I Am a Rock - Building Toward Another Revival of Canada's East Coast Oil Production

Though much smaller in scope than the oil-and-gas producing behemoth of Western Canada, oil production from the offshore of Canada’s easternmost province of Newfoundland and Labrador already has decades of experience behind it. With five offshore fields producing a little under 230 Mb/d as of early 2023, the region’s slow decline is likely to continue unless existing fields undertake additional development work or new fields are discovered. Building on the province’s commitment to double output by the end of this decade, it has worked with various offshore operators to enhance its royalty regime for two existing sites that will generate increased production in the next few years. In addition, one major discovery has the real potential to meet the pledge of doubling output by the early 2030s. In today’s RBN blog we consider the history of the region’s offshore oil production and future plans to increase output.

When thinking of Canada’s oil and gas industry, what typically may come to mind are the vast reserves and output of the oil sands, the immense productivity of natural gas wells in the unconventional Montney formation, or perhaps, unfortunately, too many instances of congested crude oil pipelines resulting in large price discounts for its flagship heavy crude oil. Though the first two are still true, the third example has become much less of an issue given recent pipeline expansions from Alberta to the U.S. Midwest. However, these are all related to oil and gas activity in the nation’s western provinces of Alberta, British Columbia and Saskatchewan.

What may not immediately come to mind is that at the other end of Canada, off the coast of its easternmost province of Newfoundland and Labrador — also referred to as The Rock, hence the song title for today’s blog — is another oil-producing region that has been playing an important role in that province’s, and the nation’s, energy industry and economy. Though oil was thought for most of the 20th century to be present in the ocean depths off Newfoundland, it was only after many years of work and test drilling that commercial quantities of crude oil were discovered in 1979 by Chevron Canada in the Hibernia field (red diamond in Figure 1), 180 miles (~300 km) east of the provincial capital of St. John’s in the North Atlantic. First production from this field and the region began in November 1997.