As province reels from oil decline Nalcor’s exploration efforts to be celebrated in London
It was announced this month that Nalcor Energy – Oil and Gas will be recognized for its offshore exploration efforts in Newfoundland and Labrador. Petroleum Economist Awards 2017 announced on September 13th that Nalcor’s efforts in exploring the frontier basins off the coast of the province garnered them a nomination in the Exploration Company of the Year category.
The press release says that their dedication to environmental protection, employee welfare, and sound business practices is at the core of what this award is about. It goes on to say, “Specifically, the Exploration Company of the Year award recognizes a company that has demonstrated an enterprising attitude and pursued its business interests successfully, using innovative techniques or processes.” This award comes at a time when oil and gas is a hot-button topic around the province, especially here at Memorial University.
As engineering students are finding procuring work-term assignments and post-graduate employment a challenge, it may be a little hard to celebrate the success of Newfoundland and Labrador’s largest energy company. Still, the award comes with global recognition, and perhaps these efforts will lead to more than just awards. The company is working on several projects in and around the province, aimed at restoring Newfoundland and Labrador’s oil boon.
Nalcor is working with the White Rose Growth Project and the Hibernia Extension Project, both of which could potentially lead to more gainful employment in the province. The aim is to tap into still undiscovered or unused oil deposits off the coast. The need for petroleum engineers and skilled tradespeople should provide some level of relief to a province that needs an uptick in employment badly.
As of August, Newfoundland and Labrador’s unemployment rate was at 14.7 percent, compared to the national average of 6.2 percent, per Stats Canada. Economic participation was at an Atlantic Canadian low 58.3 percent, again well below the national mark of 65.7. As oil prices have fallen, layoffs have come and the province has been hit hard. Looking at employment rate by industry, the numbers are striking.
The overall employment rate has fallen by 6.3 percent since August of 2016, and those in the energy industry have been hit the hardest. Employment has fallen by a staggering 19.6 percent from August of 2016 alone and continues to drop month by month. And as one of the province’s most important industries falters, the effects have spread. With unemployment on the rise, those in the real estate and finance sectors have seen a stark drop as well. From August 2016 to August 2017, the employment rate in those areas has dropped by 27.8 percent. As more Newfoundlanders and Labradorians find themselves without steady work, the real estate and finance sectors have been hit hard, as they had been benefiting from a temporarily booming economy.
That doesn’t even account for the potential long-term consequences of oil’s decline. Without an anchor for the economy, more and more young people leave the province in search of meaningful employment elsewhere. In speaking with several students, across several fields, many have intentions of leaving Newfoundland and Labrador when their education is finished. It’s no secret that the population is aging at an accelerated rate, with the number of deaths once again outstripping the number of births last year. Factoring in immigration to the province, and emigration from it, Newfoundland saw a net loss in population from 2015 to 2016. One of the basic principles of economics is that larger populations make economies more prosperous.
The unspoken problem, of course, is that while Nalcor can do all the exploration it wants; they cannot force up the price of oil. For all the projects and efforts of Nalcor and the provincial government, no gains will truly be seen without a rise in the price of oil. So perhaps it is more evident now than ever that hitching our economic wagon to the horse that is oil is to be forever on the verge of collapse. The unemployment numbers aren’t simply outliers; they have been trending this way more than long enough to be statistically relevant.
So now as the economy sits in a precarious position, on the verge of potential collapse, the province is once again at the mercy of the oil industry’s success or failure. Hopefully, the global recognition that comes with an award from one of the industry’s oldest and most respected publications can spark more foreign and domestic investment into this province’s oil potential. The award winners will be announced next month in London, and the full list of nominees can be found on the Petroleum Economist Awards website.