As the COVID-19 pandemic sent oil prices plummeting to historic lows, emails obtained by The Canadian Press show Newfoundland and Labrador was quietly bracing for two of its offshore oilfields to be abandoned by their owners.
And as the province watches those same companies this year report staggering profits, experts say fossil fuel-producing provinces like Newfoundland and Labrador should get used to the whiplash -- and use it to better protect themselves."We're going to see more situations where companies have a record profit one year and are completely busted the next year," said Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen's University in Kingston, Ont.
The notes said the province would take a $6.5-billion hit to its gross domestic product over the next decade if Suncor abandoned Terra Nova. By June of 2021, the province's offshore oil regulator had prepared a communications plan in case Suncor decided to decommission the field, the emails show. Both Suncor and Cenovus posted significant 2022 profits last week, at $9.1 billion and $11.4 billion, respectively.
As energy demand changes and countries move away from oil and gas, there is more volatility ahead for fossil fuel prices, he said, adding that governments should brace for more extreme highs and lows. One way they can better insulate themselves is to build in mechanisms to recoup their subsidies or incentives when markets rebound, he said.
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