation]
Senator Verner: Thank you to all three of you for being here this morning.
My question is for Mr. Barnes.
In a public statement on September 10, 2025, the president of your association recommended that the federal government move quickly to establish a more pragmatic regulatory framework that would help attract more investment to Canada, particularly for projects in the oil and gas and offshore sector. Would more pragmatic regulations mean ignoring provisions of the Impact Assessment Act and regulations to cap greenhouse gas emissions from the Canadian oil and gas industry? Also, how might this new framework ensure that projects that have already been approved, such as Bay du Nord, can move forward by the end of next year?
[English]
Mr. Barnes: I don’t fully understand your question. What legislative framework are you referring to?
Senator Verner: Bill C-69.
Mr. Barnes: The Impact Assessment Act, is that correct?
Senator Verner: Yes.
Mr. Barnes: Well, the Bay du Nord project has already gone through an impact assessment process and has received approval under that process from the federal government. It has approval already for impact assessment, and it is in the final stages, now working with the Government of Newfoundland and Labrador on a benefits agreement, which includes construction employment and royalties.
[Translation]
Senator Verner: For other projects, do you think your president was referring to the Impact Assessment Act?
[English]
Mr. Barnes: I don’t know what exactly my president was saying at that time. Bill C-69 has been an issue for us, because the particular piece of legislation does create some uncertainty and is unclear in certain areas with respect to how oil production projects can go through the environmental assessment process.
[Translation]
Senator Verner: I will read the excerpt from his public statement so that we have a better understanding.
[English]
. . . the federal government needs to act swiftly to address the need for a policy reset. The implementation of a more pragmatic regulatory framework is required to allow Canada to compete globally for investment and attract more project proposals from private sector proponents.
That was her declaration.
Mr. Barnes: What we have been seeing as an oil and gas industry, over many years now, is a series of federal legislation that we’ve been referring to as “pancaking,” in the sense that there has been a number of pieces of federal legislation that has prevented investors in our industry from investing here in Canada because of the length of time it takes to get through the regulatory process.
The Impact Assessment Act, in particular, Bill C-69, is unclear about how long will it actually take until you get approval once you start the approval process. We’re not seeing that in any other international country where our industry does business. That has resulted in investment leaving Canada, or not occurring in Canada, to the benefit of other international countries.
[Translation]
Senator Miville-Dechêne: I’m going to start by thanking you, Mr. Fiander, for sharing your perspective on the positive effects of the oil boom on Newfoundland and what it’s done for people like you and for the public. I realize that all of this is important in a province where the economy and the fishery, particularly the cod fishery, were really not going well.
That said, you say there’s been a slowdown in exploration in your province. Isn’t it simply because of international competition, which means that oil from Brazil and Guyana cost less? You’re in an international market, and the whole issue of wages means that oil can be pumped at a better price elsewhere than in Canada. Isn’t that your biggest problem?
[English]
Mr. Fiander: There may be some truth in that. It can be developed in other countries in the world more cheaply. In particular, for the Bay du Nord project, the mode of development for Equinor is to construct in its entirety out of country in Singapore. In the economic analysis we have done, Canada matches up very well with Singapore with regard to labour rates. Roughly, Canada pays roughly around $37 U.S. dollars and change per hour, and Singapore is around $35 an hour. We are competitive from that project’s perspective.
[Translation]
Senator Miville-Dechêne: I want to ask you a question that comes to mind from the previous panel. The oil and gas industry has responsibilities. How is it that, historically, no compensation has been awarded to fishers who have lost their fishing grounds and fish stocks when exploration has proven to be positive and you have developed? It seems to me that this issue of compensation comes back to the oil and gas industry, to the extent that you take the site and you develop it, and because of that, the fishers lose some of what they’ve built. How do you explain this lack of compensation when we know that, in the wind industry, there is currently talk of compensation for fishers?
[English]
Mr. Fiander: I’m certainly not in a position to talk about compensation for fish harvesters.
Mr. Barnes: I can do that. There are compensation programs in place for exploration and production for any direct impact the oil and gas industry has on the fishing industry. Individual oil and gas companies are required by regulation to have compensation programs in place. In fact, there is an industry‑wide compensation program so that, if there is some damage to fishing gear that cannot be attributed to any one particular oil and gas company, there is an industry-wide procedure in place to compensate fishers. Having said that, I think the question you were getting at is about the loss of fishing grounds.
The area used by oil and gas exploration and production is quite small. It is restricted for the fishing industry. It is in the 500-metre zone, size-wise. That is largely for safety reasons. We do not want the fishing industry to enter the zone and damage their vessels or fishing gear because of the oil and gas equipment in that area, but the entire exploration license and even the entire production license are still open for the fishing industry. They quite often fish in some of those areas as well. If there are concerns over compensation for lost fishing grounds, we have not been hearing them directly. We heard from Ms. Power this morning. There are mechanisms in place in Newfoundland for having that dialogue not only with the industry but also with the regulators involved, which are the Department of Fisheries and Oceans and the Canada-Newfoundland and Labrador Offshore Energy Regulator.
Senator Miville-Dechêne: Four or five platforms were built offshore of Newfoundland. Obviously, fishermen lost places to fish. Were they not historically given any compensation for that?
Mr. Barnes: To my knowledge, there was no compensation given for that, but I wish to reiterate that the loss of fishing grounds is quite small. There is a 500-metre exclusion zone around each platform, which sounds large, but, in the scheme of things, is quite small. The fish species simply swim around the platform. They are still there. The fishing industry can fish roughly in that same license area. They just cannot get that close to the platform for safety reasons.
Senator Miville-Dechêne: Thank you.
[Translation]
Senator Aucoin: I have two questions. They’re for Mr. Barnes.
I’m going to continue the discussion on compensation, which is my first question. I understand that the space used is very small, but still, it interrupts activity in certain fishing areas; all marine traffic is also affected in the event of exploration activity. Would your members potentially be open to general compensation before seismic exploration or development even begins? Might your members be open to that?
[English]
Mr. Barnes: Our members are certainly open to that conversation at any point. In fact, there’s a recent example. At the West White Rose project, which is under construction near Marystown, Newfoundland and Labrador, there was some disruption of the fishing grounds where that platform was being constructed. There was a direct conversation between the fishing industry and the oil and gas operator that is responsible for that platform, and compensation was offered.
There is no regulatory structure to regulate or allow that. It was just an industry-to-industry discussion and eventual compensation. There have been examples of that.
[Translation]
Senator Aucoin: Should that discussion happen directly between your members and the fishing industry, or should it be a three-party conversation between fishers, government and producers? It could just be a percentage that you pay, like 12.5% in the future. So there would be only one amount, and of the royalties paid, a portion would go to fishers.
[English]
Mr. Barnes: As part of the oil and gas industry, we prefer regulatory certainty. The answer to your question is this: If there are regulations associated with compensation which can be known in advance of any exploration or production activity or even further in advance before any offshore licenses are awarded, that would be ideal. That is because our industry would then know what is required to do activity there and if any compensation needs to be provided. Then we can make economic decisions accordingly as to whether activity will occur or not.
[Translation]
Senator Aucoin: Here’s my third question. You mentioned that a regime and laws or regulations must be in place for the industry to be a sure thing. Do you have any other suggestions for the committee that we could pass on to make everything more efficient, so that, in the long term, we have applications to develop other sectors similar to Bay du Nord? Can you speak to that?
[English]
Mr. Barnes: I don’t have any specific recommendations as to a type of compensation program. I would suggest that if the regulatory authorities or the —
[Translation]
Senator Aucoin: That’s not what I mean. I’m not talking about compensation anymore. In order for the industry to move forward—it seems like it’s come to a standstill now—do you have any suggestions or recommendations on what we can do to move things forward or get the industry back up and running?
[English]
Mr. Barnes: It’s a good question. We are seeing some movement to that effect coming out of the federal budget where we see wording about wanting to see Canada be more competitive. We are seeing wording in the budget about removing the emissions cap, which has been an investment deterrent for our industry. We are seeing positive comments about changing methane regulations, including revising or reviewing the Impact Assessment Act and some other federal legislation, which has impacted investment into this country, as I mentioned earlier. We are seeing positive signals coming from the federal government about wanting change to allow investment to occur in the future and for Canada to get back to being a more competitive country to attract investment for our oil and gas industry.
Senator Arnot: Mr. Barnes, the Canadian Association of Petroleum Producers, or CAPP, prefers regulatory certainty, as you said. The federal emissions cap is only still proposed. How is the offshore industry planning for compliance in the absence of a final enforceable regulatory framework?
Mr. Barnes: That is a good question. Our industry — offshore and throughout Canada — has been focused on emissions reduction in absence of any formal emissions piece of legislation. That is still taking place irrespective of whether the emissions cap regulations comes into force or not. That will continue into the future. Our industry is changing. Our industry wants to reduce its emissions.
The problem has been that that proposed regulation on emissions cap is worded in such a way that, from an offshore perspective, it will “shut in” production earlier than it should be, in the sense that, as an offshore oilfield ages in time, the emissions will increase to get more oil out. However, if there is a cap in place, it means that production can no longer continue, and the field will have to shut in early, and then you have lost economic benefits from that. The exact answer to your question is that we are still wanting to see changes in that emissions cap because it has impacted investment.
Senator Arnot: Given escalating global climate policies and an uncertain future around demand, how does CAPP assess the stranded asset risk for long-life offshore investments?
Mr. Barnes: We, as an association, don’t undertake such an assessment. However, we know that our members — certainly in the Newfoundland offshore area — tend to be large multinational companies that invest around the world, and they undertake such an analysis. But we as an association do not.
Senator Arnot: Ms. Cochrane, based on your modelling, is Newfoundland’s economic future overreliant on offshore oil revenues and project cycles? Does Newfoundland have a clear picture of labour demand under different energy transition scenarios, particularly as the offshore activities decline faster than expected?
Ms. Cochrane: Certainly, the province places considerable attention on developing other sectors. They have been doing that since we were caught in the major crisis in the 1990s. It does not generate the employment and income potential that we have generated from oil and gas. The development is not as fast. Certainly, diversification of the economy is critical. The province knows that, I would argue, and they do spend a fair bit of time trying to find other sectors. We have been in conversations with them on defence, aerospace and a number of other industries. Yes, everybody is working on that problem. Again, Mr. Fiander’s point that we are an island in the middle of the North Atlantic — we can never forget that. We have to find and work through our competitive advantage. They are doing that.
Senator Arnot: Mr. Fiander, how vulnerable are skilled trades workers to downturns in the offshore activity? Has Newfoundland done enough to prepare for non-petroleum opportunities for your organization’s members? Do you feel that the trades are being adequately supported in training and certification pathways for offshore wind electrification, hydrogen and marine decarbonization projects?
Mr. Fiander: From a training perspective, on the wind and hydrogen projects, a year ago, we would have been getting ready to get into some new training to upskill the journeymen and apprentices in the province. We are reliant on the oil industry, but we have diversified from an energy perspective in Muskrat Falls. We have developed the hydro development. The mining in the province is blooming now. It needs to be supported.
Again, the offshore developments in our province have been critical. I would suggest to you that we would not have many tradespeople in the province had it not been for all the projects. Right now we’re at 35 years of developing and constructing. If the Bay du Nord project is let go to be developed in some other country, we are going to lose our skills and abilities, and our people are going to go somewhere where they are required — somewhere else in Canada or somewhere else in the world. It is critical that we build the Bay du Nord project in Newfoundland and Labrador.
Senator Fridhandler: Mr. Barnes, I would like to drill down a bit more into the situation of the competitiveness of offshore Newfoundland and the global markets that your members play in. Their capital can go anyplace, and it will go where they believe that they can get a better return.
You have suggested that there is a government policy reset, which is a phrase that seems to come out of the CAPP organization as one of the regular spoken terms. Is that the only thing we need to be concerned about on your members’ investment decisions?
Are we happy with tax regimes, royalty regimes, labour force? I am trying to figure out a matrix of the issues we can possibly address to make offshore Newfoundland more attractive. While you are not going to share the scorecard of the investment decisions that your members make, it is a broader thing. If you are going to tell me that the only things are methane and cap emissions, fine, that is it. But I think it is more. You might not have an answer today, but I would appreciate a more fulsome written response from CAPP. It is important to our study to understand what is going on there from the investors’ perspective. Maybe you want to take a shot at it and give us an introduction.
Mr. Barnes: Yes. Sure. We will include a more fulsome answer in our written submission. Briefly, certainly, the federal government policies and some of the legislation I mentioned earlier have had an impact, but that is not the only impact.
We, as an oil and gas industry, have also looked toward the industry success we have had in various basins before we invest. In Newfoundland, recently, there has been very little success when it comes to exploration drilling that we have seen in the past. That has resulted in some companies taking a second look as to whether they should invest in Newfoundland if they have not been successful there in recent times. We are also looking closely at whether the Bay du Nord investment decision will occur or not in coming months, because that will drive future interest in Newfoundland and potentially future investment. That, coupled with the investment climate in Canada as a whole, has thwarted some investment opportunities in Newfoundland and Labrador from our oil and gas sector.
Senator Fridhandler: Mr. Fiander, from the workforce perspective, you have many members with unique skills, who have been at this game for a while with offshore activity. Newfoundlanders have historically spent a lot of time in northern Alberta in the Fort McMurray area, and many skilled trades people work there. Can you colour the picture more? It would be great to have more work at home in Newfoundland. People have to be mobile and be able to go where the work is. What kind of movement domestically and internationally on offshore projects occurs with people who have been trained in Newfoundland — Newfoundlanders?
Mr. Fiander: Our people, including myself, have spent quite some time in Fort McMurray and other places in the country. If we don’t continue to invest in the construction pieces in the province, then we’re going to see more people move out. We have an opportunity right now to continue our skills.
Again, I will lean back on the 35-year legacy of our workforce. We came out of the fishery and forestry and created a new industry. The new industry really spawned these thousands of tradespeople that Newfoundland and Labrador has now, and the benefits to the world. We see our people in Spain, in shipyards in Ireland and Norway, right across Canada, from Kitimat on back through nuclear power in Ontario. We have a skill set needed everywhere.
We are happy and glad to be able to travel and take part in some of these projects and help out other provinces. If we had a choice, we would rather be in Newfoundland and Labrador constructing.
[Translation]
Senator Youance: My first question is for Mr. Barnes.
In the context of Newfoundland and Labrador’s offshore oil exploration, recent data shows a gradual decline in revenue transferred from industry to the provincial government, while public spending—such as salaries and employment conditions—continues to increase. We heard from an economist that this trend threatens the province’s financial stability if industry contributions don’t resume.
What are the current prospects for the offshore oil sector? Is there any leverage to reverse that dynamic? Can we expect, in a way, that transfers will increase in the coming years, while avoiding overexploitation of resources and public investment contributions? I always wonder why an industry that makes so much money needs public funds.
[English]
Mr. Barnes: In the future we will certainly see royalties and economic benefits generating from the current producing fields that are producing offshore in Newfoundland and Labrador. That will continue in the future. However, there is a limited future, because a number of these platforms are coming near the end of their producing life because the fields are depleted. Eventually they will stop producing, and the facilities will be decommissioned and then removed. There is a time limit coming up on Newfoundland and Labrador fairly soon, within the next decade or so, and they will definitely see a drop in royalties and other economic benefits because there won’t be any more production from those facilities.
Having said that, the future is still bright because we have projects like Bay du Nord and potentially some others that may follow — depending upon successful exploration — that will hopefully replace the projects that end. Royalties from those projects and subsequent benefits will occur to the province.
[Translation]
Senator Youance: Thank you.
My second question is for Mr. Fiander, but Mr. Barnes can respond as well, because it’s related to his answer.
I’ll jump back to when the offshore industry started. It was developed to meet a known economic need, in particular because of the moratorium on the cod fishery, which was a pillar of the provincial economy at the time. Today, we can see that fishing areas and areas destined for offshore development cannot co‑exist.
I’m going to be a bit provocative: Is it fair to say that the oil and gas industry could gradually replace the fishing industry as an economic driver in the province? How do the trade representatives perceive this transition and the social and economic repercussions of a change like this?
[English]
Mr. Fiander: The fishing and oil industries can coexist together. With regard to offshore production and replacing the fishing industry, we’re not interested in replacing the fishing industry. That has to be managed on its own, but with the mindset that the oil industry is going to have an effect on the fishing industry. We can coincide. To Mr. Barnes’s point earlier, we are not hearing there is much interruption in the fishing grounds at the Grand Banks at this point.
Mr. Barnes: Yes. I would concur with Mr. Fiander. Both industries certainly can coexist and have since both industries began activity in Newfoundland. We are seeing both industries exist worldwide in other similar jurisdictions.
There is a unique entity in Newfoundland called One Ocean. It is an initiative developed over 20 years ago between the fishing industry and the oil and gas industry where the executives of both industries come together on a frequent basis to discuss issues of concern. That communication has afforded us the ability to address any issues before they become major issues. There have been many positive experiences working with that group.
[Translation]
Senator Youance: I have another question.
You said that eventually, the current drill sites will close down and the structures will no longer be useful. Could we foresee those perimeters that were closed to fishing being given back to fishers? You can send us a document if you don’t have an immediate response.
[English]
Mr. Barnes: The answer would simply be yes. Once the production platforms are decommissioned — that’s the word used when they’re no longer being used — they will be removed from the offshore area of Newfoundland, and the small area that is excluding fisheries at the moment will be opened up.
Senator Lewis: Mr. Fiander, I enjoyed the concept of other workers from Canada travelling to Newfoundland when the oil industry will be developed. Let’s hope there’s much to develop and many opportunities for Canadian workers across this country to fly to Newfoundland. Maybe we will get a direct flight from Ottawa to St. John’s full of oil workers two or three times a week.
When we talk about competitiveness, there are a number of levers that the province and federal government can use to make the construction in Newfoundland more competitive. You talked about differences in wages. In the rest of the country, we see things like royalty holidays during construction phases.
I am sure if the construction is done in Singapore, they won’t be using Canadian steel, aluminum or other products. It is a huge impact on the Canadian economy. I think of things like bridges built in this country. You could easily have them built in China and reassembled in Canada. That would be outrageous to think that would happen.
This issue — as far as where the new platforms are going to be constructed and how they are going to be constructed — is a very misunderstood and little-understood part of these projects. It is important for not only the Newfoundland economy but the Canadian economy. I would like your comments on that.
Mr. Fiander: Certainly. You mentioned that you would like to see Canadians coming toward Newfoundland to travel. We experienced some of that not so long ago around 2016 when we had multiple projects being constructed in the province, such as Long Harbour, Hebron and Muskrat Falls. We had people from all over Canada coming down to help us on those projects, each and every one of them in some manner. We would like to get back to that again.
From a competitiveness perspective, we have been fighting people saying that we are not productive, challenging our quality and challenging our safety. We have met every one of those challenges, and today we are the most productive, safe workforce delivering quality work anywhere in this world. I would take our workforce anywhere in the world. I would suggest to you that we would be as good or better.
We need to keep investing in projects again. It’s so critical that a province of just over 500,000 people have this opportunity to continue to hone their skills. If we miss a project, you have seen the numbers. A project can go from four to seven years. If you miss that time, that gap, your skills disappear, and your people turn to something else. We don’t need to turn to something else. It is an important industry. We can’t turn the tap off on it right now.
The Chair: Thank you, Mr. Fiander, and thank all of you for being here with us this morning. We appreciate your time with us. Our time here has ended now. Take care and safe travels.
(The committee adjourned.)