Perspectives: A Word from Industry Leaders: Kathy Dunderdale, Minister of Natural Resources, Newfoundland

By: Suzanne Rent

This year, of course, marks the 25th anniversary of the Atlantic Accord. Looking back over the past twenty plus years, how do you think the province’s offshore has fared?

The Atlantic Accord was a pivotal point in Newfoundland and Labrador’s history, and precipitated the development of our first major pioneer offshore oil project, Hibernia, which has returned substantial benefits to the province and the rest of Canada. The original Atlantic Accord greatly assisted in the pursuit of long-term economic prosperity and self-reliance for Newfoundland and Labrador. These benefits were secured and further improved in 2005 when the Williams Government negotiated a new deal that retained a greater share of offshore revenues for the province.

Twenty-five years later, we have three world-class producing projects with a fourth in development. We have a robust service and supply sector poised to serve future projects in the province and offer its capabilities and expertise in new frontier area of development.

Do you think the province can set an example for other province’s looking to boost their energy sector?

Newfoundland and Labrador is blessed with an abundance of rich and diverse natural resources. Few jurisdictions in North America can match the immense value of our vast warehouse of oil, gas, hydro, wind and other energy sources. The Government of Newfoundland and Labrador decided that the most responsible way to seize every opportunity for maximum economic benefit was to move forward by way of a comprehensive, long-term Energy Plan.

Released in 2007, the Energy Plan lays the strategic direction for the development of our energy resources, with far-reaching implications for the economy and people. This includes projects on the horizon and reaches out to 2041 when the Upper Churchill contract expires. It minimizes uncertainty for developers and creates a climate attractive to investment partners interested in maximizing growth and opportunity.

Many jurisdictions have similar plans in place for their energy sector, but Newfoundland and Labrador’s strategic advantage is the mix of energy resources available for development in the province and the aggressive plan we have put into action.

What about plans for Labrador and other previously hard-to-reach regions. Is the province exploring those in hopes it will be a leader in exploration and development of such areas like Arctic exploration?

Activity and interest in the gas-rich lands off Labrador over the last number of years has been extremely high.

Five significant discovery licenses have been issued in the area of the Hopedale Basin. These discoveries contain in excess of four trillion cubic feet of natural gas. Work on these resources is continuing with C-CORE leading a Joint Industry Project undertaking risk assessments in order to evaluate development options.

In the Canada-Newfoundland and Labrador Offshore Petroleum Board’s (C-NLOPB) 2007 Call for Bids, industry nominated new land in Labrador’s offshore area. Four parcels were offered up resulting in a combined bid total of $186.4 million. This represents the third highest bid amount for lands in the province’s history. Plans have been filed with the C-NLOPB to conduct seismic programs in the area, commencing as early as the summer.

Newfoundland and Labrador’s service and supply companies have developed a positive reputation for having expertise in harsh environments and ice-covered waters. Delegations from Greenland and Russia have indicated an interest to tap into the experience of the province’s oil and gas sector to assist them with development under similar environmental conditions. Newfoundland and Labrador is well-positioned to be a gateway for future petroleum opportunities in the Arctic. We will continue to promote the province’s expertise and build on our current knowledge of exploration and development in offshore ice-prone environments to secure the sustainability of this sector in frontier areas of development.

What is the province doing to attract more exploration to the offshore? Are there plans to open up additional parcels for bidding?

The key to the long-term successful development of Newfoundland and Labrador’s petroleum sector is continued investment attraction and exploration activity both offshore and onshore.

Once implemented, the Petroleum Resource Marketing Plan will provide a number of strategies that will be used to promote the province’s petroleum potential to international audiences.

The Offshore Continental Margin Working Group and the Western Newfoundland Region Working Group, comprised of government officials as well as industry representatives, including Nalcor Energy – Oil and Gas, was established to develop regulatory and fiscal measures for promoting targeted exploration activity. Discussions are ongoing on recommendations to encourage increased exploration in the province’s offshore.

The Provincial Government has committed $20 million through Nalcor Energy to increase its understanding of our petroleum resources through the acquisition of geoscience data. Funding will enable the evaluation of key geoscience data to assist in attracting exploration and development capital. We are also working with the C-NLOPB to review our current data release policy and move towards the release of digital data.

Less than 10 per cent of available, prospective offshore land in Newfoundland and Labrador is held under license. This leaves significant opportunity for industry players to nominate and bid on new land for exploration and development.

The province’s onshore sector is growing and attracting significant interest, too. What is the province doing to work with those companies exploring for shale and onshore oil and gas?

The province has set aside $5 million in funding for the Petroleum Exploration Enhancement Program (PEEP), which targets onshore Western Newfoundland. A high resolution aeromagnetic survey covering an area of approximately 37,000 square kilometers was recently completed and the data was made available to industry at no cost.

Modern goal-oriented drilling and production regulations have been drafted for the onshore, similar to new offshore regulations that were recently brought into effect. These new regulations are in line with regulations being utilized in other international jurisdictions. With recent unconventional developments, such as shale gas, the department contracted for an external review of the current petroleum regulations to ensure they are appropriate and applicable to new regulations.

And how will the renewable sector fit into the province’s energy equation? How is the province promoting and working with that sector?

We are continuing to promote our renewable energy potential to other markets and potential partners. This will help us fulfill our commitment to seek ways to increase the amount of renewable energy and reduce GHG emissions in our domestic market, including the closure or upgrading of the Holyrood thermal generating facility. We are also supporting research and development of alternate sources of energy and facilitating innovation in existing energy sources, including our wind-diesel-hydrogen project in Ramea.

Developing our renewable energy potential and getting it to domestic and export markets will be a long-term and challenging process. This difficulty is clearly evident in the road blocks that have been set out for the Lower Churchill project; the most attractive undeveloped hydroelectric project in North America. A recent ruling from Quebec’s energy regulator crystallizes the understanding that the difficulties we experienced in developing the Upper Churchill project still exist today.

What do you think Newfoundland and Labrador’s energy industry will look like in another 25 years?

The provincial Energy Plan will provide strategic guidance in the development and management of the province’s energy resources to 2041 and beyond. We will carefully plan and make resource decisions that maximize the benefits from current and future energy developments.