Premier Danny Williams
Atlantic Canada Oil and Gas Summit
May 30, 2005

Thank you all for coming out this afternoon.

And special thanks to your Chairman, the Honourable John Crosbie, Chairman for the invitation to be here.

Welcome also to the Minister of Energy in Nova Scotia, Cecil Clarke and Newfoundland and Labrador�s Minister of Natural Resources, Ed Byrne.

I always appreciate the opportunity to speak about one of the most exciting industries in Newfoundland and Labrador, and indeed the world.

The discovery of oil and gas resources off the coast of Newfoundland and Labrador several decades ago set our province on a whole new course. Our future changed in an instant, with the first discovery of black gold.
For more than 500 centuries the people of Newfoundland and Labrador have survived from the rich bounty of the sea, and it was almost as if Mother Nature was looking into the future when she revealed her treasures beneath the sea floor.

Within a decade or so of the discovered potential of our oil and gas resources, our ground fishery faced an ecological disaster and collapsed leaving devastation in its wake. The future was never bleaker for many of our people.

Our distinguished Chair, John Crosbie, the Minister at the time, explained in his own defense and fearless style to angry fishermen not to blame him because he said, and I quote, �I didn�t take the GD fish from the sea.�

However, at this time of devastation, Mother Nature decided to share another of her rich resources with our province and thanks to Minister Crosbie, the Hibernia project was kick-started by the federal government.

A renewed sense of hope was instilled in Newfoundlanders and Labradorians.

Since that time, industry and successive governments have worked extremely hard to develop and grow our petroleum potential, and to find our place on the international stage.

The dedicated and collective effort of many individuals has resulted in one very exciting industry in Canada�s youngest and coolest province.

This afternoon, I want to outline briefly for you what is happening today in the petroleum industry in Newfoundland and Labrador and our vision for the future.

New players are entering our offshore, former players are returning and new basins have garnered the interest of key industry players with hundreds of millions of dollars being spent on exploration and billions on development.

We are encouraged with progress being made that could bring our fourth major offshore development - the Hebron project - to reality, and we remain optimistic that we will be producing natural gas � sooner rather than later.

The opportunities in our province remain great and our government is committed to seizing them and further developing our industry in a manner that benefits everyone involved.
Our government takes a very strategic and deliberate approach to all policy development, including policy related to our petroleum industry.

We recognize that our oil and gas resources are finite and we must, therefore, manage them so they will have a positive impact on our province long after they are gone.

We certainly recognize and appreciate that industry must also reap benefits � obviously, we couldn�t do it without them. However, our people must also benefit in a meaningful, substantial way. So, our challenge is to achieve this balance in a fair and reasonable manner.

Looking out for the long-term best interests of our province was what motivated me to action during the Atlantic Accord negotiations with the federal government.

To put the Atlantic Accord situation into context, let me point out that Newfoundland and Labrador is an investor�s paradise. We sit on some of the most valuable natural resources in the world.

In fact, I would venture to say that, despite our per-capita income being the lowest in the country, our natural resource wealth, on a per-capita basis, is probably the greatest of any province.

We brought into Confederation vast fisheries resources, forests and farms. We brought all types of minerals � from the iron ore of Labrador West to the nickel, copper and cobalt of Voisey�s Bay, and gold and many other minerals still being discovered.

We brought to Canada some of the continent�s most important sources of clean hydro power, which are of great interest to governments and developers around the world.

And we brought significant reserves of oil and gas that, even today, have not been fully delineated or valued.

For years, I had asked myself � as many Newfoundlanders and Labradorians have � why is a province so resource rich, so financially challenged?

The answers are complex and varied, but the fundamental reason is quite simple � we have always given our resources away, content with a pittance of return for the province, while others are only too glad to take them off our hands.

This was perhaps the single greatest thing that motivated me to leave my comfortable private life behind, and enter the wild world of politics.

So, our government made it a priority from day one to make sure the people of Newfoundland and Labrador were the principal beneficiaries of all our resources � including our offshore industry as outlined in the Atlantic Accord.

The success we achieved in negotiating a new offshore revenue sharing arrangement with the Government of Canada is certainly one of the most significant events to occur in Newfoundland and Labrador�s modern history.

The people of our province recognized the time had come to stand tall and speak with a clear, united voice. It wasn�t all about the money � though 2 billion dollars is certainly a wonderful fringe benefit. It was about restoring our pride and renewing our sense of worth in the Canadian federation.

It was a battle about principle and I felt quite justified in the actions and doggedness that led to success.

I am sure Premier Hamm would concur, and I was honoured to work along side him in that joint effort between the governments of Newfoundland and Labrador and Nova Scotia.

If there ever was a good cop-bad cop combination, John and I never crossed over in our roles. The rational calm of Premier Hamm laid the ground work with his campaign for fairness, and I joined forces with him with my campaign to turn Ottawa upside down if their promises were not kept.

We went into those negotiations together and we remained steadfast in our united front. And I want to acknowledge Premier Hamm and Minister Clarke, who is here this afternoon, for the spirit of co-operation we enjoyed during the period of negotiations.

Both our governments fought long and hard for this improved revenue sharing agreement and the effort was well worth the result.

I just hope that our respective MP�s do whatever it takes to see this money come immediately to our provinces, rather than play political football with 3 billion plus dollars � money that can make a huge difference in our provinces.

Our province has been very successful in growing our industry into one that is mature and internationally competitive, and we are buoyed by this new agreement. Armed with our new sense of pride and confidence, our government is energized about future prospects for our petroleum industry.

As we move forward, we will be examining new opportunities to add value to the energy products which we produce.

Exploring the possibility and potential of secondary and tertiary processing is a very high priority for our government and we are actively pursuing opportunities where we can add value to our tremendous raw resources, including potential for additional refining in our province and the possibility of the development of a petrochemical industry.

There is a new bar, a new level of expectation that has to be achieved in Newfoundland and Labrador.

In the recent Globe and Mail series on the oil and gas industry, one writer wrote that there is a �new urgency to connect remote supplies of oil and gas with hungry consumer markets.�

In this international climate of demands for energy, oil and gas supplies, our province is ideally positioned to move forward in way that assists industry in meeting these �urgent� demands, while ensuring for meaningful long-term provincial benefits.
Prior to entering public life, I had business interests in an offshore company, so I know that whatever approach our government takes to reaching our objectives, must make good business sense.

This is a balance that I am confident can and will be achieved as we continue to develop our resources.

We also believe it is reasonable to expect that the level of R & D spending by operators in the Newfoundland and Labrador offshore area is consistent with the level of expenditure by the upstream petroleum industry throughout Canada.

Recently, the Canada-Newfoundland and Labrador Offshore Petroleum Board implemented new guidelines for research and development and our government is completely supportive of this approach.

These guidelines provide greater clarity for the industry and will lead to increased spending on R & D and education and training in Newfoundland and Labrador by the operators in our offshore.

We have demonstrated our capability in R&D in our province by becoming a world leader in the area of marine technology � an area where we have developed leading-edge technology that is being sought after around the world.

Research and development in the petroleum industry can bring the province to a whole new level of play internationally and we are determined to see this happen.

When one takes a look at where the Newfoundland and Labrador offshore industry is today, it is difficult to not have a sense of awe in how far we have come � considering that it is less than a decade ago that our first barrel of oil was produced.
Most of the development of our industry today is occurring in the Jeanne d�Arc Basin which is home to our four large fields namely � Hibernia, Terra Nova, White Rose and Hebron BenNevis.

Two of these fields are in production.

Hibernia, the largest field and the cornerstone of our offshore industry, produces 220,000 barrels a day with approximately 400 million barrels produced to date. Terra Nova has the capacity to produce 180,000 barrels a day with 140 million barrels of oil being produced to date.

We look forward to the start up of production of White Rose � scheduled to happen by the end of this year. With reserves of 283 million barrels, daily production rates are expected to reach 100,000 barrels.


When White Rose reaches peak production, Newfoundland and Labrador will produce close to one-half of Canada�s light conventional crude oil. An impressive statistic by any account.

And we are delighted that recently, the fourth major discovery in this area - Hebron-BenNevis took one step closer to reality.

Recoverable resources range between 400 to 700 million barrels of oil, which would represent the second largest field on the Grand Banks.

Recently, during the Offshore Technology Conference in Houston, I had the opportunity to meet with the project leader�s top executives at Chevron to discuss how we can collectively move the Hebron project forward, while achieving acceptable benefits for the people of the province, and I am optimistic about moving forward.

Natural gas production is another major success story waiting to happen offshore Newfoundland and Labrador.

To date, approximately 10 trillion cubic feet of recoverable natural gas has been discovered in our offshore and we know there is significant potential for new discoveries. Our government sees the potential, we recognize the market demand, and we are anxious to move forward with partners.

We are also aware that we have to provide some certainty to the industry in this area and that is why we are moving forward with the development of a natural gas royalty regime.

The White Rose and Hibernia fields have a significant share of our natural gas reserves � estimated at 4 trillion cubic feet. Of this amount, White Rose at 2.7 trillion cubic feet, is the most likely project for first development.

Husky Energy is assessing the economic and technical feasibility of this development and in May 2004, they issued an expression of interest inviting potential parties to evaluate the gas potential at its White Rose field..

The operators of White Rose, Terra Nova and Hibernia recently signed a non-binding MOU to further study and develop technical and commercial options to commercialize Newfoundland gas.
Natural gas development is contingent on a viable transportation system and industry has already identified three transportation options for the bulk delivery of natural gas to market including a pipeline, ocean transport Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG).

Again, in the recent series in the Globe and Mail, they referenced the fact that around the world there are several multi-billion dollar plans to build the most ambitious pipelines ever.

A 3.2 billion dollar US pipeline from Norway to the UK will run undersea for approximately 1,200 kilometres. If they can do it in Europe, they can do it in Newfoundland and Labrador where there are proven reserves in the north and east and vast potential in the south, and indeed around the province.

While we are not yet in a position to determine the best option for Newfoundland and Labrador, these international projects speak to both the potential and demand in this area.

All options must be studied and proven from a feasibility perspective, and whichever option industry decides to pursue in our province must meet our best interests.

We will not sit idly by while facilities are built in other jurisdictions and allow our resources to be taken away for processing elsewhere.

The prospect of natural gas development is one I have discussed with officials of BHP Billiton. This company became a new player in our industry last year when the company joined the Laurentian Basin exploration group.

BHP also has a keen interest in the prospect of natural gas developments offshore Labrador � where discovered reserves are estimated at over 4 trillion cubic feet. We have discussed the Labrador resource as having the potential to be part of an overall northern gas strategy far beyond our provincial boarders.

While there is much excitement about Newfoundland and Labrador and its potential for further oil and gas development, there is also another energy resource that once developed will also pay dividends for the people of my province � that is the Lower Churchill hydro resource.

The exciting part about this resource is that it is clean and renewable and with the right development agreement in place, it will benefit many future generations of Newfoundlanders and Labradorians.


In an international market pleading for a clean, reliable and secure energy supply, once again Newfoundland and Labrador is perfectly positioned to develop our resource.

We have undertaken a new approach as a government, whereby we went out to the world and invited them to propose development plans for the Lower Churchill.

Through this international call for Expressions of Interest and Proposals, we received 25 proposals. These are now under review by government and Newfoundland and Labrador Hydro, and it is with great anticipation that we await the complete assessment of these proposals.

I have to tell you � and no offense to Premier Hamm � but you will not find a premier in this country who is more excited about the future of their province.

For the first time in many, many years, Newfoundland and Labrador is poised on the brink of greatness. We are on the verge of financial stability and prosperity, we are diversifying and broadening our economic base, and we are buoyed by a renewed sense of pride and place.

At a time when Warren Buffet is turning his guns towards energy investment, when the Kyoto world is looking at clean renewable energy, and when oil is at 50 dollars US a barrel, Newfoundland and Labrador is sitting on successful oil projects, potentially large oil and gas discoveries, and the best available hydro project in North America.

Now we have in Newfoundland and Labrador, according to the Atlantic Institute for Market Studies, the biggest economic opportunity in a generation. We are in an ideal geographic and economic position to advance our province significantly but we will not giveaway our resources for short term gain.
JFK said �let us never negotiate out of fear, but let us never fear to negotiate.� The new approach in Newfoundland and Labrador is to negotiate fearlessly, with a goal of getting a great deal for the province, but also fully prepared to do no deal at all rather than do a bad deal.

That was our approach with the Federal Government, and that will be our approach with industry � an approach based on fairness and equity.

If Hibernia was developed based on 10 to 15 dollar oil, then surely the economies improve significantly with 40 to 50 dollar oil. Industry profits have been enormous yet returns to Atlantic producing provinces have been miniscule.

New oil is being recovered in the Tar Sands at significant cost. Jurisdictions like Russia and Venezuela are seeking greater returns from industry for their resources through taxes, increased royalties and equity.

It is time for industry to treat Newfoundland and Labrador and Nova Scotia as partners, not merely suppliers of their needs. The concept of �share the wealth� is easily understood in my province � and we are embracing it as our mantra.

We have sought and achieved a greater return from the federal government based on arguments of fairness and equity. We hope to accomplish the same with industry.

North American security of supply is a major issue and Canada is the major supplier to the United States. We find ourselves in a timely position of strength and we must maximize it.

Our oil and gas, our hydro, our minerals � are all extremely valuable assets and we should not be of a mindset that developers are doing us a favour by utilizing them.

We need their capital, their expertise, their experience and they need our resources, our locations, our labour � a perfect and equal partnership.

If that equality is recognized through fairness then we should proceed, if not then we should wait and leave those precious resources for future generations.

We have much to offer, but unless we build industries that offer the means to revitalize and sustain the economies of our rural communities, then we have achieved nothing. This is precisely why our government is so committed to our oil and gas industry.

Right now the oil and gas industry is creating jobs and wealth in our urban areas, however, we want to ensure as a government that we spread the wealth so that it can help sustain our other great natural resource - our rich and vibrant cultural heritage which is nurtured most deeply in our rural regions.
Our rural communities are the foundation of our way of life. They are a treasure not to be undervalued. They are the heart and soul of Newfoundland and Labrador and indeed Atlantic Canada. This is why it is so important to foster and grow our oil and gas sector in a way that benefits both industry and the province alike.

We continue to work closely with all our industry partners to streamline and encourage the regulatory process, generate a positive investment climate and couple this with what we believe to be a fair, competitive fiscal framework in which to do business.

Equally as important, Newfoundland and Labrador is ripe for investment. We are building infrastructure, so that industry in all parts of the province can be competitive, thrive and prosper.

We are creating a climate of investment, so that businesses grow, jobs abound and economies flourish.

And we are focusing on education and training opportunities on industry relevant areas. We know our strengths, and we are building upon them.

We see our potential, and we are moving anxiously towards to it � ready to embrace a future full of opportunity, hope and prosperity.

That is our destiny in Newfoundland and Labrador.

Thank you.