The Honourable Siobhan Coady, Minister of Natural Resources
Speaking Notes for Rotary Club of St. John's
October 20, 2016
INTRODUCTION
Today, I am pleased to be here as Minister of Natural Resources to share with you the incredible wealth of opportunity we have in this province; to speak on how we can build on what we have; and to describe what we are doing to grow a stronger economy.
It has been an incredible week for Newfoundland and Labrador. This week we saw Fortis join the New York Stock Exchange as the largest entry this year on the Exchange. The Newfoundland Labrador flag flew on Wall Street – it was quite a sight.
This is only the second time a company from this province was listed on the prestigious exchange – the other being CHC Helicopter. At the event, the President of the New York Stock Exchange spoke of his connections to the province and how the Newfoundland London Telegraph was the first international company listed on the exchange.
We all have reason to applaud Fortis, a $45 Billion in asset company that has grown from St. John’s Electric Light Company in 1885 to operating in Canada, US and Caribbean. Its growth and success is inspiring.
There were two things I took away from hearing the president of the stock exchange. One: most everyone has a Newfoundland and Labrador connection; and two: a reminder that Newfoundland and Labrador has a history of innovation, growth and success that is to be built on.
Also this week we saw for the first time a Newfoundland and Labrador person nominated to the Supreme Court of Canada. Judge Rowe rose to the top because of his abilities, success and tenacity. Both of these events reflect all that is right in Newfoundland and Labrador.
Not only should we recognize those successes and honour the work it took to achieve – but we can build on them. Encourage, support, acknowledge and do more to repeat those successes. The list of accomplishments of Newfoundland and Labrador companies and people is lengthy. Let’s build on them.
Today I want to discuss how the Department of Natural Resources is doing just that – promoting, energizing, and building success. I also want to address the concerns around Muskrat Falls. The department has three lines of business: oil and gas, mining and energy.
I want to speak first about Energy
ENERGY
Newfoundland and Labrador has often been called an Energy Powerhouse. With an abundance of hydro, wind, natural gas we have much to offer North America and the potential is increasingly recognized. Ensuring we are meeting the regulatory requirements to connect to the North American Grid is part of this opportunity and efforts are well underway. Having Stan Marshall at the helm of Nalcor certainly has helped set a vision for success and energy opportunity.
Providing stable, secure, reliable power is also the focus of my department. We have taken several steps to ensure the reliability of our energy supply. We are ensuring that Hydro implements the recommendations of the Liberty and PUB reports; we’ve separated Hydro operations from those of Nalcor to ensure accountability and focus; and we have expedited a third transmission line from the generation facilities at Bay d’Espoir to the Avalon Peninsula.
Another component of our province’s energy security is Muskrat Falls. As you know we inherited quite a difficult situation and we have working diligently to get the project on track.
Most of the legal, contractual arrangements were fixed by the time our government took office including some $7 billion in contractual obligations, a legal committment to supply energy to Nova Scotia, and a completion requirement under the Federal Loan Guarantee.
Given this reality, our only option is to finish Muskrat Falls as efficiently and effectively as possible.
Our immediate goal on coming into office was to determine the cost, schedule and associated risks of the project. EY was engaged and in its April report determined that the September 2015 estimates were unreasonable and that the project was further over budget and behind schedule. We now know the project is expected to be 2 years delayed and $4Billion over budget.
We accepted and are implementing EY’s recommendations; have a new internationally renowned CEO and are expanding, improving the Board of Directors. The new Board is currently under consideration by the Independent Appointments Commission and we are looking forward to its conclusions.
Concerns
There have also been increasing concerns raised by the people of the province as Nalcor prepares to create the reservoir at Muskrat Falls. By way of comparison The Smallwood Reservoir created for the Upper Churchill is 2300 square kilometres flooded area, the Muskrat Falls Reservoir is 41 square kilometres.
Our government understands the concerns being raised and we are listening.
We have ensured that Nalcor meets all the requirements of the departments of health, environment and fisheries and oceans - both provincially and federally.
All decisions are based on evidence and science, and, most importantly, on the protection of human health. Highly regarded independent consultants Dillon Consulting, AMEC FW, Stantec Stassinu, Golder and Reed Harris Environmental completed baseline modeling, assessments, monitoring and prepared scientific reports.
The experts carrying out these studies included toxicologists, biologists and those with extensive experience in the environmental and engineering fields. The predicted levels of methylmercury are not expected to affect land and resource use in Lake Melville. Extensive, enhanced monitoring is a regulatory requirement and will continue well into the future, and long after the project is complete.
To address the concerns raised around methylmercury, Minister Trimper announced yesterday that government is requiring Nalcor to remove more forest cover at the Muskrat Falls reservoir as an additional mitigation. Nalcor will have to meet this requirement.
These measures are going beyond what has been previously required for any hydro dam anywhere in Canada and likely around the world. Nalcor is raising the water in the reservoir this Fall from 17 metres to 25 metres, which will be approximately 25% of the planned total, to protect the site infrastructure and permanent assets from potential damage during the upcoming winter.
I am deeply concerned about Billy Gauthier and other hunger strikers. I respect those that are raising concerns. By taking these additional measures we are working to address the concerns that have been raised.
OIL AND GAS
Newfoundland and Labrador is a province that is rich in natural resources – including offshore oil and gas.
We are revealing more of our oil and gas prospects through extensive geoscience that includes seismic acquisition.
We now have contemporary, high quality data on our offshore prospects which is attracting global attention.
Our province’s seismic program is one of the largest ongoing offshore 2D seismic programs in the world today – with more than 145,000 line kilometres of modern 2D seismic data acquired up to date...and we continue to acquire new data.
Through new seismic work, we have defined over 20 basins, significant new basin areas, and over 350 leads and prospects.
In August, Premier Ball and I announced that the Newfoundland and Labrador’s 2016 independent resource assessment, covering the area of the West Orphan Basin, has identified 25.5 billion barrels of oil and 20.6 trillion cubic feet of gas potential.
The West Orphan Basin – which is within Canada’s 200 nautical mile zone - is already attracting global industry attention. Its sheer size exceeds the entire Jeanne d'Arc Basin; and some of the prospects in this region are over 500 square kilometres in area - which is bigger than the areal extent of the Hibernia field at approximately 150 square kilometres.
This independent resource assessment is based on new data covering nine parcels on offer in the West Orphan Basin within the area of the Canada-Newfoundland and Labrador Offshore Petroleum Board’s 2016 Eastern Newfoundland Region Call for Bids which closes on November 9.
The assessment covers approximately two per cent or 20,000 square kilometres of Newfoundland and Labrador’s offshore area encompassing 1.5 million square kilometres.
The 2016 Call for Bids, coming up in November, also includes four other prospective parcels in the Eastern Newfoundland Region (Flemish Pass) and three parcels in the prolific producing Jeanne d’Arc Region.
We are actively engaged in creating conditions for increased exploration and development in Newfoundland and Labrador. We need to build on our success and ensure a sustainable, vibrant oil and gas industry.
We will soon announce an Oil and Gas Industry Council that set a vision for the province’s oil and gas sector - focused on success, building a stronger, sustainable industry known and recognized globally.
Our priority is to position the province as a preferred global location for oil and gas development.
We are working toward:
- decreasing the time from prospectivity to production - a major consideration for companies when making global investment decisions;
- ensuing that the regulatory environment is goal-oriented and consistent with recognized global standards;
- focusing on full life of project benefits to maximize opportunities for the province;
- providing fiscal certainty to attract companies to assess exploration opportunities; and
- focusing on innovation for the industry of the future.
Working together, we are attracting investment in the competitive international environment; and furthering prospects - and plans - for the future development of our oil and gas industry. Let’s not just have an oil and gas industry – lets be the best in the world.
MINING
We have had great success in the exploration, development and marketing of our oil and gas sector. And we are now applying those principles to the mining industry, one of this province’s oldest and leading industries.
Mining and mineral exploration companies, many of which are international, directly provide high-paying jobs to more than 7000 men and women in Newfoundland and Labrador, particularly in rural communities.
Expenditures by these companies find their way into every aspect of our economy.
Our diversified minerals industry provides a wide variety of commodities to the world market. Eleven mineral commodities are produced or mined in the province. Five metal mines currently produce: iron ore, nickel, copper, cobalt, silver, and gold.
There are many very positive developments currently underway in our province.
The final phase of construction at the Vale Newfoundland and Labrador Ltd.’s nickel processing plant at Long Harbour will be completed this year.
The underground mine expansion project at Voisey’s Bay has started and ore production is projected to begin in 2020. Hundreds of construction jobs will be created, as well as another 450 positions during operations from 2020 to beyond 2035. This next phase of the Voisey’s Bay project will generate significant additional industrial benefits to the province.
Canada Fluorspar has begun construction of its fluorspar mine located in St. Lawrence on the Burin Peninsula. Annual production is estimated to be 200,000 tonnes of acid-grade concentrate with a mine life of 10 years.
Anaconda Mining is continuing to actively explore projects in the Baie Verte-Green Bay area to expand their resources and extend the life of their existing mining operations. Canadian Business recently recognized Anaconda Mining as one of fastest growing companies in Canada.
Rambler Metals and Mining is producing copper-gold concentrate at their Nugget Pond mill from the Ming Mine on the Baie Verte Peninsula.
Just this week, RDC announced an investment of $720,000 to support the Iron Ore Company of Canada in its industrial trial of an innovative technology for the recovery and refining of iron ore in western Labrador. By investing in this technology, we are supporting the opportunity for improved mineral recovery in Labrador West and strengthening IOC's competitiveness on a global scale.
There are also a number of advanced exploration projects in Newfoundland and Labrador for potential investment, including opportunities for gold, base metals, rare earths and other commodities.
We support growth in the mineral industry through prospector training and mentoring, the mineral incentive program, which supports grassroots prospectors and junior mining companies, public geoscience, the core storage program, promotions, and efficient and transparent regulation.
To increase exploration and development activity we are working on sharing mineral information globally - similar to sharing seismic data with oil and gas companies around the globe. We believe this will help attract mineral exploration activity that has the potential to generate significant new industrial activity in the coming years.
We are committed to working closely with the mining industry and with communities to attract investment and develop the economy of Newfoundland and Labrador.
CONCLUSION
Paul Harris once said “to focus thought upon matters in which you are in agreement, rather that upon matters in which you are in disagreement.” We will continue to address the concerns with Muskrat Falls.
All of us can agree that this province is blest with an abundance of natural resources and opportunities in oil and gas, mining and energy. Layered on this is our entrepreneurial spirit, our culture of innovation, our perseverance and our strength of character. Think about the success of Fortis, Newfoundland London Telegraph, and our many throughout the province who represent the best of us.
This is our moment to shine. Yes, our fiscal situation is difficult; yes, we must address it; and yes, commodity markets and the economy is challenged. But isn’t this when we are at our best?
Sir Winston Churchill once said “a kite rises highest against the wind – not with it.”
The winds may be strong but we shall rise high. The future for Newfoundland Labrador is soaring.
Thank you.