January 2, 2018
Province's Natural Resources Industries Advance in 2017
The Honourable Siobhan Coady, Minister of Natural Resources, is optimistic about the future of natural resources industries in Newfoundland and Labrador after major developments in 2017.
Significant advancements signaled the continued growth of the oil and gas industry. The province’s fourth standalone oil project became a reality this year as Hebron celebrated first oil in November. In May, the West Rose Extension project was sanctioned. First oil through the wellhead platform is expected in 2022 and will provide substantial direct employment and business benefits to the province, as well as more than an estimated $3 billion in royalties, equity and taxes. In August, contracts for the construction phase of the White Rose Extension project were awarded to Newfoundland and Labrador companies and will create 5,000 person years of work through construction.
Newfoundland and Labrador ranks as the most attractive Canadian jurisdiction for oil and gas investment and fourth globally out of 97 jurisdictions in the annual global survey of petroleum-sector executives released by the Fraser Institute. Offshore Newfoundland and Labrador is considered one of the best frontier regions in the world today with over 20 basins, significant new basin areas, and now over 650 leads and prospects defined as a result of ongoing seismic work.
Mining continues to be a leading contributor to our economy, with 5,000 people employed in the industry and $3.7 billion in mineral forecast to be shipped this year. Canada Fluorspar is well into construction of the mine in St. Lawrence. IOC began development of the Wabush 3 project. Tacora is completing a feasibility study, representing another important milestone in the efforts to restart Wabush Mines. In addition, there are many advanced exploration projects ready for potential investment for gold, base metals, rare earth minerals and other commodities. Nearly 21,000 claims were staked last year – just over three times the amount staked in 2015 and the most in the last five years. All initiatives point to confidence in the mining industry and the value of mineral resources.
Positioning Newfoundland and Labrador globally as a preferred location for oil and gas development and increasing activity in the mining sector through targeted promotion and core digitization are initiatives in The Way Forward: A vision for sustainability and growth in Newfoundland and Labrador.
Major achievements in the oil and gas, mining and energy sectors in 2017 are included in the backgrounder below.
“As I look forward to 2018, I am encouraged by the many positive activities achieved by natural resources industries this year. Newfoundland and Labrador is positioned as a global leader in oil and gas development, mining and energy. Our government will continue to work to responsibly manage all of our resources in the best interest of the people of the province.”
Honourable Siobhan Coady
Minister of Natural Resources
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Minister Coady Congratulates Hebron on First Oil - gov.nl.ca/releases/2017/nr/1128n05.aspx
Government of Newfoundland and Labrador and Husky Announce White Rose Extension - gov.nl.ca/releases/2017/exec/0529n02.aspx
Newfoundland and Labrador Ranked as the Most Attractive Canadian Province for Oil and Gas Investment and Fourth Worldwide gov.nl.ca/releases/2017/nr/1129n03.aspx
Premier Ball Announces Muskrat Falls Public Inquiry - gov.nl.ca/releases/2017/exec/1120n05.aspx
Supporting Growth in the Mining Sector - gov.nl.ca/releases/2017/exec/0223n03.aspx
Another Important Milestone Reached in Effort to Restart Wabush Mine -gov.nl.ca/releases/2017/nr/0628n05.aspx
Geological Survey Releases New Research on Potential Gold Resources in Central Newfoundland gov.nl.ca/releases/2017/nr/1102n03.aspx
The Way Forward: A vision for sustainability and growth in Newfoundland and Labrador thewayforward.gov.nl.ca/
Oil and Gas
The province celebrated first oil at the Hebron platform, the fourth standalone oil project off the coast of Newfoundland and Labrador. During its eight-year engineering and construction phase, the Hebron project was a significant contributor to the province’s economy, providing direct employment and training to thousands of residents, including approximately 7,500 personnel during peak construction. Hebron is the province’s fourth offshore oil project.
The completed platform was towed to the field in early June. The project is expected to provide long-term employment for over 600 personnel during operations and support long-term economic development opportunities for various local supply and service companies. It is estimated that the Hebron field, first discovered in 1980, will produce more than 700 million barrels of recoverable resources.
With the construction of the Hebron platform complete, Nalcor Energy issued a Request for Proposals in October to identify the next potential tenant(s) to lease the Bull Arm site. The Request for Proposal was the next step in a process that was initiated in March of this year when an Expression of Interest was issued to the local and global market.
Four proposals have been received and are being evaluated with the goal of securing a tenant that will maximize site utilization and attract sustainable business opportunities. Nalcor Energy’s intention is to enter into lease negotiations with one or more proponents and conclude negotiations by the end of the first quarter of 2018.
The Provincial Government and Husky Energy announced that Husky Energy, as operator, is moving forward with the West White Rose project offshore Newfoundland and Labrador. First oil through the wellhead platform is expected in 2022 and will provide substantial direct employment and business benefits to the province, as well as more than an estimated $3 billion in royalties, equity and taxes.
Husky awarded major contracts related to the White Rose project to companies in Newfoundland and Labrador. This includes a construction contract to the general partnership of Pennecon Ltd., SNC Lavalin and Dragados Canada for the building of the concrete gravity structure and a contract to fabricate the living quarters to Kiewit Offshore Services in Marystown.
Newfoundland and Labrador ranks as the most attractive Canadian jurisdiction for oil and gas investment and fourth globally out of 97 jurisdictions in the annual global survey of petroleum-sector executives released by the Fraser Institute.
In November 2017, generic offshore oil royalty regulations were published in the Gazette facilitating increased fiscal certainty to industry and supporting conditions for increased offshore exploration and development in Newfoundland and Labrador.
Continued investment in oil and natural gas exploration and development is critical to the provincial economy. Work is continuing with the oil and gas industry development council, chaired by the Minister of Natural Resources, which is integral to creating conditions for increased offshore exploration and development, ensuring certainty and maintaining an attractive and stable business environment for operators and investors.
Providing secure, stable, reliable power continues to be a top priority of the Department of Natural Resources. Work continues to keep the Muskrat Falls project on track and to mitigate rates to consumers once the project is complete. In 2017, there were significant advancements, including:
- Construction of the powerhouse and intake structures for the Muskrat Falls generating facility has been substantially completed.
- Overall construction of the Muskrat Falls Project at the end of November was approximately 88 per cent complete.
- Construction of the 1,100 High Voltage direct current Labrador Island Transmission line that stretches from Muskrat Falls to Soldiers Pond is the first of its kind in the province and was completed this fall. With the transmission line construction complete, workers are focused on completing the commissioning work that’s required to energize LIL in mid-2018 and bring recapture power from Churchill Falls to the island.
- In early December, Hydro's new 230KV 188-kilometre transmission line between Bay d’Espoir and the Avalon Peninsula went into service. The addition of the new line strengthens reliability for customers on the Avalon Peninsula by relieving transmission congestion and providing more capacity to serve the region.
Premier Ball and Minister Coady announced a public inquiry into the Muskrat Falls Project in November. Lead by Justice Richard D. LeBlanc, the inquiry will begin work in January 2018.
The inquiry will provide a greater understanding of:
- Whether all options were considered at the time of sanctioning the project;
- Why there are significant differences between the actual cost of the project and the estimated cost at the time of sanction; and
- Whether it was justified and reasonable for the project to be excluded from oversight by the Public Utilities Board.
The inquiry is expected to take approximately two years to complete with the final report due on December 31, 2019.
The Provincial Government welcomed the announcement by the Iron Ore Company of Canada (IOC) that it will proceed with the Wabush 3 project. Wabush 3 will be a conventional open pit mine that will allow flexibility in operations and provide a new source of iron ore to extend the operating life of its Carol Project. The mine can produce up to 23.3 million tonnes of pellets and iron ore concentrate annually. IOC has long-term plans to produce beyond the year 2079.
Canada Fluorspar began construction of its St. Lawrence mine and concentrator in 2017. The mill is fully constructed and is being commissioned with first concentrate expected any day.
Tacora Resources purchased Wabush Mines and is nearing completion of a feasibility study after which it will seek to raise additional capital needed to re-start Wabush Mines (Tacora Mine). Alderon has updated its independent Economic Impact Assessment (EIA) of the Kami Iron Ore Project in western Labrador.
The Mineral Development Division completed repair of three dams at the former Consolidated Rambler Mines tailing facility. Dam Safety Inspections were completed at all six orphaned and abandoned mines with tailings dams.
Research released by the Geological Survey highlights the potential for new discoveries of gold and other metals in central Newfoundland.
The Geological Survey regularly releases research on the geology and mineral resources of the province, which is used by prospectors, junior mining companies and investors to undertake exploration activity. Exploration activity stimulates local economies through increased demand for services, supplies, and the personnel that make continuing assessment possible.
Information from the Geological Survey tends to provide a catalyst for claim staking with nearly 40,000 claims staked in 2016 and 2017;and this is approximately the total number for the previous four-year period combined. Most of the claims staked may be attributed to the renewed interest in gold exploration. Staked claims generally coincide geographically with public data released by the Geological Survey.
2017 had the highest ever number of mineral exploration approvals issued to prospectors and exploration companies. While 2016 exploration expenditures were approximately half those of 2015, the forecasted expenditures for 2017 indicate a 35 per cent increase from 2016 and would mark the turnaround of the decline in provincial exploration expenditures that began in 2013.
Over 2,500 quarry permits were issued in 2017. The quarry program continues to be important to support provincial, federal, and municipal government projects and other local developments.
2018 01 02 4:15 p.m.