• A useful list of industry milestones
• NOIA's past Chairpersons and Presidents (1977-2006)

Atlantic Canadians, generally speaking, don’t often pat themselves on the back and they never rest on their laurels. More than 500 years of grueling work in heavy seas, unforgiving weather and geographic isolation has forged a regional character notable for its patient resolve, practical creativity, gritty determination and indefatigable optimism. At the core, we are a seafaring culture: centuries of mending nets, repairing vessels and living on short rations through the bitter winter, always planning for the new active season at sea, has bred a people who look to the future rather than the past.

Yet, here is NOIA, looking back over 25 years of helping to grow East Coast Canada’s oil and gas industry. This article is not a retrospective catalogue of events. It is a series of snapshots, vignettes of people too busy with today and tomorrow to spend much time thinking about yesterday. It celebrates the character and the work of people who made the East Coast oil and gas industry happen.

Twenty-five years has seen many significant milestones and brought change to virtually every aspect of the industry, from technology to business structure to the petroleum marketplace itself. NOIA has kept pace with - and in some cases has driven - these changes. And NOIA members are already planning what they’ll do in the next quarter century.

The early days
At its incorporation in 1977, NOIA’s membership and mandate tended broadly toward ocean industries rather than oil and gas, and was focused in Newfoundland. In the 70s Atlantic Canada did not have the infrastructure needed to support imminent oil and gas development. Even the environment was an obstacle, given the harsh cold-ocean and ice conditions. A thriving oil and gas industry seemed a very improbable - and distant - dream.

Yet the energy crisis of the 1970s was driving an ambitious search for hydrocarbons. Oil prices were climbing - and were expected to skyrocket. Popular wisdom held that within a generation, the world would run out of key non-renewable resources on which the economies and societies of the developed world depended. Middle-eastern conflicts fed the fast-growing concern over North America’s dependence on non-renewable natural resources - especially from unstable sources. Like many other states, Canada began exploring for alternative supplies of oil and gas.

Early explorers on Canada’s east coast, confident after their successes in the Gulf of Mexico, pursued exploration plays featuring the salt domes that produced so well in the Gulf. The geology of the Grand Banks, however, is very different from that of the Gulf, with different geological timing, and the initial fifty or so wells resulted only in teasingly small finds, disappointment and withdrawal from the region. We needed new thinking for a new play.

Chevron came up with that new thinking and found success with Hibernia - then estimated to have close to half a billion barrels of oil. In 1979, the market hit $33/ barrel and was projected to approach three figures. Soon seven or eight rigs typically dotted the Grand Banks, tended by 15 supply boats. In those days when a 9000 horsepower supply vessel came into St. John’s harbour, jaws dropped; today it’s a commonplace, scarcely noticed through the huge windows of the office towers now lining Harbour Drive.

The Hibernia find precipitated the establishment of Canada’s federal Petroleum Incentives Program (PIP). PIP funded exploration of Canada’s frontiers, with the objective of providing an inventory of resources that would ensure the country’s energy supply and promote industrial growth. The program stretched the exploration budgets of oil companies tremendously, catalyzing major upstream growth not only for the east coast, but also the arctic region, particularly the Beaufort Sea.

Those were heady days, bursting with hope and enthusiastic idealism. Then, in February of 1982, our young industry suddenly grew up. The Ocean Ranger disaster reminded us all of the very real cost we might have to pay in the game of petroleum industry risk and reward, when all 84 hands were lost in the frozen North Atlantic. The legacy of that tragedy would be improvements in safety and a better understanding of our offshore conditions; efforts to ensure that it does not happen again may well be an enduring memorial to the Ocean Ranger crew.

Yet drilling didn’t stop: true to our heritage, we learned the lessons of loss and continued to hunt petroleum. Numerous other discoveries followed Hibernia; exploration offshore East Coast Canada was rewarded with a remarkable 17% find rate. Plentiful natural gas was found off Nova Scotia and Labrador, but the big prize - King Oil - was found at Panuke, offshore Nova Scotia, and on Newfoundland’s Grand Banks.

Indeed, of the 11 offshore discoveries over 100 million barrels during the last quarter of the 20th Century, four were made in the Jean D’Arc Basin, one of the five hydrocarbon-bearing structures on the Grand Banks: these were the golden quadrangle of Hibernia, Terra Nova, Hebron-Ben Nevis and White Rose. Optimism ran as high as the market. But the law of gravity applies also to petroleum, and what goes up, must come down.

In 1986 the price of oil plummeted to $9 a barrel. Drill rigs disappeared from the East Coast, and a petroleum industry winter began. While NOIA members again adjusted to short business rations and settled in to plan for industry renewal (whenever it would come), the NOIA organization undertook a program of education and development to support them through the lean years.

The exploration slump allowed time for issues of jurisdiction and ownership to be worked out between the provincial and federal governments. The relationship and its responsibilities were formalized as the Atlantic Accord, which established the necessary framework and put the conditions in place for the oil and gas development that would eventually come. The framework consisted partly in the implementation of the regulatory bodies Canada-Newfoundland and Canada-Nova Scotia Offshore Petroleum Boards (C-NOPB and C-NSOPB). The Atlantic Accord Implementation Acts were signed in the late 80s.

Jurisdictional and legal issues were out of the way in time to pave the way for development. The Hibernia agreement was signed in late 1990 and the Hibernia Management and Development Company (HMDC) was created. The Hibernia partners (Mobil Oil: 28% Petro-Canada: 25% Chevron Canada: 21% Gulf Canada: 25%) went forward with exploration and pre-development and made over 20 discoveries. The project was poised for development when, in early 1992, Gulf Canada was forced to abandon the partnership owing to its own internal financing issues. The project froze for over a year and the search for a new partner began.

A mission of approximately 30 business people from Newfoundland visited Ottawa in an effort to convince Canada that Hibernia was important. The members - among them Chris Collingwood, Rick Gill, Cabot Martin and Rob Strong - paid their own way, brought together by their shared interest. The combined efforts of Energy Minister Jake Epp and his successor Bill McKnight, John Crosbie, the members of the Hibernia partnership, and the “30-man mission”, a deal was reached: Gulf Canada’s 25% share would be split among the remaining partners, with new investment from American independent Murphy Oil and the Government of Canada. The Hibernia partnership now stood thus: Mobil Oil: 33% Petro-Canada: 25% Chevron Canada: 27% Murphy Oil: 6.5% Canadian Government: 8.5%. The project was on.

The only constant is change
By the time the Hibernia project was re-launched in 1993, the global industry had experienced significant changes, which continue to unfold in the early 21st Century. The days of wildcat exploration and experimental engineering are gone: today’s petroleum companies have evolved a more cautious, fiscally-focused business culture.

In the age of super-majors, strong intermediate-sized independents have been bought out, while others have amalgamated to form bigger entities. The 21st Century oil company is as likely to grow its inventory by purchasing smaller companies as to pursue an aggressive exploration agenda. Exploration plays, then, must be very large to attract investment by these large companies.

Large-scale projects require large-scale support, and the only way to provide that in this region is cooperatively. In the green field East Coast region, business community turned to a practice as old as the Banks fishery: what one small boat can’t handle, many can. They pulled together the required range services by amalgamating or creating partnerships of one kind or another with existing shops. Alliancing, a response to the need for economies of scale in other regions, was a natural solution for East Coast Canada. To fulfill their needs, the Hibernia partners encouraged local businesses to provide support, and in turn local businesses developed a petroleum infrastructure suited to the region.

The industry’s research and development practices, too, have changed. Traditionally, big oil conducted big R&D programs in all areas of the business, including technology. Today, petroleum companies tend to focus on petro-chemisty and reservoir geophysics, while exploration and production technology development is driven by the service sector. This fundamental shift means that leading edge technology is widely available, as service companies turn their R&D breakthrough into goods and services that they can sell throughout the industry. The technological progress of the past 15 years clearly demonstrates the success of this new model.

A pivotal innovation for the 21st century petroleum industry, and an area where East Coast Canada is making significant contributions, is subsea technology. Not only does it allow cost-effective field expansion and “reincarnation” of production platforms from one field to another, it also makes possible development of previously stranded resources. The market may be driving exploration into ever deeper water and ever harsher ocean environments, but it is subsea technology that will make deepwater production viable. Home-grown companies such as Newdock and AMI, who have learned and grown through international partnerships, are now marketing subsea expertise around the globe.

The existence of onshore oil and gas projects conveys the evolution and maturity of Newfoundland’s industrial commerce. The costs of onshore operations can be lower than those of the offshore due simply to the difference between operating environments. However, given its evident early stages, onshore operations do not have an extensive infrastructure in place - much of the existing infrastructure is optimized for the offshore (which is expensive) or modified from that of existing onshore operations like those in Alberta. The projects of Canadian Imperial Ventures Corporation and Deer Lake Oil and Gas prove that the operating environment and economic conditions make it practicable.

Meanwhile, back in the office
Against this backdrop of business and technology change, NOIA evolved its oil and gas focus. The organization operated without a staff through its first 10 years, the executive and directors shared the work. So many people contributed in so many ways, it would be impossible to name them all. The 2002 NOIA Membership Services Committee cast a net of memory and harvested some events and names that may not have been heard for a while.

The NOIA Board during the 70s - Harvey Riche, Rick Emberly, Harry Pride, Bob Sutherland and others - met every two weeks, rotating meetings between their offices. In the early days, NOIA received strong support from both provincial and federal government. They provided funding and expertise, since the modest revenue from the organization’s limited membership could not fund the administration and education that local businesses needed.

In the early 1980s, Rob Strong, at the time a NOIA volunteer, and Frank Nolan, Director of the Department of Regional and Economic Expansion (DREE), sketched event budgets on the backs of cigarette packages, trying to ensure that NOIA’s calendar of half-day seminars and networking socials could be managed with an annual budget that approached $1000.

NOIA’s first office space sat above Golder & Associates (a Geo-technical consultancy) on Water Street: it was a one-room apartment, with storage in the bathroom and a banker’s box of files in the bathtub. Yet NOIA’s 1987 conference attracted delegates from ten countries to consider the topic Newfoundland Offshore: Challenges for the Next Twenty Years. Maria Yablon organized and administered, with the help of a conference committee that included Mike Marr, Derrick Muggeridge, Wilson Russell and Ira Bridger.

When Ruth Graham, NOIA’s longest-serving executive director, undertook the task in July of 1989, the East Coast petroleum business was in a slump. With a core membership of 140, the NOIA community was still very optimistic and forward-looking. Ruth, with the NOIA Board and many other volunteers, set about an ambitious program of member education, including seminars and conferences that brought in experts from all over the world – particularly the North Sea, which has many similarities to the East Coast environment – to discuss leading edge technology and industry best practices. With provincial and federal government agencies, NOIA members participated in regional, national, and international trade shows and conferences that allowed industry entrants to learn how the industry operated in other regions, identify opportunities for joint ventures and alliances and market their growing capability. This attracted attention and within two years membership reached 250.

The organization soon outgrew its cramped quarters and low-tech approach: in the mid-1990s NOIA moved its offices to Atlantic Place and bought into a more timely fax-based communication with its members. The precursor to today’s NOIA Daily Bulletin was a two-page Business Opportunity Bulletin, faxed to members once or twice weekly. The NOIA News of the day, a newsletter covering both sides of a legal-sized sheet of paper, was mailed to members every two months. The first NOIA directory was produced in 1992; it was photocopied, glue-bound and covered with printed cardstock.

Parallel to this education program, NOIA developed significant policy and advocacy support for its membership. From early days of meetings with operators and government departments and agencies, seeking optimal approaches to local benefit and industrial development, to today’s broad research programs, NOIA has emphasized cooperation. Critical research into natural gas utilization, regional capability, technology transfer and human resource issues could not have been completed without financial and informational assistance from both levels of government (Atlantic Canada Opportunities Agency (ACOA), Industry Canada, Department of Industry, Trade and Technology (now DITR), and DREE), as well as cooperation from sibling organizations such as the Onshore/Offshore Technologies Association of Nova Scotia, the Atlantic Resource Industries Association and the Manufacturers Association of Prince Edward Island.

For the East Coast Canadian region to attract investment and to succeed in the global petroleum environment, all three pillars – government, license-holders and the supply and service sector – must work together to support the industry. East Coast Canada’s success over the past 25 years has shown that, in the final analysis, there’s a simple truth at the heart of this complex industry: hard work and cooperation pays off.

I wish to acknowledge Ruth Graham, Deirdre Greene, Bill Lorenzen, Steve Millan, Harry Pride, and Rob Strong. Thank-you for making the time for interviews and questions, and thank-you for your patience.(Peter Norman, autumn 2002)