The Honourable Siobhan Coady, Minister of Natural Resources
Speaking Notes for Noia’s Oil & Gas Week
June 23, 2016
Good morning. Thank you for the kind welcome. It is a pleasure to be here – I’ve had the opportunity during the last few days to meet many of you and to discuss opportunities and challenges within this industry.
It is wonderful to see the video on Radient360 and to appreciate the progress that we have made in developing innovative techniques and equipment to find a niche in the market and capitalize on it – and, of course, doing it right here in Newfoundland and Labrador. Congratulations, Radient360.
I want to congratulate Noia on a very comprehensive agenda and the organization of what has been an outstanding conference.
I know many of you will continue discussions and interactions post conference that will successfully conclude in doing business.
I’d also like to recognize the delegation from NLOWE attending this week’s Noia conference consisting of 10 women-owned businesses servicing the oil and gas industry in such areas as weather forecasting, medical services, human resources, communications, public affairs, and organizational and leadership development.
As I know how very important safety is to the industry and how we are all responsible to ensure each other’s safety, I’d like to take a quick safety moment. I would like to point out emergency exits and ask for you to note the one nearest you. Hmmm, sounds like I’ve been on one too many flights.
As you know I’ve been Minister for all of six months, and I’ve had the opportunity to meet with and listen to your ideas, your contributions on how we may “refuel”, “reenergize” and redefine oil in the Province of Newfoundland and Labrador.
Today I’d like to take this opportunity to tell you what I’ve learned are some of the key elements to success and what we plan to do about the opportunity.
As I am always intelligence-gathering and interested in your perspective, I am going to point out that there are note cards and pens at your table.
Please make a jot note and give it to the Noia team if you have anything to add to my radar screen, and I know they will make sure I am given the information.
My commitment to you is to be responsive, engaged and accountable - our collective goal is to drive success in the industry and in this great province.
The more success you have, the more local, national and international business you enjoy; the more improvements made to ensure we move expeditiously from prospectivity to production; the better it will be for all of us.
As Walter Chrysler once said “The real secret of success is enthusiasm”.
When you hear of our prospectivity, you will be very enthusiastic about the opportunities that lie before us.
Being focused, nimble, and determined will lead us forward.
That is my mantra – the three key elements I want to speak about today.
FOCUSED
The Premier, when he spoke on Tuesday morning, gave a brief overview of the Oil and Gas Industry Council that will soon be engaged in setting a vision for the province’s oil and gas sector - focused on success, building a stronger, sustainable industry known and recognized globally and to fully realize the benefits of our oil and gas industry.
I am pleased to say that we are in the final stages of developing the Industry Council and the Council’s work will begin over the next few months.
I want to thank Noia for their encouragement, involvement and guidance, as well as CAPP for their dedication and interest.
As former Chair of Noia, Sean Power, said late last year when introducing the document Redefining Oil, “By making the right decisions and moving collectively toward a shared vision, we can create an industry that is stronger, more competitive, more sustainable and one that maximizes the benefits of our provincial resources and global participation.”
I think this captures what the Industry Council will work toward. Its mandate will be to assist government in developing a long term vision for the future development of the Newfoundland and Labrador oil and gas industry, with a focus on developing a more sustainable and globally competitive industry, while ensuring that Newfoundland and Labrador is the principal beneficiary of our offshore resource development.
Council members will be comprised of a diverse mix of skills, knowledge, ability and experience selected through the process established under the new Independent Appointments Commission Act. There will be a public call for members, and within a few weeks, those interested can apply online to the Public Service Commission for consideration.
Noia and CAPP will also be represented on the Council. It is anticipated as part of the development of the vision and work of the Council that there will be wide consultation and engagement.
We also appreciate that members of the Council will volunteer their time and energy, therefore the budget for activities will be small and within the existing funds of the Department. The Department of Natural Resources will provide the supports needed for the Council.
There is much to be done to ensure we maximize our growing opportunity, and I look forward to working together to define our future and build on our success.
NIMBLE
In order to realize the full opportunity that we are presented with in our oil and gas industry, we have to become nimble and responsive with modernized regulations and improved governance.
Let me tell you a little on the actions we are undertaking:
We are in the process of modernizing the regulatory framework through the Frontier and Offshore Regulatory Renewal Initiative.
FORRI is a partnership of federal and provincial government departments and includes participation of the Boards. It aims to modernize the regulatory framework governing oil and gas activities in Canada's frontier and offshore oil and gas areas.
The older suite of regulations is prescriptive in nature – one size fits all.
The new regulations are performance-based, allowing for innovation and advances in technology by those working in the offshore to be incorporated.
FORRI is working to modernize and amalgamate five existing regulations into one single framework, which includes the:
- Drilling and Production Regulations;
- Geophysical Operations Regulations;
- Certificate of Fitness Regulations;
- Operations Regulations; and the
- Installation Regulations.
At the end of March, we held stakeholder consultations on the policy intent for Phase 1 of the initiative. This included provisions relating to:
- Board powers;
- Applications;
- Management systems; and
- Operator duties.
I would like to extend a thank you to all stakeholders who participated in the session, including Noia for attending and subsequently providing written feedback.
Your input is most welcome and certainly valuable to the process.
The policy intent for Phase 2 is presently under review, and NRCan is hosting stakeholder consultations next week (June 28) in Ottawa.
I appreciate your collective participation in these sessions as your input is so important to the regulatory development process.
We are also focused on having the up-to-date and responsive health and safety regulations. Safety is, of course, the highest priority for all of us. I know we all work every day to ensure that we, and everyone who works with us, is working in a safe and healthy manner.
Those in this room know that Transitional Occupational Health and Safety Regulations were introduced as part of amendments to Accord Act legislation on December 31, 2014.
This legislation introduced a comprehensive occupational health and safety regime in the Newfoundland and Labrador offshore.
The amendments to the Accord were to provide a clear, enforceable and legal regime to govern occupational health and safety, as well as the appropriate regulatory-making provisions to ensure worker safety.
Let’s just say there were some learnings from the implementation, and in response to stakeholder concerns, there are amendments being made to select sections as an interim step while work continues toward the permanent OHS regulations.
We will also consult on the permanent regulations and will ask for you to review and provide feedback on the proposed regulations.
A modern, stable and globally recognized regulatory environment is a competitive edge. We all want regulatory efficiency.
Speaking of modernizing, I know many of you are interested in changes to drill stem testing requirements.
I am working to advance and making progress on the issue with my colleague, Minister Carr of Natural Resources Canada.
Before I move from regulation and governance, I want to say that the Board of The Canada-Newfoundland Labrador Offshore Petroleum Board has a provincial vacancy.
The Independent Appointments Commission will start the process soon of finding candidates who offer the right mix of skills, knowledge and experience.
DETERMINED
I’ve spoken about being focused on our future, on the need to be nimble, and now I turn to being determined.
Looking around this room, I see the determined faces of those dedicated to ensuring success in our oil and gas industry - determined to maximize the local participation in our great resource through innovation and excellence.
As I had mentioned earlier, we are focused on success, building a stronger, sustainable industry that is known and recognized globally and on fully participating in our oil and gas industry.
Now, I know from industry and from representation from Noia that there are concerns about ensuring local participation.
Benefits plans are submitted to the Canada-Newfoundland and Labrador Offshore Petroleum Board for activities in our offshore.
These plans focus on the requirements of the Atlantic Accord legislation that provide for full and fair opportunity to participate on a competitive basis for provincial businesses and first consideration for employment of qualified residents in Newfoundland and Labrador.
Additionally, Hibernia, White Rose Expansion, Hibernia Southern Extension, and Hebron projects are subject to benefits agreements, which are contractual arrangements directly with the Provincial Government and generally require more specific business and employment commitments from project developers.
Historically, we have done very well in securing benefits for the people of the province.
The oil and gas industry in Newfoundland and Labrador has grown tremendously, and with it, so have the opportunities for our province.
To date, Hibernia, Terra Nova, White Rose and Hebron have spent a combined 23 billion dollars in this province and employed tens of thousands of Newfoundlanders and Labradorians.
In 2015 alone, in-province spending on these projects totaled nearly three billion dollars.
Local businesses are benefitting through the supply of goods and services. While there have been challenges, we are growing and evolving to be responsive to the changing needs of the industry.
We have had great success; however, we ensure that we are obtaining maximum benefit for the people of the province.
We have done well; but we are confident we can do even better.
The principles of full and fair opportunity and first consideration for residents and businesses, as outlined in the Atlantic Accord legislation and administered by the C-NLOPB, are fundamental to our industry.
ALL stakeholders – at ALL times - must embrace these principles and the intent of the Atlantic Accord to ensure we have a globally competitive, growing, sustainable industry.
It is important that processes, procedures and practices are in place and followed to ensure compliance with the Accord’s objectives and with benefit agreements.
The prospectivity and opportunity are great.
We’ve attracted global attention with extensive geoscience that includes seismic acquisition. This has provided us with quality data regarding our offshore prospects.
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 over 350 leads and prospects defined to date from new seismic work.
Our scientifically driven strategy for surveying is reducing the exploration uncertainty to chance factors of 1 in 10 or lower.
A large portion of the new seismic survey has been acquired over our slope and deepwater frontiers, marking the first time many of these regions of our offshore have been imaged.
Newfoundland and Labrador's slope and deepwater areas represent one of the world's last great frontiers.
All of our seismic work, coupled with satellite surveys and other analysis, has revealed that there is a different play trend in some areas of our offshore – the same type which is found in other successful global basins.
For example, in the Orphan basin area, a new Tertiary play trend, known as Cape Freels, has recently been imaged and confirmed in the province's new seismic surveys.
While still under evaluation, this newly revealed play trend is attracting global industry attention, as it is similar to other successful analogues found in offshore Brazil and in other global basins.
In the Jeanne D’Arc basin, for example, we have conventional structures or traps. In the Orphan Basin we are seeing a different style, more stratigraphic or fan-like analogues. This is exciting, as we see a different play trend.
The sheer size of these prospects in the Orphan Basin is also interesting, as some exceed 500 square kilometres in area (for comparison, the Hibernia field is approximately 150 square kilometres in size).
The area of this new play trend exceeds the size of the entire Jeanne d'Arc Basin.
Dr. Richard Wright will be providing more details about the Orphan Basin later this morning.
The result of this exciting prospectivity is the continued impressive exploration work by our existing operators like Exxon Mobil, Stat Oil, Husky, Suncor, and Chevron, and we welcome new entrants Nexen and BP.
We look forward to this year’s land tenure coming up in the fall, especially with the new exciting prospects in the Orphan Basin.
Conclusion
Focused, nimble, responsive and no doubt determined – that describes not only our industry and our new government – it describes everyone in this room.
We have a growing opportunity with one of the best oil and gas prospects in the world today. In this competitive international environment we can and are attracting investment. Certainty, stability, innovation and competitiveness are key requirements to do so. Together building a common goal of developing our oil and gas industry – we will not only succeed but exceed.