The party’s over — when’s the next one?

The construction sector in Newfoundland and Labrador has been on an amazing run over the last six years. Vale’s Us$4.25-billion Long Harbour nickel processing facility followed by the $14-billion Hebron project and the $9.4-billion Muskrat Falls have created incredible wealth in the province.

Throw in a few billion in other offshore expansion projects at Hibernia and White Rose and you can see the impact it has had on wages, housing markets, commercial developments and provincial revenues. Unfortunately, with any rise there must be a fall, and Newfoundland and Labrador is in that coolingoff phase. The question is, what is next? How does the province return to its glory days that are not that far in the rearview mirror?

That is part of the discussion we will have at APEC’S Major Projects event on the morning of Monday, June 5, at the Delta St. John’s hotel. Jim Butler from Statoil Canada will talk about his company and how its promising finds off Newfoundland and Labrador fit into Statoil’s global operations. Finance Minister Cathy Bennett will provide an update on how the province will provide some stimulus to the construction sector over the next few years. APEC’S president, Finn Poschmann, will examine the potential role of the new Canada Infrastructure Bank in accelerating large capital projects in our country. And I will be discussing the trends in capital investment in the province and looking at what’s ahead.

On the latter point, it looks promising. The crash in oil prices has had a significant impact on provincial royalties and corporate profits, but the reality is that it only had a mild impact on the pace of offshore development in the province. The $2.5-billion White Rose expansion project was pushed back in 2015 but looks ready to go again. The last three calls for bids in the offshore netted nearly $2.6 billion in work expenditure commitments during a time when oil was plummeting. It has led to new players in the province’s offshore including Nexen Energy, BP, Hess Canada and Noble Energy, and reaffirmed the commitment of existing firms such as Statoil, Husky, Suncor and Exxonmobil. Statoil, Husky, Exxonmobil and Nexen have already announced plans for long-term exploration programs in the offshore, BP will likely be drilling within two years, and others won’t be far behind. Statoil announced its major finds in Flemish Pass and continues to drill there this year. It could be the next multibillion-dollar project to be developed.

The lower price of oil has had a big impact on drilling capacity globally. In early 2014, it was very difficult to find a semi-submersible drilling rig, as utilization rates were close to 100 per cent. If a company could find one, you were paying over $400,000 per day. That has changed dramatically with the drop in oil — today rates are averaging under $200,000 a day, which makes drilling offshore Newfoundland a lot more affordable in the next few years and reduces some of the risk.

The pace of capital investment in the province over the next few years will be about 40 per cent below the peak during the 2013-2015 period, and companies will have to adjust, as will the labour force. More migration by the labour force is inevitable now that Hebron is done and Muskrat Falls is on the downside. But they will come back, as will others, when the coming period of exploration starts to pay off.

At our event on June 5, we will give attendees perspectives on the opportunities ahead for Newfoundland and Labrador and where they should focus their resources in the near term, including in the offshore, mining, forestry and the public sectors.

The climb back up will take time and it may never be as good as it was in the last few years, but momentum in the offshore is building again, and who knows how good the next party could be.

Patrick Brannon, director of major projects Atlantic Provinces Economic Council Halifax