Good morning ladies and gentlemen and thank you for the kind invitation to join you as we officially open the 2009 Annual NOIA Conference.
I want to thank Ron for that incredible and touching tribute to those lives that were so tragically lost earlier this year.
I said in the House of Assembly just days after that terrible disaster that on that final day, these individuals were doing what they did every other day � going to work, performing their jobs, providing for their families, contributing to our economy. They were simply doing their jobs in an industry they loved.
I know that none of us will ever forget them.
So thank you Ron and thank you also to NOIA for taking the time for that lovely and most fitting of tributes.
The petroleum industry continues to flourish and mature in our province, and although we are seeing continued growth and expansion I think it is safe to say that it is still a very tight knit community unto itself here in this province.
And we are fortunate to have the leadership and vision of the NOIA executive to advocate on your behalf; to promote what we have to offer around the world; and to provide related services and products for you, their members. And I thank you for the work you do.
And I am delighted to be here today to share for just a few moments from our government�s perspective on an industry that has become so important to the people of Newfoundland and Labrador.
Now, I will say that I recall speaking to this conference back in 2007 when the reception seemed a little chillier than the one I received today for some reason!
Talks to get the Hebron development underway were not going as quickly as some would have liked; and some folks were none too pleased that as a government we had gone back to the industry partners to request more information and due diligence on the Hibernia South extension proposal.
And last year, I spoke here and had to start my speech by dampening expectations of a Hebron announcement because the deal had not been finalized. Fortunately for us all, that announcement came shortly after and I think we can all agree it was well worth the wait.
So, I have had some hits and misses here at NOIA! But I think the hits made the misses well worthwhile.
Today, I know you are all hoping for another big announcement but in my opinion a great speech ends with a bang, so I think I will leave you hanging for a few minutes more.
But suffice it to say, I think that everyone in this room would agree that in spite of these times of economic challenges and uncertainty, the Newfoundland and Labrador oil and gas industry is not such a bad place to be these days!
Since the day I entered office, I have had a vision for this province and most particularly for the natural resource development of Newfoundland and Labrador.
The very first time I spoke to this conference as Premier was on June 4, 2004. It isn�t too often that I quote myself, but I do want to quote something from that speech.
I said, "For me, it is not about the past few decades since the industry took hold in this province, as amazing as the experience has been. It is about answering one fundamental question: What are we going to do today to make Newfoundland and Labrador a more prosperous place tomorrow?"
At that time, I pledged my commitment not just to NOIA, but to the people of the province, that our government was focused not on the short-term but on the long-term. Not on the quick agreement but on the best agreement.
Our vision was for a future that placed us at the table as players so that we could work hand in hand with our industry partners in helping to shape our province today and tomorrow.
In relation to Hebron I said this in 2004, "We recognize the challenges associated with this field�s development, and we are prepared to work with the owners to see what the province can do to advance this project. But it has to be on terms that not only work for owners but that maximize benefits to Newfoundland and Labrador. This is not about getting an agreement at any cost. It is about getting the best agreement for Newfoundland and Labrador�.." End quote.
Well, we went through some tough times and some hard nosed negotiations. My industry partners in the room today can certainly attest to that! But make no mistake, that sometimes painful process had a result that was well worth it for all concerned.
We persevered and we were persistent. In the words of Robert Half, "Persistence is what makes the impossible possible; the possible likely; and the likely definite."
Not only did we as a government achieve a historic and ground breaking agreement worth billions of dollars and thousands of jobs for the people of the province, but we proved to our critics that this is indeed a great place to do business.
We�re going to hear from Glenn in a few moments and I don�t want to put words in his mouth, but I think our industry partners were equally as pleased with the result of the agreement and are excited to be moving forward with the people of Newfoundland and Labrador as their partners.
The relationship that has since evolved has resulted in mutual respect and admiration.
I, for one, could not be more pleased and honoured to be working with them and I thank them for their ongoing commitment to Newfoundland and Labrador.
I asked for your patience back in 2004 and again in 2007. And I know not everyone was as patient as I would have hoped. And I understand that. As a former business person, I fully appreciate the pain some of you endured along the way. But I think we can all agree that our approach was sound and strategic, and in the end standing on our principles we achieved great things for this province.
We haven�t simply developed an industry, but we have been creating a legacy for future generations.
Even as we are gearing up for Hebron, there are other great things happening on the ground.
In the last two years, the province has attracted more than 300 million dollars in work commitments in the offshore through land sales. The 2008 land sale attracted new and existing players to the offshore demonstrating that industry continues to see the province�s basins as prospective with a total of 132 million dollars in work commitments for last year alone.
The offshore land included in this year�s Calls for Bids spans three offshore regions and represents the diversity of our offshore area. Three of the parcels are in basins which are currently non-producing, demonstrating that industry continues to have interest in our highly-prospective regions.
The discovery of hydrocarbons by StatoilHydro in the Flemish Pass Basin in April is the first discovery on the east coast outside the prolific Jeanne d�Arc Basin where all other projects are located.
Although it is too early to determine the commercial viability of the hydrocarbon accumulation, we are excited with the results and remain optimistic that this will lead to increased exploration and interest in the deeper areas of our offshore.
Natural gas development is also getting closer to becoming a reality for us. In 2007, the first sale of gas-rich lands in offshore Labrador by the offshore regulatory board resulted in 186 million dollars in work commitments in that region.
With first oil expected later this fall, we anticipate the development of 70 million barrels of recoverable oil from the North Amethyst field, the first White Rose extension. This will enable us to extend on the capabilities of a producing oil field through subsea tiebacks to existing infrastructure.
The project marked our first ever successfully negotiated equity with a 5 per cent stake for the province, and Hebron followed soon thereafter.
Our highly-skilled service and supply sector has gained significant experience in offshore development and production through work on the Hibernia, Terra Nova and White Rose projects. This has contributed to our ability to attract the majority of work associated with our offshore to local fabrication facilities.
These facilities have provided tremendous benefits to the province through the development of new infrastructure, increased knowledge and expertise, and an experienced, hard-working workforce. The progress being made on the development of the North Amethyst field clearly demonstrates a commitment to action.
The activity at Bull Arm recently included North Eastern Constructors Limited (NECL) fabricating subsea equipment and Cameron testing the integration of subsea equipment for North Amethyst.
This summer, as subsea work for North Amethyst moves from Bull Arm to Bay Bulls, the Bay Bulls Marine Terminal will be full of vessels and cranes. The privately-owned terminal, which is part of the Penney Group�s energy division, is the onshore base for construction at North Amethyst. This activity is evidence of the impact of negotiated agreements on the local economy.
We anticipate even more activity for all fabrication facilities throughout the province during the coming months and years. Government is working to ensure that as much work as possible associated with North Amethyst and future developments will remain in the province.
I also want to mention briefly your conference theme this year which focuses on the artic challenges which for obvious reasons is particularly fitting for our province.
This year, we will celebrate in this province the great exploration of Bob Bartlett who along with his team braved the northern frontier. And so it is appropriate that your conference this year�s recognizes our generation�s explorers who brave that same northern frontier in search of new opportunities.
As you may be aware, I have been an advocate on the national stage of positioning Newfoundland and Labrador as a gateway to the north. I have long believed that globally we will be looking to the north for the future of oil and gas industry and our province is ideally located as a gateway.
But it is not just our geography that so positions us. We have built on our geographical asset to become world leaders in ocean technology. And our service and supply companies have the capabilities to operate in the harsher, more challenging areas of our offshore. Local companies - like C-Core, Rutter Technologies, and Provincial Aerospace, just to name a few - are actively pursuing solutions to overcome the obstacles associated with ice-prone offshore operations.
Increased expertise and research in areas such as ice engineering, detection and surveillance will strategically position the province and provide this sector with a strong advantage as potential Arctic developments come on-stream.
As a province and a government, we are continually
looking for opportunities to further advance our energy sector. That is
why we created Nalcor Energy.
Building on its base businesses of electrical power generation and transmission over the past three years the company has expanded into the broader energy sector, including oil and gas, industrial fabrication, wind energy, and research and development.
The company is also leading the development of the
Lower Churchill hydroelectric development, the most attractive
undeveloped hydroelectric project in North America.
The company will continue to assess growth opportunities for the province's oil and gas resources both onshore and offshore Newfoundland and Labrador.The creation of Nalcor is one more step we have taken as a government to ensure this province is a force on the international energy scene. Under the capable and outstanding leadership of Ed Martin, the people of this province can be extremely confident in the direction this corporation is headed.
And even during this time of economic uncertainty, we have been closely monitoring the global economic situation and the associated volatility in oil prices. Our projects remain quite healthy and our major developments are in a good financial position to compete for capital both internally and externally based on long-term fundamentals.
And now, let�s move onto to some more ground breaking good news.
Mark Twain once said that "it takes more than three weeks to prepare a good impromptu speech." And part of this speech has been in the making for much longer than that.
I am delighted this morning to bring a little bit of good news to the members of NOIA. Well, about 10 billion dollars worth to be more precise. On behalf of our government and our industry partners, I am pleased to announce that we have reached a Memorandum of Understanding on the expansion of Hibernia South.
This is tremendous news for our industry and for the province as a whole as we will see not only related employment and work activity, but revenue to the Provincial Government from the Hibernia Southern Extension project, from all sources, is estimated to be in excess of 10 billion dollars.
The MOU delivers for the first time ever on our Energy Plan goal of a 10 per cent equity stake and includes a top royalty rate of 50 per cent.
Hibernia South will increase and sustain production from the Hibernia field, preserving employment while providing a significantly greater royalty return for the province than any previous project.
Specifically, the province has achieved a 10 per cent equity interest in the estimated 170 million barrels that will be produced using a subsea tie-back. The remainder will be produced from the existing Gravity-Based Structure (GBS) at an enhanced royalty rate to the province of 42.5 per cent on every barrel of oil.
Upon completion of the formal agreements, Nalcor Energy � Oil and Gas will pay an overall purchase price of 30 million dollars. This is consistent with our Energy Plan terms of recognizing historic costs for Nalcor�s entry into new licence areas.
Using the Hebron agreement as a template, this MOU also contains a commitment to implementing a Gender Equity and Diversity Program for all phases of the project. The research and development guidelines set by the Canada-Newfoundland and Labrador Offshore Petroleum Board will also be met for the Hibernia Southern Extension.
The anticipated benefits from the agreement we have negotiated on Hibernia South is particularly impressive when you put it into the context of the original Hibernia field. The original field has produced 630 million barrels to date and the provincial treasury has seen 1.9 billion dollars from that production.
We expect a further 13 billion dollars from the remaining main field production and this extension will add the estimated 10 billion dollars more in revenue for the province.
And once again, Canada will see revenue from Newfoundland and Labrador resources with this development. On the Hibernia expansion alone, we expect the Federal Government and rest of Canada will see more than $3.5 billion in revenue. It�s just another example of how much we contribute to Canada�s coffers and the contribution we make to this federation.
More of the MOU will be released this morning in an official news release, but suffice it to say this agreement will bring enormous benefits to Newfoundland and Labrador.
I am also extremely pleased to confirm today that after nearly 12 years of production, the Hibernia project is now in "payout" meaning the province is now receiving a royalty of 30 per cent.
When you consider the agreements reached by our government in terms of oil and gas development I think you will agree that although we had some critics and skeptics along the way, we have delivered for the people and for the industry in this province.
Combined, White Rose extension, Hebron and Hibernia South will yield more than 36 billion dollars in revenue and royalty for Newfoundland and Labrador and thousands upon thousands of jobs.
Equally as significant, the progress we have made over the past few years further positions this province as an energy hub with a bright future and a place where investment is welcome with fair and reasonable benefits for everyone involved.
I want to thank the negotiating teams on all sides for their hard work and dedication to seeing this process through. As with all negotiations, there were some tense moments and some give and take on all sides. But in my experience, the best agreements are those born out of the toughest negotiation.
As JFK said, "Let is never negotiate out of fear; but let us never fear to negotiate."
At the negotiating table is also where respect is earned and I think I can speak for both government and the industry when I say we have developed a deep and abiding mutual respect over the past couple of years, that bodes very well for the future of the industry in this province.
Our government is so pleased to be partners with some of the biggest corporations in the world, and we are working towards the same goal of making this industry the greatest success story that it can be here in Newfoundland and Labrador.
One senior executive recently mentioned of learning about the cod moratorium that hit this province in 1992 and the resulting devastation that it had on our economy.
Fortunately, our fishery redefined itself and has rebounded though we still face challenges. But the oil and gas industry really came on stream at a time in this province�s history when it was very desperately needed.
Aside from our genuine hospitality, this is another reason why our people have so openly embraced the industry in Newfoundland and Labrador.
And we are, as I said before, simply delighted with the partnerships we have developed with you all as a government and we look forward to many great years to come.
RBC announced yesterday that in 2010 Newfoundland and Labrador will lead all provinces in growth in this country. And we plan to keep it that way for many, many years to come!
On that note folks, I will conclude my remarks and ask my friend and our industry partner Mr. Glenn Scott of ExxonMobil to say a few words.
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