Arctic oil ban could hurt and help N.L. economy, says NOIA chairman

Newfoundland and Labrador could feel some mixed impacts from a ban on Arctic oil activity handed down by the federal government on Tuesday, said NOIA chairman Raymond Collins.

Prime Minister Justin Trudeau, in partnership with U.S. President Barack Obama, announced a moratorium on new oil and gas leasing in Arctic waters. The U.S. issued an indefinite ban, but Canada will review the action in five years' time.

• Trudeau announces review of Arctic strategy, joint drilling ban with U.S.

• Provincial government, Statoil to spend $3.9 million on Arctic

Collins, who heads up the Newfoundland and Labrador Oil and Gas Industries Association, said the decision will hamper plans of making this province a gateway to Arctic oil exploration.

"It puts an end to that [plan] for the foreseeable future," Collins said. "There will be limited opportunities in the eastern Arctic of Canada for St. John's to become a [supply] location for any potential exploration that will occur."

Other Arctic jurisdictions, such as Greenland, are not part of the ban announced today but remain in proximity to the province, Collins pointed out.

"There may be some options there."

While Canada has banned exploration activity until further review, Obama utilized an obscure provision from a 1953 law to place a permanent ban on offshore leasing in the Arctic areas of the Beaufort and Chukchi Seas.

The statute states, "the President of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer Continental Shelf."

Greenpeace, the international environmental group, applauded the move by both countries in a statement to CBC News.

"Today's announcement is a groundbreaking step for the Arctic, its inhabitants and the planet," said Jessica Wilson, head of Greenpeace Canada's Arctic campaign.

"Offshore oil drilling poses a serious threat to the region and the entire world because of the risk of oil spills and out-of-control climate change."

However, in the statement, the group said Canada could do more to act permanently, like its southern counterpart, and said the decision excludes a number of existing exploration licences in the Arctic.

In 2014, the Province of Newfoundland and Labrador, in partnership with Statoil, committed a combined $3.9 million to Arctic oil exploration. The province put up $1.5 million of the funding under its Research and Development Corporation.

The province's reputation for oil exploration in cold climates and rough seas made it a hub for planning, with the Arctic Oil and Gas North America Conference held in St. John's in April 2015.

Since actual drilling was considered a long way off, Collins does not believe there are any large-scale investments by NOIA members squashed by the ban.

Arctic ban could benefit province: NOIA chair

The effects may be felt elsewhere, however.

"I haven't had a chance to poll members individually, but I think ones that are directly engaged in Arctic research will have some disappointment on this," he said, adding he is unsure what will happen with research projects currently stationed in the North.

With the promise of Arctic oil development dashed for the foreseeable future, Collins said the province's offshore could end up being the focus of companies that held northern hopes.

"[The province's offshore] is very attractive on a worldwide basis, so we still hope to see significant growth in the local industry. We still think the environment for Newfoundland and Labrador is quite positive for oil and gas."