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The Stena Icemax offshore drill ship arrives at Bay Bulls, Newfoundland, on May 2, in preparation for drilling an exploration well for BP Canada Energy.GREG LOCKE/The Globe and Mail

Cash from Newfoundland and Labrador’s offshore oil sector will be used to help the province pursue its green ambitions through a unique fund that is seeking a broad range of ideas to help reduce greenhouse gas emissions.

Called the Green Transition Fund, the $100-million kitty launched last week stems from the West White Rose offshore oil expansion project. Cenovus CVE-T, Suncor Energy Inc. SU-T and Nalcor Energy agreed to the investment as part of the restructuring deal they struck with the province in May, 2022, which brought certainty to a half-finished project that had languished for two years. That deal also included an overhaul of the project’s royalty framework.

The annual payment into the green fund from West White Rose begins at $6-million in 2023, increasing to $12-million in 2033.

Industry, Energy and Technology Minister Andrew Parsons said in an interview that he wants to see cash roll out the door as quickly as possible.

Newfoundland and Labrador is aiming to reduce its emissions to net zero by 2050. The fund will provide support to projects for businesses, organizations, postsecondary institutions and industry associations to assist the province’s transition to a green economy.

Projects must have willing and capable partners, present tangible benefits such as job creation, intellectual property creation or greening the economy, and they must make sense for the province, but the fund has been left broad by design.

“There is no idea that won’t be considered,” Mr. Parsons said. “We didn’t want to make it so prescriptive that it eliminated possible ideas. I would rather look for the best of what comes in and cast the net wide.”

Applications could involve anything from academic or commercial research and development, for example, to green investments, techniques to reduce emissions in the mining sector, the development of new markets or other initiatives supporting the green economy.

The White Rose offshore field sits around 350 kilometres east of Newfoundland. It produces about 26,000 barrels per day, but that number is falling as its oil reserves decline. The expansion project adds about 75,000 barrels per day to production, with the first new oil expected to flow in early 2026.

The province’s offshore oil sector suffered a blow late last month when Equinor announced it had put on ice plans to develop the $16-billion oil project Bay du Nord. The Norwegian energy giant said the project would be paused for up to three years, citing significant cost increases because of volatile market conditions.

But Mr. Parsons said he’s not concerned that market forces could once again scupper West White Rose and risk payments into the Green Transition Fund, because it’s a contractual obligation on the part of the oil companies.

On Bay du Nord, he said the province is continuing to engage with Equinor, but he’s “not convinced this project is on life support.”

“Every indication I have is this was a strategic move meant to find a better path forward. But they fully recognize this is a huge opportunity,” he said.

“When you’re talking about projects that are in the $16-billion range, you want to ensure that your investment doesn’t go overboard. It doesn’t matter how much these companies are worth, the bottom line is always what’s driving it.”

Charlene Johnson, chief executive of Energy NL, an industry group, said at the launch of the Green Transition Fund that it was encouraging to see “revenue from the offshore helping us prepare for the energy industry of the future.”

Ms. Johnson said the program would help cover some of the “overwhelming, if not prohibitive” costs of implementing technology that can help the sector reduce its emissions.

She is also pleased it will be available to all facets of the energy sector, from supply and service companies for the offshore to the province’s growing renewable energy sector, including wind, clean fuels and hydroelectricity.

The Green Transition Fund will commence with a call for expressions of interest in the coming days.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 20/02/24 4:00pm EST.

SymbolName% changeLast
CVE-T
Cenovus Energy Inc
-1.11%23.24
SU-T
Suncor Energy Inc
-1.03%44.12

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