Premier Danny Williams
I would like to thank the Energy Council of Canada for your kind invitation to join you here today and begin by welcoming our visitors to St. John�s, North America�s oldest city and capital of Canada�s youngest and coolest province.
Recently, the head of the Canadian Academy of Recording Arts and Sciences dubbed us the cultural capital of Canada. And we proudly embrace this title, as we love nothing more than to celebrate and share with others our rich heritage through music, dance, art, food and yes, even through our quirky accents.
So, welcome and please ensure that you take some time to get out and enjoy the unique sights and sounds of our historic province.
I would like to commend the Energy Council of Canada for the work that you do in the context of the World Energy Congress. Energy is the lifeblood that flows through the veins of a modern society. It is as essential to this planet as the sun, the water and the air we breathe. Indeed, these elements of the universe are the very source of many forms of energy.
Your web site states that the Energy Council of Canada is a "vehicle for strategic thinking, networking and action by senior executives in the private and public sectors that have a broad interest in national, continental and global energy issues. This is done in order to optimally shape the energy sector for the benefit of all Canadians."
Anyone who knows me will be aware that I am very much an advocate for this type of strategic activity. Indeed, our government�s Energy Plan: Focusing Our Energy, released in September 2007, was a very important project that myself and the minister personally put a great deal of time and effort into, as we value the importance of planning strategically for the long term.
Of course, you may also know that I have very strong opinions about partnerships between the public and private sectors when it comes to energy issues.
And despite the best efforts of some national media to coin me as the Chavez of the north, I hate to disappoint you! You will find that I am, very simply, just a guy trying to do the best for his people and that includes having government play a meaningful and tangible role in the development of our resources.
I was in the private sector for 30 years, so I know the game but now my shareholders are the people of this great province.
Indeed, despite a rocky start I think you will now find that our new partners in the oil and gas industry are extremely pleased with our relationship and the new role government has taken as a true partner with a vested interest in energy development.
We were confident that this new dynamic would prove beneficial to the province, and we were equally confident it would prove beneficial to industry. They perhaps just needed a little more convincing!
And as they say, the proof of the pudding is in the eating.
We have negotiated some tremendous agreements for resource development and we are now sitting together at the table, interests are aligned, partnerships are stronger than ever, and everyone is indeed benefiting. Just ask our partners Exxon, Chevron, Suncor, Statoil, and Husky � they will confirm this.
Of course, another major step that we have taken in this province is the creation of our new energy corporation, Nalcor Energy. This was not a fly-by-night decision or one made lightly. Indeed, if you look back to our first campaign election platform, we made the commitment to create this new corporation.
I had a very firm vision coming into politics for the future of resource development.
I knew from my business background that a strong corporation, led by capable and visionary leaders would propel this province into a new era in resource development; and I felt confident that given our substantial assets we could be major players on the world stage. Led by Ed Martin and his extremely competent staff, Nalcor Energy is blazing new trails in Newfoundland and Labrador.
In conjunction with our Department of Natural Resources, Nalcor Energy is leading the development of the province�s energy resources, including the exciting Lower Churchill hydroelectric development.
Nalcor Energy�s foundation is built on its base operating business: the generation and transmission of electrical power and has expanded into the broader energy sector, including oil and gas, industrial fabrication, wind energy, research and development and now exploration.
Given the vast energy resource riches of this province and the tremendous potential for the future, we are figuratively and literally energized about Nalcor�s role in the future of Newfoundland and Labrador.
I mentioned our province�s Energy Plan earlier and I want to take just a moment to reflect on the value of that document.
Mason Cooley once said that, "Courage, determination, and hard work are all very nice, but not so nice as an oil well in the back yard."
Well, he is right about that to an extent. But when you are running a province and entrusted with the people�s resources you need to have a little hard work as well. That is why a tremendous amount of thought, analysis, planning, consultation and brain power went into that plan.
Focusing Our Energy was built on two objectives of economic self-reliance and environmental sustainability. It embraces developments currently on the horizon and reaches out to the period beyond the expiration of the current Upper Churchill power contract in 2041 when the province will be in the position to finally receive fair benefits from this resource.
The plan minimizes uncertainty and creates a climate attractive to investment partners interested in maximizing growth, and it will help ensure that the province�s legacy is a sustainable economy powered by renewable, clean energy.
Focusing Our Energy also provides the path forward for the development of our energy resources over the long-term, with emphasis on our province�s ability to supply clean, green energy for economic development here at home and the rest of North America.
A key element of the plan focuses on using the revenues of our non-renewable resources to build the infrastructure necessary to develop our renewable energy sources. We have been successfully implementing the plan including achieving some key policy objectives such as gaining equity stakes and a greater role in our offshore development.
And just as I believed strongly in the inherent value of an Energy Plan for our province, I was equally committed to seeing one developed for the country as a whole.
I quote again from your organization�s web site that says, "In Canada, the role of the energy sector assumes special importance. Canada has a rich endowment of energy resources, which will be important for driving its own economic growth and development, while also being one of its dominant exports to feed an energy hungry world."
Well, I could not agree more.
And so, during my time as Chair of the Council of the Federation, I advocated strongly to my fellow premiers to develop an energy plan for the country. As you can imagine, bringing together the interests and positions of ten provinces and 3 territories was no small task. Some would call it downright daunting.
However, given the vast energy potential of this country and the heavy reliance of our economies on energy revenue, I was determined to see this through.
And so, in August 2007, Premiers released A Shared Vision for Energy in Canada, a document that highlights the importance of energy conservation, supply, demand and infrastructure to Canada�s continued prosperity.
I would encourage those who have not, to read that plan. Some interesting statistics highlighted include that in 2006, the sector represented 5.9 per cent of the national GDP, with over 345,000 people employed in the oil and gas and electricity sectors alone.
In 2006, capital investment in the oil industry alone was 53 billion dollars, while electricity sector investment was 13 billion dollars. Energy exports (at 99 billion dollars) accounted for 22 per cent of the value of all exports.
Clearly, an industry worth so much to this great country deserves both the attention of and some strategic direction from governments, and the Energy Council of Canada has demonstrated the need for cooperation and leadership.
It is also why I was determined as a leader of our province�s energy warehouse in this country to have our voices heard.
Let�s briefly review the vast energy resources we have in this province. From uranium to wind, from oil and gas to hydroelectricity, the natural resource potential in Newfoundland and Labrador is substantial to say the least.
We�re currently generating approximately 7,500 mega watts of hydro power, with the resources of the Lower Churchill Project still untapped.
Of course, we also have our tremendous wind resource and we are estimated to have the largest wind potential in North America. The Canadian Wind Energy Atlas indicates that our wind resources are among the best in North America, positioning us to become leaders in the development and use of wind power.
On January 23, 2009, Newfoundland and Labrador reached a significant milestone by producing its one billionth barrel of oil.
There are currently approximately 850 million dollars in outstanding exploration commitments, representing industry�s continued interest in exploring in our offshore.
Add to this our discovered and undiscovered natural gas potential, and it is indisputable that Newfoundland and Labrador is a tremendous asset to Canada�s energy future.
And we are not resting on our past successes. As a government, we are facilitating new investment; we are supporting local industry; and we are telling the world very clearly that we are open for business.
We continue to have successful Land sales in our offshore area demonstrating a continued industry interest in offshore exploration. Land sales completed in the last two years netted in excess of 300 million dollars in new work expenditure bids.
The 2008 Call for Bids attracted new players to Newfoundland and Labrador�s offshore.
They included Repsol Exploration, S.A., of Spain and Investcan Energy, a subsidiary of SCDM, a French based investment holding company with significant international interest.
And marking a significant step for the future development of the province�s oil and gas resources, Nalcor Energy recently announced its operatorship in three exploration permits in the Parsons Pond area of the Great Northern Peninsula in Western Newfoundland.
Nalcor Energy has acquired an average of 67 per cent gross working interest in these onshore permits and will finalize drilling plans in the coming weeks. It expects to undertake up to a three-well drilling program at an estimated cost of up to 20 million dollars. The company will work with its joint venture partners to finalize the drilling plans and well locations for this exploration program.
We have in the past couple of years finalized the White Rose Extension, our 4th offshore development in the Hebron project and in June of this year we announced an agreement on the Hibernia Southern extension.
These agreements will result in thousands of jobs and tens of billions of dollars of revenue for the province and very healthy returns for our corporate partners.
And we are continuing to assert ourselves in the generation and transmission of hydro electricity.
For the first time in the province�s history, Newfoundland and Labrador is now wheeling hydroelectric power through neighbouring Quebec into the North American marketplace.
In April 2009, Newfoundland and Labrador Hydro signed a Transmission Service Agreement with Hydro Quebec (HQ) under HQ�s Open Access Transmission Tariff for power transmission from Labrador to the Canada-U.S. border. Hydro is selling power on the Canadian side of the border to Emera Energy Inc. who in turn is selling that power to the energy markets in Canada and the United States.
Of course, one of the cornerstones of our Energy Plan is the development of the Lower Churchill, which has been identified as the most attractive undeveloped hydroelectric project in North America. Its two installations at Gull Island and Muskrat Falls will have a combined capacity of over 3,000 megawatts and can provide 16.7 Terawatt hours of electricity per year.
With enough clean electricity to contribute significantly to the reduction of air emissions from thermal, coal and fossil fuel power generation; this is simply one outstanding project.
In particular, the projects could displace over 16 megatonnes of carbon dioxide emissions every year, equivalent to the annual greenhouse gas emissions from 3.2 million automobiles.
There have been numerous developments recently which signal extremely important and significant steps on the road to development of the Project.
The signing of the New Dawn Agreement with the Innu Nation of Labrador resolves key issues relating to matters between the province and Innu Nation surrounding the Innu Rights Agreement, the Lower Churchill Impacts and Benefits Agreement (IBA) and Innu redress for the upper Churchill hydroelectric development. This agreement is a key milestone to project sanction.
In preparation for the Project�s development, an Expression of Interest (EOI) was issued in February to six engineering and project management companies in order to determine their interest in bidding for the Lower Churchill Project�s detailed engineering design work.
The six companies are worldwide specialists in hydroelectric, transmission and civil construction and the contract award is expected in 2010.
As well, a directive of the province�s 2007 Energy Plan was a proposed 1,200 km High Voltage direct current (HVdc) link to be designed to deliver up to 800 megawatts to the island of Newfoundland with an option to be extended and deliver up to an additional 1,000 megawatts to the Maritime Provinces and potentially the New England and New York markets.
Submission of the Environmental Impact Statement for the Generation aspect of the Project and the environmental registration of our Labrador-Island Transmission Link has taken place. And project construction could take place next year, once EA approvals have been achieved.
In these times of climate change and the realities faced as a result of the global environmental shift, the province is committed to investigating alternative and renewable energy sources to offset our existing non-renewable electricity supply and reducing reliance on thermal generation.
Nalcor Energy has taken the first steps towards the development of wind power in our province with agreements to purchase energy produced by two 27 megawatt wind projects.
In 2008, they purchased wind power from the first commercial wind development in Newfoundland, located in St. Lawrence. Power from the second wind project was received in June.
On the island of Newfoundland, wind generation will help reduce fossil-fired generation at Hydro�s thermal generating station in Holyrood.
Nalcor Energy is currently leading a research and development project in the isolated community of Ramea to demonstrate the viability of wind-hydrogen-diesel technology. This project is building a viable solution for deployment to other isolated diesel communities in the province, and potentially around the world.
This is one of the first projects in the world to integrate generation from wind, hydrogen and diesel in a remote, isolated electricity system and has the potential to eventually replace diesel with zero emission power.
By sponsoring and leading this R&D program we are demonstrating our innovation and capability in finding creative energy solutions to global problems.
With funding from the Provincial Government, Hydro is also undertaking two energy projects in select coastal Labrador communities.
These two programs are important initiatives to identify technically-sound alternative energy options for coastal communities and meaningful ways for consumers to conserve energy.
The alternative energy study will determine the potential for alternative energy sources to complement existing diesel generation systems. This study includes investigating solar, wind and mini-hydroelectric facility developments.
In 2009, the province also established a new Office of Climate Change, Energy Efficiency, and Emissions Trading to develop and implement policy and analysis on these issues and we have been partnering with several multilateral governmental organizations on issues of climate change and renewable energy.
Through our Energy Plan, the province has committed to a low-carbon future. The lower Churchill project including the Labrador Island Transmission Link, combined with the upper Churchill and our existing hydro generating facilities on the island, provide the opportunity for more than 98 per cent of the province�s electricity requirements to be met with stable, renewable power.
This will eliminate 1.3 million tones of Green House Gas emissions, as well as all other pollutants from Holyrood, annually by 2015.
It is a unique and enviable position when compared with many other jurisdictions, and will provide our customers with stability over the longer term in relation to other areas where thermal generation is the predominant power supply.
Bringing additional renewable energy to market will not only assist us in meeting our GHG reduction targets - it will also lessen the economy�s dependence on a volatile fossil-fuel generation supply. Reducing that dependence will result in long-term price stability.
Getting more renewable power to Canadian customers requires new transmission infrastructure, not just for Lower Churchill power, but for other projects across the country. Enhanced infrastructure can also help the current energy generation meet existing Canadian needs.
We need to optimize supply from all areas in order to satisfy our increasing demands for renewable energy. New transmission will enhance inter-provincial trade and allow better integration of new and existing generation supply and increase operational reliability between jurisdictions.
The national government must be involved in building these long haul power highways from east to west and north to south. Significant new capital investment will be required in both large scale generation and transmission to achieve the Federal Government target of 90 per cent of Canada�s electrical needs being met from non emitting sources by 2020. Such long term investments would signal the Federal Government�s intent to deliver on Green House Gas reduction targets in the near term.
We need to ensure that we work together as country and a continent to maximize our energy potential and to get the power into the hungry market places. The time for parochialism and insular policies should be over. This is why I am a strong advocate of an east-west north-south power grid. It is a vision about nation building, not territorial and economic protectionism by Quebec. Construction should be commencing on major green hydro projects from Yellowknife to Churchill Falls.
For too long, Newfoundland and Labrador has been hemmed in by our inability to manage our resources to maximize benefits for our people, and also in a way that supplies markets that need our clean energy.
The Upper Churchill is the most significant example as we are unfortunately at the mercy of an unfair and lopsided contract that other governments have been unwilling to renegotiate.
The contract sells over 5,000 megawatts of power to Quebec from 1976 to 2041 at a rate of 0.25 cents per kw/h with a renewal from 2016 to 2041 at which time the rate drops to 0.20 centsper kw/h. It is unconscionable that this be allowed to continue.
Power which was bought by Hydro Quebec for 0.25 cents per kw/h in 1976 had an averaged export value of 0.57 cents per kw/h and by the end of 2008 was 9.0 cents per kwh or 36 times more than what they pay for it.
Indeed, I think most fair and rational people would agree that our province has paid far too high a price for this contract which was signed decades ago.
But we have a new opportunity in the Lower Churchill to see a provincial resource used for the national interest, particularly in the context of developing green energy. And we are very excited in this province to see this project through, and we sincerely hope that other interests do not work to derail the natural progression of such a wonderful green development.
It is disappointing and frustrating that Hydro Quebec is not doing everything it can to enable this project given its exorbitant profitability from the Upper Churchill which could go on for 2/3rds of a century. A "buy Quebec" policy is not good for the rest of us.
And I believe the time has come when the rest of the country has recognized the need for this to change. Hopefully, we see progress in that direction.
At a time when governments are looking for ways to address their sometimes conflicting need for new energy supply and actions on commitments to fight climate change, Newfoundland and Labrador has successfully charted a course of economic and environmental sustainability in our energy sector that is rooted in effective resource management.
Our government had a vision that we laid out six years ago when we first took office. There have been bumps, criticisms, skeptics and cautious support along the way. But there has also been overwhelming grassroots support for and belief in this vision which has sustained our momentum and resulted in great success.
Newfoundland and Labrador and Nalcor Energy will be major international energy players during this century.
It is my hope that as you leave here and continue on with your meetings leading to the World Energy Congress in Montreal next year, that you will see the successes of our past and the potential yet untapped. And that Newfoundland and Labrador will play a prominent role in your deliberations and your policy development.
Most importantly, have fun and enjoy your stay and our
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