Newfoundland Historical Context
NL has long been a poor cousin of its more developed neighbors, serving primarily as a site of resource extraction at the margins of more advanced states. Historically, J.D. House (1985) notes NL was “a classic case of an underdeveloped country peripheral to the centers of power in a capitalist world order dependent upon the export of raw materials to the metropolitan centers.” Therefore, since the late 1800s, and most obviously since the mid-1900s, governments in NL have attempted to diversify the economy and break away from its “long heritage of dependency and economic underdevelopment” (House 1985: 2). This trend can also be traced in political economic histories of NL (see Summers (1994; 2000) and Cadigan (2009)). The production of offshore oil was envisioned as providing the province with the resources to leave behind poverty and underdevelopment and rise from “have not” to a “have” status.
Offshore oil exploration in NL began in the early 1960s when the federal government allocated extensive east coast offshore exploration permits (House 1985: 55). The oil price shocks of 1973 and 1979 resulted in further enhanced governmental support for east coast offshore oil development. Due to both the desire to protect the country against high oil prices and a fear of oil scarcity (Doern 2005: 12-13), the federal government actively sought an increase in oil development in Canada’s oil “frontier” regions: the “Canada Lands” of the arctic and offshore. Indeed, NL’s offshore was of particular interest. Prime Minister Trudeau’s Liberal government considered NL’s resources as “an important component in their national energy strategy” (House 1985: 56). Trudeau’s 1980 National Energy Program (NEP) and its subsequent regulations in the Canada Oil and Gas Act established further exploration incentives as well as the crown corporation oil company, Petro-Canada, which was “designed to stimulate activity” in Canada’s frontier oil areas (Voyer 1983: 8). This exploratory work led to the discovery of the Hibernia oil field in 1979 as well as the Terra Nova field in 1984.
Regulatory jurisdiction in the NL offshore, specifically regarding the question of whether these resources are owned by the federal or provincial government, has been fiercely debated since the 1960s and has involved protracted legal proceedings (House 1985, 57-60; see also Arvey 1979; Black 1986). In 1984, the Supreme Court of Canada finally confirmed federal ownership and jurisdiction of the offshore region. Premier Peckford continued to lobby for provincial ownership with the federal opposition leader, Brian Mulroney, who agreed to a “political compromise” should he be elected. After Mulroney’s election in 1984, the promised compromise was created through the 1985 Atlantic Accord (AA) and the 1990 Canada-NL Atlantic Accord Implementation Act which established NL as the principal beneficiary of offshore oil and gas. The compromise also secured joint federal-provincial management, which importantly included environmental protection, through the C-NOPB (Black 1986, 456), now the C-NLOPB. Oil production is now the cornerstone of the province’s economic development; it is the largest contributor to the province’s GDP and provides as much as 40% of total provincial government revenue.
References
Arvey, J., 1979. Newfoundland's Claim to Offshore Mineral Resources: An Overview of the Legal Issues. Canadian Public Policy V, 32-44.
Black, A.J., 1986. Jurisdiction over Petroleum Operations in Canada. International and Comparative Law Quarterly 35, 446-456.
Cadigan, S.T., 2009. Newfoundland and Labrador: A History. University of Toronto Press, Toronto.
Doern, G.B. (Ed.), 2005. Canadian Energy Policy and the Struggle for Sustainable Development. University of Toronto Press, Toronto.
House, J.D., 1985. The Challenge of Oil: Newfoundland's Quest for Controlled Development. ISER, MUN, St. John's.
Summers, V., 1994. Regime Change in a Resource Economy: The Politics of Underdevelopment in Newfoundland Since 1825. Breakwater, St. John's.
Summers, V., 2000. Between A Rock and a Hard Place: Regime Change in Newfoundland, in: Brownsey, K., Howlett, M. (Eds.), The Provincial State in Canada: Politics in the Provinces and Territories. Broadview Press, Peterborough, pp. 23-47.
Voyer, R., 1983. Offshore Oil: Opportunities for Industrial Development and Job Creation. James Lorimer & Company, Toronto.
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The content for this province was peer-reviewed in December Oct 2013. We’d like to acknowledge the assistance of the external reviewers.
