Speaking Notes – Premier Tom Marshall at NOIA (Newfoundland & Labrador Oil & Gas Industries Association) Conference 2014
THEME: Play on the Edge: Our Home. Our Energy. Our Future.
Good morning, ladies and gentlemen. To those who are here for the first time, let me give you a hearty welcome to Newfoundland and Labrador. To those who are back: It’s nice to see the way this place has gotten its hook in your jaw. Don’t say you weren’t warned!
Trips to Newfoundland and Labrador are like Mark Messier’s Lays potato chips. I bet you can’t have “just one”!
What better time for you to visit than during Eastern Canada’s largest offshore oil and gas conference, hosted by Canada’s largest offshore industry association, in the province that led the country – and even China – last year in GDP growth! We’re less than an hour into things, and already you’re feasting on superlatives! My breast pocket is full of them!
Capelin and Icebergs
Newcomers may be a little surprised by the temperature this time of year, especially if you’re more familiar with the temperatures of, say, the Persian Gulf, or the Gulf of Mexico, or the South China Sea, or pretty much any other place on the planet. You might be tempted to think this is the place that global warming forgot!
To be honest, a hot June has never been certain in Newfoundland and Labrador. In fact, it’s been a very long tradition to call this season “capelin weather”. A “capelin” is not to be confused with a “sculpin”, which is commonly known as the ugliest fish in the sea. A “capelin”, by contrast, is one of the smallest. In cove after cove around our province this time of year, when the winds prevail from the chilly ocean, enormous schools of these small silver fish will beach themselves. The shores are alive with them, flapping about as they leave the comfort of the water. But don’t expect these fish to develop lungs and legs and stun you with their mastery of Darwinian evolution. They’re simply living out the natural compulsion to spawn, and that compulsion drives them beachward where they deposit their eggs, gasp for air, and die.
We as Newfoundlanders and Labradorians are only too happy to do ourselves the favour of gathering them in buckets and frying them up in iron pans with a dab of butter for a tasty treat. The whole experience would make for a fascinating episode of CNN’s “Parts Unknown” with Anthony Bourdain, so if any of you happen to catch his ear sometime, ask him: Where else on Earth do the fish swim out of the depths and up on your plate for the evening meal?
See what I told you about this place being full of superlatives?
There are also not many places on Earth where you can spot dozens of colossal icebergs drifting down the coast in a majestic procession. There are not so many bergs visible off St. John’s right now, but a couple of hundred clicks to the northwest, in Bonavista Bay, the ocean is full of them. That, too, is something that’s been happening here for generations.
In fact, it was just such an iceberg, 600 kilometres southeast of here, that on the 15th of April 1912, brought the maiden voyage of the Titanic to a terrible conclusion.
Coincidentally, that tragic sinking occurred not far from the spot where, several decades later, we were to discover the first reservoir of oil in the Jeanne d’Arc basin.
The sea has always been a great giver of wealth to this place, but it never lets us completely forget how cruel and unforgiving a companion it can be.
The Importance of Planning
That’s why we’ve learned, through many generations, to treat the sea with enormous respect.
The theme of this week may be “Play on the Edge” – but the sea is never to be toyed with.
We’ve learned tragically why it is so important to place worker safety at the very top of our agenda whenever talk of exploration and development is on the table.
When preparing for our first offshore oil project, Hibernia, all of us understood the importance of building in ample protection against the violent Nor’easters that hiss and spit along our coasts, and the frozen giants that lurk in “Iceberg Alley”.
When the Hibernia platform was built, it was fortified to endure an onslaught of gargantuan proportions. The Gravity Base Structure has the structural integrity to withstand the impact of a one-million-tonne iceberg with no damage. In fact, it can withstand a collision with a SIX-million-tonne iceberg with survivable, repairable damage. Six million tonnes is pretty much the maximum size of the ice that can drift into water of the continental shelf in that region. It would be rare indeed to see such a thing. We expect to see a berg of that magnitude only once every 10,000 years. But if this year or next year happens to be that year, we are prepared. Hibernia is well-protected.
The Hebron structure will be protected just as well. And the Terra Nova and White Rose structures have the ability and the agility to move when ice approaches. Their glory holes are excavated openings in the seabed, protected from the scouring that heavy bergs can cause, so we can say quite literally that the bases are covered.
I think you see what I’m getting at here. I’m working up to a theme.
The theme of this week is “Play on the Edge” – but oil play is not a game of random chance. There’s a skill set that you can develop to give yourself the edge you need to notch up a win.
And this industry has the added advantage of offering multiple players the opportunity to win, all at the same time. It’s not a zero-sum game, but a series of win-win scenarios from which all players have the chance to benefit.
That’s why we can sit around our tables today, not as foes, but as colleagues and friends, looking for new ways to join forces for prosperity. There are fortunes to be raised from the Newfoundland and Labrador offshore, and all of us can benefit.
The difference between an offshore oil and gas industry that is merely “viable” and one that is truly “enviable” is the very deliberate approach we take to achieve something extraordinary.
We all know that the offshore oil and gas industry is full of risks, and it has no shortage of mavericks with the guts to handle risks, but even the mavericks know that the greatest gains are made when courage and bravado have the benefit of careful strategic planning.
Prudent planning can never eliminate all the risks, but it can seriously mitigate them so ventures are far more safe and far more feasible.
We can ratchet down the uncertainty by being strategic, diligent and forthright in approaching every challenge.
Ratcheting down the uncertainly serves to ratchet up the level of investor confidence – and that gives us the capital to launch forth into even deeper waters and reap even richer rewards.
How Strategic Planning Can Drive Exploration
That’s been our approach to expanding the province’s offshore industry beyond the Jeanne d’Arc Basin to other regions.
We could have taken a hands-off approach and waited for investors to decide on their own whether to reach deeper into the Newfoundland and Labrador offshore in search of the next big prize.
Instead, we took a more active tack.
There are only so many exploration dollars put to work around the world each year. To improve our chances of seeing big dollars invested right here, Nalcor Energy made a strategic choice. It conducted seismic testing of its own in the subsea regions north of the Jeanne d’Arc Basin.
It turned out to be a brilliant move on Nalcor’s part. Seismic mapping of these untested regions has proven to be exceptionally worthwhile. Not only is Nalcor now in a position to make available to investors some 50,000 line kilometres of 2D seismic data, but the data shows the region is a liquid gold mine.
Not only have new basins in the Labrador Sea been delineated, but seismic work such as this can result in high-impact discoveries such as Statoil’s discovery in the Flemish Pass. The Bay du Nord Prospect turned out to be the largest oil discovery in 2013 anywhere in the world!
It’s like winning the World Cup!
Only 5 per cent of the one million square kilometres of sedimentary basins we have delineated are currently under licence. This suggests that the wealth may well have remained hidden had Nalcor not done work of its own.
This also means that about 95 per cent of the delineated basin is now available for licensing to companies wanting a piece of the prize. The value of that real estate has appreciated considerably!
To make the prospects even more attractive, our offshore governing body – the Canada-Newfoundland and Labrador Offshore Petroleum Board – has recently approved a new scheduled land tenure system. That further ratchets down the uncertainty for investors, making it even more attractive for those who would like to get in on the action.
How Strategic Planning Can Drive Growth
Strategic planning works wonders!
Strategic planning is the approach that spurred our province through Nalcor Energy since 2007 to take equity ownership stakes in new offshore projects. Here’s the upside for you of our decision to do that. If we have an even-greater vested interest in the success of a particular project, then we are going to be very interested in making the public policy decisions that drive success.
If the offshore needs skilled workers, then those of us who have the constitutional responsibility for education and skilled labour are going to be all the more motivated as stakeholders to prepare our people to fill the skilled worker gaps.
We’re going to expand relevant programs at Memorial University and College of the North Atlantic.
We’re going to make post-secondary education more accessible by lowering the cost barriers.
We’re going to advance incentives to drive apprenticeships and journeyperson mentoring.
We’re going to invest in services and infrastructure to give ourselves a competitive edge in the offshore.
We’re going to make full use of the largest fabrication facility in Eastern Canada at Bull Arm.
We’re going to continue to lead in ocean and ice engineering R&D at C-CORE and the National Research Council Institute for Ocean Technology.
We’re going to continue to lead through strategic investments in the state-of-the-art Offshore Marine Safety and Survival Training Centre.
We’re going to continue staking our claim as leaders for R&D in cold ocean technologies and harsh environment operations.
All of these things we’re going to be far more likely to do if we are equity owners with a vested interest in a project’s success.
That’s the argument we made to the oil companies when we announced our intention to seek active partnerships in development. And that’s the argument that finally won the day.
Our commitment has proven to be prophetic. We have indeed expanded programs, lowered barriers, grown our skilled workforce and strengthened infrastructure to give Newfoundland and Labrador a competitive edge.
And everyone in the industry has benefited from that approach – corporate investors, skilled workers, subcontracted suppliers, and the people of the province, the principal beneficiaries of our success.
The Statoil Model and the Arctic
Recently at a St. John’s Rotary luncheon, I touted Statoil’s early approach as a fitting model for our own. They took the same tack, driving growth at home and abroad to return wealth to the people whose enterprise Statoil was – the people of Norway.
Statoil’s genius was to recognize that home base is just the starting point. Expertise built at home can be harnessed farther afield. Home is the proving ground, but then the world can become your arena for operation. You can play on soccer pitches everywhere, to extend the “play” analogy, and you can bring home the metal.
Just as things are opening up in the Flemish Pass, the Labrador Basin and elsewhere around Newfoundland and Labrador, they are also opening up in the Arctic.
It’s a whole new set of challenges up there. The weather is cold. The sea is packed with ice. Who in the world would be prepared to tackle challenges like that?
I think you see where I’m heading. The land of frigid Junes and the Iceberg Alley is well prepared to take on the challenges of development in the Arctic. Having cut our teeth here, we are prepared to lead there.
This would be an ideal North American staging ground for Arctic operations.
When explorers set out to master the North Pole a century ago, they looked to mariner Captain Bob Bartlett of Newfoundland and Labrador to get them there. Here’s where his operations started.
You follow the path of the icebergs north, and there you find the top of the world, a pristine environment that needs our careful stewardship. Lessons learned here will help us do the right things there.
But in the meantime, new life has just been breathed into our own offshore, and we’re beginning to realize just how far forward the new prospects may reach.
Already, this province produces 35 per cent of Canada’s conventional light crude output.
Hibernia represents 1.4 billion barrels of oil reserves.
Terra Nova represents 592 million barrels of oil reserves.
White Rose and North Amethyst represent 380 million barrels of oil reserves.
Hebron represents 707 million barrels of oil reserves.
Then there is West White Rose, and the Flemish Pass, and the Labrador Basin, and other basins that are well within the sweep of our radar.
We have one and a half billion barrels of oil production under our belt.
We’ve become a production hub, an exploration hub, a supply and service hub, a trade hub, a hub of innovation in research and engineering.
We’re already masters in the field, and the people we serve are benefiting enormously.
The Work Will Go On
It is enormously satisfying to serve.
Each of us – all of us – have people we serve: investors; stakeholders; voters. We all answer to someone.
I’ve been proud as Premier, Natural Resources Minister, Finance Minister and so forth, to answer to the people of Newfoundland and Labrador.
I was fully expecting that, a few days from now, I would be stepping aside to make way for my successor.
But like the weather and so much else in Newfoundland and Labrador, our politics is unpredictable.
So my tenure will be extended for a little while longer to ensure that the important work of government continues uninterrupted and the transition to what comes next is seamless.
At that point, I can be safely dispatched with the requisite pomp and circumstance.
I’ve heard that the current plan is to place me on a bier atop a Viking barge that will be ceremonially set ablaze in the harbour and piloted out into the North Atlantic.
There will be some stirring music – perhaps Celine singing “My Heart Will Go On”.
And then the work will indeed go on. The exploration will go on, and the seismic testing, the engineering and the fabrication, the drilling and the pumping, the trading and the transporting and the profiting – all of it continuing, unabated – and opportunity will continue to flow through the lines like rivers of light sweet crude.
Thank you so much for your partnership.
May you thoroughly enjoy this conference and find the strategic information you need to take the next steps with us.