Premier's speech to NOIA
June 19, 2012
Premier opens NOIA’s international conference
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The following are speaking notes delivered June 19 by Premier Kathy Dunderdale to the Newfoundland and Labrador Oil and Gas Industries Association (NOIA) 2012 Conference in St. John’s:
Good morning everyone. It is wonderful to see the sun rising bright and warm over Newfoundland and Labrador this morning, both literally and symbolically. Truly it is a brand new day for all of us, and words cannot do justice to the pride and gratitude I have for the people in this room today and the enormous role you have played, and continue to play, in ushering in this new era of opportunity and success in Newfoundland and Labrador.
I see a great many familiar faces today, and if I gave in to the temptation to start naming individual accomplishments, we would be here a very long time. Suffice it to say, your contributions have been profound and far-reaching.
You have proven yourselves to be leaders in this industry – and not just leaders locally, but indeed leaders of a global stature in offshore exploration and development, in supply and services, in marine research and technology, and in other capacities.
The video we just saw captures the nature of the challenges you have faced to establish yourselves here.
As Captain Tony Patterson of Virtual Marine Technology said so accurately: “The North Atlantic Ocean is one of the most treacherous seas on Earth. It’s a very harsh environment for people to work. Newfoundland and Labrador offers a great proving ground for people who are developing marine technologies. Once it’s been proven here, it can work anywhere.”
And in the words of Steve Dodd of GRI Simulations: “An understanding and appreciation of harsh environments is built into the people here, so it’s a natural home for any company interested in performing work in this sector.”
I am very impressed by the sheer number and the calibre of the companies that have come to Newfoundland and Labrador to join with the many others that have had their genesis right here.
Newfoundland and Labrador has provided all of you with the toughest of challenges, bar none – and you, in turn, have risen to meet those challenges head on and earned – by your own hard work and ingenuity – the undeniable right to stand shoulder to shoulder with the best in the industry.
I have looked forward, each and every year, to returning to NOIA’s conference to talk about how the industry has expanded and matured, and to share with industry leaders our vision and enthusiasm for the opportunities that await. I can only marvel at the transformation we have seen and the growth the industry has experienced – from the earliest years when these rooms were full of pioneers, eager to take on new challenges, right up to this year, when I now see before me expertise with the solid muscle that experience brings, with amazing stories to tell and with more energy and vigour to take on the opportunities ahead. You truly know what it means to “play on the edge” – and when you play, you play to win!
The success of this province’s oil and gas industry – your success – has also contributed immensely to the expansion and diversification of industry generally in our province and to the economic resurgence that has changed the face of Newfoundland and Labrador.
I cannot overstate the importance of this transformation for the people of our province. We all know that, more than any other sector, it is the oil and gas industry that has transformed us from Confederation’s poor sibling to a full partner and indeed a leader in Canada’s economic resurgence.
What is even more significant is the resurgence of pride and optimism that has gripped Newfoundlanders and Labradorians, giving strength to our collective aspirations to be all that we can be – socially, culturally and economically. Our young people are inspired and more confident to dream bigger dreams, to set higher goals and achieve even greater successes.
The industry is not only providing direct employment for more than 3,000, but fueling indirect jobs for thousands more. It is supporting over 500 supply and service firms directly, and drawing enormous sums of investment dollars that are fueling other enterprises and R&D.
Approximately one third of provincial revenue is derived directly from our petroleum sector.
Not only on the northeast Avalon, but in each and every community of our province, oil and gas development is producing tangible benefits that are changing people’s lives and opening up new opportunities for growth.
The revenue is paying for long-needed improvements to local roads, major highways, bridges and ferry services that are critical for new economic growth, as well as improvements to schools and hospitals, municipal water and sewer, and other critical infrastructure and services.
This revenue has also enabled us to reduce the province’s public debt by a third, reducing our interest payments, securing a stronger credit rating and establishing a more secure fiscal position moving forward.
However, we must be mindful that this revenue fluctuates according to oil prices in the world marketplace, exchange rates and production rates. We must be fiscally responsible in managing the revenues we receive.
By deliberately choosing to harness these revenues responsibly to create the conditions for new development, our government is focused squarely on ensuring the growth we are witnessing today is sustainable over the long term so our grandchildren and great-grandchildren also share in the benefits of the transformation that is occurring today.
Sustainability was the focus of our province’s 2007 energy plan – the comprehensive vision document that anchors our approach to energy development. Clearly, the oil and gas sector is one of the major pillars of energy development. Another is hydro – and the development of the Lower Churchill with the opening of a transmission route to the Maritimes provides us with the ideal opportunity to erect another pillar that will serve as a companion to the oil and gas sector. Together, these pillars establish Newfoundland and Labrador as an energy warehouse with new opportunities yet to be tapped.
It is amazing to consider how far the Newfoundland and Labrador oil and gas industry has come in a relatively short span. We have not always had a good relationship but we have worked hard to earn the respect and confidence of the industry by demonstrating our unwavering commitment to building strong partnerships.
At the heart of any strong relationship is an agreement that is mutually beneficial. We in this province know better than most what a bad deal does to a relationship. The Upper Churchill Contract, among the most lopsided in Canadian history, continues to strain our relationship with Quebec, even four decades following the signing of the contract.
The 23rd chapter of the Book of Genesis records that, when Abraham’s wife, Sarah, died, he arranged a meeting with the local leaders in the region where he was living. “I am a stranger among you,” he said. “I have no property here. Sell me a piece of land where I can bury my wife.” Negotiations ensued, and the local people finally agreed to enter into a commercial agreement for the transfer of title. To this day, that geographic region continues to be known and honoured, all these millennia later, by its original name, which means “friendship”, “association”, “unity”, “alliance”. That ancient name is, of course, “Hebron”.
Three weeks ago, on the 31st of May, the Canada-Newfoundland and Labrador Offshore Petroleum Board announced that the application to develop an oil field appropriately called by that very name has now been approved in our province’s offshore region. As a venture of a grand alliance of partners – ExxonMobil, Chevron, Suncor Canada, Statoil Canada and Nalcor Energy on behalf of the people of our province – Hebron is just the latest in a series of projects that have drawn leaders in the international oil and gas industry right here to Newfoundland and Labrador.
Hebron may contain more than a billion barrels of reserves, making it the second-largest project after Hibernia. The development partners have opted to extract this oil using a gravity base structure. Having learned valuable lessons from the construction and operation of the Hibernia GBS these past 15 years, we are ready to apply that knowledge to make this fourth project yet another marvel of offshore petroleum engineering and construction. This time, we are the veterans, having learned by doing and having proven our mettle. As we rev up the engine of activity at Bull Arm and prepare for the 4.1 million person-hours of work this project is expected to generate, we move forward with the confidence that our commitment to excellence will be demonstrated once again.
With Hebron, as with every development project, I make no apologies for fighting hard to secure maximum benefits for Newfoundland and Labrador, leaving no stone unturned to ensure we are as fully engaged as possible in all the work associated with this project.
In recent weeks we have heard from Exxon that it is considering building the Hebron Drilling Equipment module outside the province. Exxon has suggested that a constraint exists in regard to yard capacity. We disagree with this assessment and our opinion has been confirmed by an expert advisor.
We expect Exxon to live up to the terms of the Hebron Benefits Agreement and we will pursue the available avenues under the agreement should Exxon not reconsider its present direction. The importance of living up to commitments like this one is paramount.
Already in our offshore oil and gas sector, some 90 per cent of the more than 3,000 highly skilled professionals employed in one capacity or another are Newfoundlanders and Labradorians. That fact speaks volumes about our capacity to rise to the challenge and shoulder the responsibilities of leading in this industry. We are activity engaged at all levels to make Newfoundland and Labrador’s offshore oil and gas sector a model of excellence.
Thanks to decades of exploration and production work by the true pioneers of this industry, we now know that Newfoundland and Labrador has tremendous undiscovered potential, stored in a series of basins wrapping our coast.
Through strong investments in programs to enhance geoscience data acquisition and release, we are setting our sights on the opportunities yet to come. As all of you know, we have only scratched the surface of the petroleum potential of Newfoundland and Labrador. While the discoveries to date in the province’s offshore region total more than three billion barrels of crude oil and more than 11 trillion cubic feet of natural gas, the research tells us there are six billion barrels of oil and 60 trillion cubic feet of natural gas just waiting to be discovered. We are eager to work with new partners and existing partners to build on the successes we have already achieved.
A few days ago, I was in Calgary to speak at a Memorial University Affinity Dinner and of course some of my remarks focused on our energy sector.
Newfoundlanders and Labradorians have played a pivotal role in building the oil industry in Alberta and generating the wealth on which Alberta’s success is based. Newfoundland and Labrador has been a direct beneficiary of oil sands development just as the oil sands development has been a direct beneficiary of the work of the people of Newfoundland and Labrador.
But these days, thanks to the work of Newfoundlanders and Labradorians and our partners right here in this province, we are today standing side-by-side with leading oil producers in an energy-rich country.
At this conference, and other conferences and trade missions across the continent, we are proudly celebrating our strengths and showcasing our successes. We are telling investors they can feel confident drilling here because we have proven our capacity to deliver first-rate projects with a first-rate workforce. Our potential for growth is huge. The region is booming, with significant new mining and energy projects in the wings. The province’s energy arm, Nalcor, an equity partner in three projects already, has earned its reputation as a highly responsible and reliable colleague, with expertise to match the best.
Our educational institutions are working hand-in-glove with industry to prepare graduates to excel. Our government is, in turn, working with our educational institutions and industry to match individuals to labour market needs. We have invested to lead the country in post-secondary accessibility through the most progressive student aid reforms and among the lowest tuition fees in Canada. We have invested in expanding the required training programs and facilitating apprenticeships and journeyperson certification, and provided incentives for employers to hire apprentices, particularly those from traditionally under-represented groups, such as women, Aboriginals, and persons with disabilities.
We are determined to ensure that people who have not traditionally benefited from these professional opportunities are able to add their skills, ingenuity and drive to the mix, benefiting all of us. Both the Hebron and Hibernia Southern Extension Benefits Agreement include a Gender Equity and Diversity Program, the first of its kind in offshore petroleum developments for Newfoundland and Labrador with the goal of ensuring inclusive opportunities.
The province’s commitment to leadership in harsh-environment ocean research and technological development makes this the ideal place to gain a foothold on emerging frontiers and reap the rewards. Our expertise in offshore development is already demonstrated and growing. Our service and supply sector totaling more than 500 firms is tested and proven. The opportunity to avail of existing infrastructure is advantageous. Our political climate is stable, ensuring low risk. The province has been successful in negotiating agreements for labour stability on our key offshore projects, including Hebron. Our fiscal regime is attractive relative to those of other countries.
We have an amazing story to tell. It is a story of ingenuity, hard work, dedication, commitment to excellence, camaraderie, friendship and reward. It is a made in Newfoundland and Labrador success story – one we have helped to write with the partnerships of those who have joined us.
Our story is only partly written. The next chapters are unscripted, but here in this room are many of the women and men who will help us write them. Getting to this point in our history was not easy. It didn’t just happen. Thomas Edison said this: “Opportunity is missed by most people because it is dressed in overalls and looks like work.” There were struggles to get to where we are today but together we saw them through. There will be more struggles ahead, but when are there not?
One of my favorite books is by Newfoundland author Bernice Morgan. The book is Random Passage and it is the saga of a family who leave their native England for a future in a distant country, only to find a barren and unforgiving land – this land – that would test every measure of their mettle in order to survive.
I can only imagine what it must have required of them to carve out an existence in what were harsh and unforgiving conditions. They proved their mettle, with courage, confidence, ingenuity and hard work. They had a vision of brighter days that propelled them forward.
And now, hundreds of years later, we honour this legacy through our collective vision of becoming all that we can be. This legacy is interwoven through every portion of this conference and through your daily work. Our success as an industry, a people, a province and as a contributing member of this great federation of Canada is rooted deeply in where we came from and where we will go.
Thank you, members of NOIA, for providing me the opportunity to mark our achievements together and to celebrate the exciting future that we all share.