Good morning.

Welcome to the Newfoundland Ocean Industries Association 19^th Annual International Petroleum Conference. On behalf of the government and people of our province, I want to tell you how much we appreciate your support of this industry - particularly those of you from outside our province and country. I sincerely thank you, and everyone working in our oil and gas industry, for the great contribution you are making to our economic development and social progress.

I especially want to welcome new people and companies to our ranks. We need broader participation to help accomplish our objectives. Getting new players involved is one of the priorities our department is pursuing aggressively.

I congratulate the members of NOIA on organizing another successful conference, and thank you for your essential continuing contribution to the growth of our petroleum industry. Your efforts earn the kind of support evident today.

NOIA is internationally recognized as a tremendous source of information on oil and gas in this region. Your members know very well the advantages membership brings � timely information, valuable support, and a strong voice for the industry. This conference is a prime example of how NOIA brings government and industry together to promote development of this business.

My department values the sound working relationship we have, and I know you appreciate the efforts, expertise and dedication of our officials. I�m working to increase cooperation between us, and discussing with your members the merits of establishing a Ministerial Advisory Council for that purpose.

I�m new to this industry. One of my first duties was to join in the launching of our first annual oil and gas week - a NOIA led celebration to better inform our own people of offshore contributions and opportunities.

I�ve learned a lot since being appointed four months ago, but I know I�m only beginning. I believe I understand some of the challenges we must meet to achieve our potential, create the opportunities and profits necessary to encourage investment in today�s competitive world, and maximize jobs and social benefits for our people.

Our government is committed to working with the industry to develop the best business and regulatory environment we can, to encourage the investment and exploration necessary for success, and to earn the increased level of benefits our people want.

Newfoundlanders and Labradorians are excited about our future as an oil producing province, and the potential for natural gas development. We want to maximize benefits for ourselves, and we want to ensure we play a fundamental and meaningful role in managing the industry.

I commend the initiatives of Memorial University and our other institutions to prepare our citizens for oil and gas careers, and to ensure we become a true centre of excellence and offshore expertise. I thank one of our major companies, Husky Energy, for their recent magnificent contribution to these efforts through endowing The Husky Energy Chair in Oil and Gas at Memorial. I hope other companies will be inspired to make this kind of investment in their industry, and our province.

We realize nothing is guaranteed simply because we have resources. We know the world is full of resources, and ours will only be developed if we are properly prepared and the opportunities here offer competitive rewards. We work constantly to meet those conditions.

One of the most promising developments for our offshore in the past year has been the agreement on a boundary for the Laurentian sub-basin, allocating 70% of the disputed area to our province. Unfortunately, formalizing regulations and converting old exploration permits into modern licences takes time. We are all looking forward to the boost to exploration final resolution of the situation will bring.

And that is going to happen this week. The regulations will be gazetted by the federal government in the next day or so. Great news for the industry. We are counting on you to make the most of these opportunities.

We can now move forward with exploration in an area which has an estimated 600 to 700 million barrels of oil, and 8 to 9 million cubic feet of natural gas - and very likely much more. We hope to see seismic work begin this year, and more advanced exploration next year.

Finally, the Laurentian Sub-basin can be explored, and its full potential realized - for the people of our province, the people of Nova Scotia, and for your companies. We intend to work as closely as possible with our neighbouring province to ensure East Coast Canada becomes as prominent as possible in this global industry. I�m very happy Nova Scotia Minister Ernest Fage has been able to join us this week, and look forward to meeting with him.

We know our resources can create many more opportunities for your businesses and our province. That is why our government is diligent in our efforts to promote oil and gas development.

This industry is jolting our economy. Its why Newfoundland and Labrador will lead economic growth in the country again this year.

Our government is proud of the way we have been able to work with you to achieve this success. Hibernia and Terra Nova are responsible for much of the growth we are enjoying today. The White Rose project, and the agreement we reached with INCO to develop the Voisey�s Bay nickle deposit, will provide a significant boost this year, and enormous benefits for years to come. We will continue delivering these benefits for our people, and opportunities for our industrialists.

Your industry has come a long way in a short time. 1997 saw the successful completion and tow-out of the Hibernia platform, and first oil flowing. Terra Nova produced first oil just over a year ago. White Rose, our third offshore project with a reservoir topping 230 million barrels, will begin producing by the end of 2005.

These three projects are very successful and profitable endeavours. Since 1997 Hibernia has produced over 258 million barrels, tremendous revenues for the partnership, and more than $140 million in royalties to the province.

The C-NOPB recently approved a production rate increase for Hibernia to 220,000 barrels per day. This increase, along with an increased percentage in royalties, is expected to yield payments to the province of $85 million in 2003-2004 - not a lot in comparison with the value of production, but an important contribution to our economy.

The Terra Nova field is pumping an average 180,000 barrels a day. Total production is now over 40 million barrels, and with the royalty regime tied to production, more revenue is generated for the province as production levels are reached.

White Rose will produce even more provincial benefits, including providing almost 500 jobs today and several more hundred in coming months. Our province is enjoying an increasing share as the industry develops.

Success stories like this don�t just wash up on the beach. We have to jump in the boat and go out and catch them. This is only accomplished through solid commitment from all stakeholders.

Investors in our province see not just the potential of our resources, but also a healthy business environment, and a government with a record of making things happen.

The enormous potential of our resources is very inviting. Extremely large investments are being made � millions spent on exploration, billions on development. We appreciate this, and are counting on you for a lot more.

We want to grow this industry aggressively and responsibly. We intend to maintain our momentum. We will continue making investment attractive. Companies are responding positively to our sound and stable policies, and continuing to invest. That is what is driving growth and confidence in our economy.

To maintain growth, we realize we have to be competitive in a global market of many tempting opportunities.

Our government is working to remove unnecessary obstacles that inhibit exploration and discourage development. Today�s world is a very competitive place. We can�t be complacent and expect development to happen just because we want it to happen. All our citizens want to maximize provincial benefits in resource developments. Most are reasonable. But there are some you can never get a good enough deal to satisfy. They remind me of stock market players who always want to buy at the bottom and sell at the top. They end up making nothing because the price is never right. They remind me of, and often are, the opposition parties in our province.

Our government will do what is necessary and reasonable to be competitive, as long as we get a fair share for the province. That is why we drafted a generic royalty regime, in consultation with industry. This regime is expediting investment by clarifying fiscal regulations from the beginning of a project. This eliminates the need for ongoing, unpredictable and time consuming royalty negotiation for each project.

We believe we need consistency in offshore regulation. Investors need to know what the process will be, and that the rules will not change half way through the process.

The Canada-Newfoundland Offshore Petroleum Board is doing a great job working with both levels of government. It was designed to be a stable regulatory body, and is serving that purpose. It was never intended to be a marketing arm. That is your role, and mine.

Unfortunately, Ottawa does not share our views in many important respects, nor have they shared our priority to create a more effective and efficient regulatory regime - though there are signs of change, such as the Round Table process begun last fall.

Layers of federal regulations, from numerous departments, create too many unnecessary delays � reducing our competitive strength.

We should not ask investors to jump through hoops of government bureaucracy before spending their money in our province. The process should be clear and without duplication of government regulations. We want to make things simpler. We are working to remove complexities which could discourage investors.

Newfoundlanders and Labradorians, like other Canadians, find ourselves in disagreement with Ottawa from time to time. Our problems with the equalization regime is a good example. It discounts the value, to us, of resource development. We want to share with other Canadians. Our offshore development is delivering substantial revenues and jobs in the rest of the country. But it is not fair for us not to be the primary beneficiary of our own resources.

"Clawbacks"� a nasty word in this province, in others also � "clawbacks" of revenue from our non-renewable resources reduce our ability to finance public services and reinvest in economic development. The current formula is a hindrance to our growth, and part of the reason so many citizens dismiss the benefits of resource projects, and pressure government to insist on unrealistic conditions for development. This is one of the reasons Premier Grimes is working so hard with other provinces to reduce our frustrations with our federal system. We appointed a Royal Commission to advise on dealing with these problems, and look forward with great anticipation to their report at the end of this month. We simply want to share fairly in the benefits of Confederation, too many of which are concentrated in the provinces with the most political influence.

But, despite the obstacles, the resolve of all stakeholders to nurture the oil and gas industry here is remarkable, and a lesson in cooperation many could learn from.

Working alongside industry, our government has developed a regulatory framework which allows for streamlined and timely approvals. This means companies doing business here can expect to see a return on their substantial investments sooner rather than later.

The desire we all have to grow this industry is evident in our conference theme "Shaping our future" which sends a clear message: We intend to shape our destiny. We are committed to doing, and expanding, business.

I encourage investors to explore our vast potential. To invest in new technologies which will bring oil ashore from the deep waters of the Flemish Pass and the Orphan Basin, and recover oil from Hebron/Ben Nevis, which we hope will be our fourth development. You will find a very enthusiastic partner in our government.

We are all disappointed the Hebron project is not moving at a faster pace. A timely commitment would help ensure stability and continuity for the industry. We understand the partners have to do what makes sense for them, and we are working with them to accomplish what makes sense for us. We appreciate their challenges, and the efforts being made by members of this partnership. We work constantly with all of them and make our interest in seeing development begin as soon as possible very clear. We are looking at anything reasonable we may be able to do to help.

There are many investment opportunities to explore in Newfoundland and Labrador.

We all realize offshore exploration is a very uncertain activity everywhere. The accepted success rate of finding hydrocarbons in commercial quantities is only one in every ten wells drilled. Industry professionals are not discouraged by these realities. Companies who venture into our offshore would not be here if they were not committed and optimistic about their prospects. They know the challenges they face.

Such is the case for Petro Canada and its partners � Encana and Norsk Hydro - drilling in the deep water of the Flemish Pass. Their first exploration well, Mizzen, did not encounter commercial quantities of oil, and recently, the Tuckmore prospect was abandoned.

But the partners may have learned a lot from these projects. They remain committed to our region � an offshore which is still relatively unexplored. Few people realize that while our East Coast Region is much the same size as the Gulf of Mexico, where 40,000 wells have been drilled, only 250 wells have been drilled here. A lot more investment in exploration is required to determine our potential.

Right now there is $470 million in work expenditure commitments to be spent in offshore exploration by industry over the next five years. This clearly demonstrates confidence in our prospects.

Fourteen new offshore land parcels have been issued in our current offshore land sale. We are very optimistic about the proposals we expect to be submitted by the end of the year.

And now that exploration in the Laurentian Sub-basin can proceed, we expect to see a lot of activity there.

Tomorrow, my Deputy Minister Brian Maynard, will speak to you in more detail about the Laurentian Sub-basin.

It was my privilege, last month, to lead a delegation of industry businesses from the province to the Offshore Technology Conference in Houston, Texas. Energy is global. Our government, my department, will continue promoting our offshore directly to companies at international oil and gas events.

Keeping a high profile on the international stage is vitally important when competing for investment dollars.

In 2001, we advanced our efforts when we became an international affiliate of the prestigious Energy Council of America. The City of St. John�s did the same when it joined the Energy Cities Council. I commend them, and our surrounding municipalities, for their focus on this industry.

These events and opportunities provide exposure to current energy policies and issues, and potential investors and markets, all keys to success.

The groundwork we do today will pay off significantly in the future.

Sustaining momentum in our oil and gas industry requires the efforts of many skilled and dedicated people. Good people and good policies will create our future.

I ask visitors to this province to please help us spread the word that Newfoundland and Labrador is an excellent place to invest. We will be more than happy to assist in any way we can. And we would appreciate any advice you might consider offering.

This conference will inform you about our impresive resource potential, our attractive business climate, and our unique social and cultural lifestyle.

Thank you to the organizing committee for inviting me this morning. I value the opportunity to participate in and learn from such events.

Thank you all for being here and supporting this industry, and our province.

Have a great conference

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2003 06 16                                    12:40 p.m.