IN FRIGID WATERS 350km east of Newfoundland, the West White Rose project is designed to produce up to 75,000 barrels of oil a day. Whether it actually pumps a drop is a separate question. In September Husky Energy, its main backer, said it would review the investment and urged Canada’s government to take a direct stake. The province has since set new incentives for exploration and the federal government has announced C$320m ($240m) to support its energy sector. Yet Husky says West White Rose’s future remains in doubt.
This year’s implosion of oil prices has led companies to reconsider investments from Newfoundland to Nigeria. As capital has become scarce, some governments have taken action—for better or worse. Norway set new climate targets but also passed tax relief to encourage new drilling. In Canada, where an index of energy companies has shed more than half its value this year, the downturn has amplified long-standing questions about how the government can help—or whether it should.
Canada pumps more oil than anyone bar America, Saudi Arabia and Russia. But covid-19 caps a bumpy decade. American shale has offered fast, easy (if not always profitable) growth compared with Canada’s offshore projects or its mucky oil sands, where building mines and processing thick bitumen is both costly and carbon-intensive….