Nova Scotia Premier Backs Off on Comment to Fine Companies

Backing off from a statement he made in June that the oil and gas industry should be fined unless they used more local companies in offshore multi-billion projects, Nova Scotia Premier John Hamm said last week that he would only agree to a system of fines if the energy industry ended its usual practice of giving contracts to local companies. Speaking at a natural gas conference in Halifax, Hamm said he wanted to instead focus on the positive aspects of the industry.

"The day to talk about penalties is the day we stop getting the contracts," Hamm said. Speaking to a crowd of about 100 executives, Hamm added that he could see evidence that the energy industry was beginning to do more to ensure the local economy benefited from exploration and production efforts. "I believe the (earlier) message is getting through."

In the region, Imperial Oil Corp., Exxon Mobil Corp. and Shell Canada, among others, have spent almost C$3 billion to date to build production platforms and pipelines off of the prolific Sable Island area, and a third of that, about C$850 million, has been spent in Nova Scotia, he said. Outside of the region, Hamm said almost C$1.25 billion has been spent to date. The Sable Island natural gas fields are now producing 500-600 MMcf/d and the province expects to have at least six major offshore projects begun in the next 10 years.

Under the province's current rules, companies only have to inform the Canada-Nova Scotia Offshore Petroleum Board how "first consideration and fair opportunity" have been given to local businesses. In June, Hamm had said he wanted the board to have stronger powers, including the right to penalize companies that did not offer enough work for local businesses.

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