COMMENTARY: Offshore Petroleum Bid Good News for Nova Scotia—But Should Be Just the Beginning

By Alex Whalen

Last week, Nova Scotia’s offshore energy regulator granted Inceptio Oil and Gas Ltd., a British energy company, the right to explore for oil and gas in two areas of the province’s ocean floor.

Premier Tim Houston has emphasized the need for greater development of Nova Scotia’s natural resources to drive income growth for workers, and Nova Scotians should hope the Inceptio bid—which totalled $210 million—is just the beginning. Indeed, the government should enact policies to make the province more attractive to investment, for the benefit of Nova Scotians.

And better policy is badly needed.

Back in the late-1990s and early-2000s, investment in Nova Scotia’s natural resources sector (mining, quarrying, oil and gas) comprised 20 per cent of all business investment in the province, often exceeding $1 billion per year (all figures adjusted for inflation in 2017 dollars). But following the decommissioning of the Sable Island gas project, which began in 2017, investment in the sector has averaged just 2.3 per cent of overall business investment (excluding investment in residential housing), with an average investment level of $140 million per year. That’s a collapse in investment on an epic scale, and bad news for workers in Nova Scotia.

Currently, incomes in Nova Scotia are among the lowest of any province or U.S. state, trailing peer jurisdictions by thousands of dollars per year. Business investment is a key driver of wage growth because it gives workers the tools, equipment and intellectual property needed to produce higher-value goods and services. Nova Scotia also ranks near the bottom for business investment (on a per-worker basis), trailing most Canadian and U.S. jurisdictions.

While business investment can come from a variety of sources, natural resource industries drive a substantial portion of business investment in Canada, and average hourly wages in the sector are among the highest of any job classification in the country. In other words, if Nova Scotians want higher incomes, they should cheer for more business investment.

How can the Houston government attract more investment in natural resources to boost economic growth and create high-paying jobs?

First, it’s important to acknowledge that the government has lifted bans on hydraulic fracturing (a method used to recover natural gas) and uranium mining, which should open avenues to investment that were previously off-limits. And Premier Houston’s strategy to cut red tape and streamline project approvals should make Nova Scotia more attractive to investors.

But there’s much more to be done. While Nova Scotia’s natural resource potential is estimated in the many billions of dollars, the province competes on a global scale for investment. Investors in oil and gas and mining consistently point to regulatory duplication and inconsistency, overly-burdensome environmental regulations, long permit times, and other concerns driven primarily by government policy in Nova Scotia, federally, and in other provinces.

If the Houston government can improve Nova Scotia’s regulatory and permitting system, the Inceptio investment could represent the beginning of a new era of growth in the province and not simply a one-off in an otherwise struggling sector. Nova Scotians in search of higher wages should hope that it’s only the beginning.

Share This:

---

More News Articles