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By Alex Whalen
The Wakeham government recently announced a series of initiatives to advance offshore gas development. And that may be good news for Newfoundlanders and Labradorians.
According to the government’s latest estimate, there’s 27.6 trillion cubic feet of natural gas available for development in the Jeanne d’Arc Basin, worth tens of billions of dollars. Average hourly wages in natural resource industries exceed $50 an hour and are among the highest-paid of any industry in Canada. But the provincial government must improve its policies to fully capitalize on this massive opportunity.
Thus far, the government has announced initiatives to assess offshore gas potential, fund a provincial energy plan and feasibility study, and consult on a royalty framework. Again, while each of these items may have merit, to attract more investment in the industry the Wakeham government must enact substantial reforms.
Indeed, investors have expressed concern about the province’s regulatory environment. According to a survey of investors published in 2024, 100 per cent of investors said that environmental regulations, regulatory duplications and inconsistencies deter investment in the province, while 57 per cent said uncertainty about land claims deter investment. Among 17 jurisdictions in the survey, Newfoundland and Labrador had the fourth-least competitive policy environment and the second-lowest in Canada. In other words, despite its natural resource potential, poor policy remains a big problem in Newfoundland and Labrador.
Of course, when it comes to oil and gas investment, the province competes on a global scale. Companies with the expertise required to develop this resource are typically large operators who look for opportunities around the world. Because undue regulation drives up the cost of operations, it has a dampening effect on investment.
The province’s competitiveness problem isn’t simply limited to red tape. The provincial government’s relatively high tax rates can discourage investment, and its debt and budget deficits ($688 million deficit this year alone) may portend future tax increases. On this score, Newfoundland and Labrador was Canada’s worst-performing jurisdiction, with 80 per cent of survey respondents indicating concern about the province’s red ink and 56 per cent pointing to taxation.
With less than a year in office, the Wakeham government bears little responsibility for the province’s standing in the eyes of oil and gas investors. Yet its emphasis on natural gas development represents a clear opportunity to attract investment and well-paying jobs. To do this, the government must help make the province more attractive to investors.
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