Premier Tom Marshall
Rotary Club of St. John’s luncheon
Thursday, May 15, 2014
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The author Antoine de Saint-Exupéry once wrote: “If you want to build a ship, don't herd people together to collect wood. Don't assign them tasks and work. But rather teach them to long for the endless immensity of the sea.”
It’s good advice. Begin by teaching people about the places the vessel can bring them. When people are motivated by the dream, they need no further motivation to build. It’s the dream that drives them.
A decade or so ago, I was a lawyer living in Corner Brook. Like so many at the time, I was deeply concerned about the state of our province. Jobs were lacking. Graduates were leaving. Investors were leery. Why were we still the poor cousin of Confederation?
All the elements for success were right there in front of us. We were sitting on a natural resource gold mine. Others elsewhere had built prosperity with far less.
But resource wealth does not automatically mean prosperity. Wealth can pass right by the people own the resources.
What we were missing a decade ago was an overarching strategy to channel the development of those resources in a way that would change our future once and for all.
We called for a new approach, and to the credit of the people of the province, when that call was issued, you came on board. You gave us the mandate we asked for. We, in turn, gave you something to believe in – an immense sea of opportunity from which we could finally start benefiting.
Of all the resources at our disposal, none offered more promise of prosperity and long-term security than our treasury of energy resources – oil, gas, wind and untapped water resources unsurpassed by any others on the continent.
But what we DIDN’T have, but badly needed, was a vehicle capable of harnessing those resources to generate real wealth – sustainable wealth – from which all Newfoundlanders and Labradorians would be the principal beneficiaries.
We needed to build a vehicle that would do for Newfoundland and Labrador what Statoil was doing for Norway.
Many of you may have heard the Statoil story.
In 1972, Norway established Statoil as a state-owned enterprise – an energy corporation owned by the people. Statoil gave Norway a direct role in the management of their own oil resources. It built local expertise. It gained valuable experience. It provided the foundation for a strong, made-at-home Norwegian oil industry.
But first, Norwegians had to invest to make Statoil strong. You have to put something out to get something back. Twenty years later, it was Statoil pouring money into Norway. And today, four decades on, Statoil is a giant of the energy industry – not just in Norway. Oh no! Far from Norway, they are leading projects, generating profits and returning wealth to the people back home. The investments have paid off.
If Norway could do this, why not us! Why couldn’t we establish our very own Statoil – our very own energy company!
That’s the question our province’s very first Energy Plan answered in 2007. That plan contained the blueprint for a brand new energy corporation, established by legislation in our House of Assembly, and launched with a mandate to function exclusively for the benefit of all the people of Newfoundland and Labrador.
It’s not a coincidence that the first three letters in the corporation’s name – “N-A-L” – are the initials of “Newfoundland and Labrador”.
Nalcor is not a company owned by wealthy shareholders in New York, London, Frankfurt or Dubai, serving the best interests of others at your expense.
It belongs to you, and all the people of the province, and its sole purpose—it’s reason for existing—is to bring wealth to you and to all Newfoundlanders and Labradorians, for generations to come –wealth that will benefit every community and family in tangible ways.
So, how are we using Nalcor to achieve our objective? The answer is: in the same way Norway used Statoil to achieve theirs.
In the nineties in this province, the government of the day was exploiting Newfoundland and Labrador Hydro as a source of dividends for general provincial revenue. There was no strategic energy plan to use Hydro, or any other entity, as an engine to drive growth.
When we created Nalcor, we took the opposite approach. Instead of taking dividends out, we left them in to solidify Nalcor’s financial position. We had two strategic goals: to make the capital expenditures required to maintain a large but aging asset base and to allow for further growth through oil and gas and Muskrat Falls. We injected equity and have doubled capital investment in the last five years. We have invested strongly to build an industry leader with the mandate and the muscle to drive project development.
First, Nalcor established a team of industry professionals second to none, capable of working in the energy industry anywhere in the world, but committed to working here for the benefit of us.
Seeing the safety record of Hydro, Nalcor leadership undertook to bring the company to world class standards and they have done just that – ensuring the 800 employees of Hydro, Newfoundlanders and Labradorians – return safely home to their families at the end of every work day. They also took stock of where were headed with electricity demand and noticed that there was no strategic plan to meet the increasing demand that was bearing down on this province. The team set about analyzing the options and planning for the future.
Next, we insisted on securing a seat at the table for each and every energy development happening in our back yard. We recognized from the outset that you don’t develop expertise in the energy sector unless you are at the table, learning from and working with the major players in the industry.
That’s the reason we demanded equity stakes in Hebron in 2007 and all future oil projects. At first, the companies did not buy in, but once they understood where we were coming from and why, they welcomed us as a partner. As we started shouldering a greater share of the responsibility for energy sector development, we earned their confidence and respect. But more importantly, by being in the oil business, we’re making money, creating wealth and bringing value for the people of the province.
And today, as respected partners in multiple projects with years of experience and proven expertise, we are well along the path to success that Statoil took before us.
Last week, I was in Houston attending, for the first time, the international Offshore Technology Conference. All the major players in the global oil industry were there. In fact, the executive vice-president of a seismic company from Norway flew all the way to Houston specifically to meet with a delegation from our government and Nalcor on what’s happening in our own offshore.
One executive giving a presentation on global opportunities in offshore oil posted on the big screen a quote from Nalcor to drive home his message. We asked him why he chose to highlight our story.
Our conversation made it abundantly clear to me that our approach is so highly regarded on the world stage that others, far from here, can use the weight of our reputation to boost their business success.
And they’re not just talking: they’re investing. Industry professionals consider recent discoveries in the Flemish Pass to be among the most exciting and important to occur anywhere in the world in the past year. In fact it was the largest find in the world for 2013, and they are diverting resources to our region to drive a brand new wave of activity.
We’re no longer talking about just the Jeanne d’Arc Basin where Hibernia, Terra Nova, White Rose and Hebron are already generating enormous wealth. A whole new region of exploration has opened up further north along our coast – and not by accident. Through Nalcor, we are driving it. Through Nalcor, we have made investments in seismic mapping that have uncovered the finds that are turning new industry heads our way. They were expecting we’d find only natural gas, but what we found is solid indication of oil– and companies are expressing a lot of interest in buying the data our seismic program has generated.
If we had not made the deliberate decision to invest through Nalcor to drive exploration, this would not be happening. And that’s why our approach is generating such a buzz in investment circles far from here.
While others abroad are celebrating and emulating our approach, some here at home apparently still need convincing. On Monday, the leader of the Official Opposition made some negative comments.
Well, I’m not sure which province or which government he was referring to, but it certainly can’t be ours.
Today, the Conference Board of Canada issued its economic report card for the provinces. Using hard data, they have ranked Newfoundland and Labrador, alongside Alberta and Saskatchewan, as the top performers among all provinces. In fact, with an A-plus rating, we were not only ahead of Ontario, Quebec, BC, Manitoba and the Maritimes; we were also ahead of Canada’s national performance and ahead of the US, the UK, Australia, France, Germany and even Norway. Not only are we leading the entire country in foreign direct investment performance, but we are also shining in employment growth.
This new report echoes the findings of Canada’s five major banks and the bond-rating agencies.
On one indicator after another – capital investment, housing starts, retail sales, family income, disposable income, reliance on social assistance, you name it – we are seeing clear evidence of the way economic growth is transforming the lives of Newfoundlanders and Labradorians.
Not just through lucrative jobs and contracts in oil and hydro; not just through a capital investment boom and a construction boom like nothing we’ve ever seen before; not just through spinoff opportunities;but also with a steady river of royalties and tax revenues, pouring into the Newfoundland and Labrador treasury to pay for roads and highways, schools and hospitals, municipal infrastructure and investment programs spreading wealth and opportunity to every region and every home.
And now, we are channeling some of that revenue into developing our hydro potential on the Churchill River. Why? Because hydro energy is renewable, and once Muskrat Falls is up and running, it will provide energy to meet the needs on the island and in Labrador as well as meet future mining requirements. In addition, for the first time ever, it will provide us with surplus power that we can export to markets North America. For generations to come, water pushing turbines will also generate wealth and opportunity for our people.
Through Nalcor, we are also taking Statoil’s approach by casting our gaze far from home. We are positioning ourselves to seize energy sector opportunities abroad and bring the opportunities and the benefits back home.
Our long-range strategy is no longer limited by the life of the offshore fields. Already, we are positioning ourselves as a strategic base of operations for energy opportunities in the Arctic. With years of experience operating in the harsh conditions and cold climate of the North Atlantic, we now have the relevant expertise and, I am proud to say, the reputation for overcoming the challenges presented by that environment.
Newfoundland and Labrador is well on its way to becoming an energy industry giant, generating wealth for Newfoundlanders and Labradorians for generations to come.
And what magnitude of wealth am I talking about? Like most people, I had no inkling of the kind of returns we are talking about when we speak of maximizing the dividends from hydro power, oil and gas.
Here’s what Nalcor have told me:
If we did nothing else, looking out just five years, when our three oil projects and Muskrat Falls become operational, the people of Newfoundland and Labrador will already be seeing returns in the range of $350 million to half a billion dollars each and every year. That’s clear profit from Nalcor to start a heritage fund, pay down debt and finance health care, education and other vital services for you, your neighbours and your families.
With further investments in oil and gas, we could be seeing returns of three billion dollars a year just after the Upper Churchill returns to the province’s hands in 2041. Yes, three billion dollars a year! That’s over $8 million a day!
And Nalcor informs me that will grow to six billion dollars a year in profit, flowing each and every year into the treasury of Newfoundland and Labrador for your benefit. Try to wrap your mind around that.
Where is our heritage fund? Nalcor is our heritage fund! It will become a wealth-generating machine serving you, your community and your family in perpetuity.
We are going to achieve this wealth WHOLLY AND SOLELY because we took Norway’s approach by first investing in Nalcor so it could go out and generate the wealth on our behalf.
We no longer live in fear of the depletion of our non-renewable offshore reservoirs. Nalcor is taking us beyond that. We are already well down the road toward a diversified energy industry, with a powerful renewable energy base, with exploration of new reservoirs thriving, and with a growing supply and service industry to seize oil and gas opportunities all around the world and bring the wealth back home.
We are achieving exactly what we set out to achieve a decade ago. Taking the exit ramp from the course we’re on is no option at all. We need to continue the work we’ve started, transforming our wealth of potential and promise into a wealth of opportunity and profit from which all Newfoundlanders and Labradorians will continue to benefit for generations to come.
I encourage you to see what I see. Stare at the endless sea of opportunity and prosperity before us. Who could have imagined we would be where we are today, already beginning to realize the future that we’ve always hoped to achieve!
Thank you for working with us. Thank you for enabling us to advance so far along this incredible path. Let’s rededicate ourselves to moving forward to reap the full benefits that await us. Newfoundlanders and Labradorians deserve no less than everything we are capable of achieving!