Published on April 4th, 2012
Newfoundland, Rich in Energy Resources
Newfoundland and Labrador, Canada’s easternmost province, is a wild place. It is home to massive mountain ranges, endless bogs, more black flies than can be properly considered necessary, and a few people too. The province has a land area a tad bigger than Germany’s, but a population a few thousand short of Luxembourg’s. The island of Newfoundland is so far east that it has its own time zone. For the most part, the people live on the coasts, on the Labrador mainland and the island of Newfoundland. More than half of them live in proximity to the capital, St. John’s, much closer to London than to Los Angeles. And the province is booming. Royalties from offshore oil projects have been mainlined into the economy, and the provincial college system is churning out trades’ workers at unprecedented rates. Things are good. But newly elected Premier Kathy Dunderdale isn’t sitting on her laurels—there is, she says, work to be done. Dunderdale is the first woman to hold the premiership of the province, a development that is both profoundly exciting and perfectly normal. Gender barely played a role in the election politics or her party’s decisive victory, but Dunderdale wants to tackle issues of gender head on. “It’s always important to have women at the table,” she says, “when you’re talking making decisions about anything that affects their lives. In governance that is particularly important.” Dunderdale’s approach is essentially pragmatic. It is her contention that the issues of women are really the issues of sustaining community, “When you don’t have a balance in society, you are going to have social justice issues,” she says. “To have a healthy community, you have to have that kind of balance—That kind of inclusion.” Take, for instance, the development of Hibernia— the largest of Newfoundland’s offshore projects. Dunderdale relates how women make up only 0.04 per cent of the tradespeople, a number that she says is almost unquantifiable.” So we had one of the biggest economic generators this province has ever seen, and women were shut out. And it’s because nobody put a particular lens on it… And I don’t say that was in any kind of a deliberate way; it was done because women weren’t at the table.”
But That Was Then
Gender equity and diversity is a specific requirement for new projects coming online. Dunderdale calls this level of progress groundbreaking, but it wasn’t achieved through anything revolutionary.”We went at it in a very measured, a very particular way,” she says. “You have to be very clear on what your goals and objectives are; you have to be reasonable in terms of your expectations about when you might be able to achieve them.” Before she was premier, Dunderdale was the minister of Natural Resources, and her expectations on that front bear a striking resemblance towards her work on gender issues. Motivated by the desire to build community, she sees the province’s energy future as bright, with groundbreaking development eminently achievable through a series of steps both reasonable and measured. “When we came in 2003,” she says, “the major principle that we ran on, the major plan in our platform, was that natural resources were going to be developed to the benefit of the people of the province. And that still remains the central piece of who we are, and what we’re about.” On the one hand, that means major upgrades to infrastructure. On the other hand, it means giving the major players something they need. And the biggest thing that the government has been asked for, she says, is clarity. Big corporations want to know what the rules are and what the conditions for development will be. They want to know what they’re getting into. The government’s answer to that question is the province’s first ever energy plan, published in 2007. “Here it is,” says Dunderdale. “This is all the clarity that you have been requesting.”
The Provincial Energy Plan Makes A Number Of Things Abundantly Clear
First and foremost, Newfoundland and Labrador, through the actions of its Crown Corporation, Nalcor, intends to position itself as a major player in the North American energy market. Like any other major corporation, Nalcor can act to maximize profits. But in this case, its sole shareholder is the provincial government—so Nalcor, theoretically, is acting not only to maximize profits, but also to produce the greatest benefit for the provincial population.
It is, thus hardly surprising that in the introduction to the energy plan, then Natural Resources Minister Dunderdale wrote: ”We believe we now have the best plan for the future development of our energy resources that achieves our two objectives —economic self-reliance and environmental sustainability,” It goes farther than that. The central idea of the energy plan is that Newfoundland and Labrador is an “Energy Warehouse,” that is, not only will the province be self-sufficient, it will be an exporter of fuel and energy—using power to power the economy.
The plan is deceptively simple: blessed with both substantial oil reserves and huge potential for renewable energy development, the province will pursue both avenues simultaneously. Nalcor will spearhead the exploration and development of known and unknown non-renewable resources, in the Jeanne d’Arc Basin on the Grand Banks and elsewhere, notably, in Labrador.
“[In fifteen years] I anticipate that exploration initiatives and programs will have resulted in significant discoveries in our offshore,” says Ed Martin, Nalcor president and CEO. “The subsequent projects will either be online or under construction depending on the scale, thereby, sustaining activity levels in the province and offshore production levels.” Production on existing oil and gas reserves is set to trend downward after 2015, which could very easily spell doom for dreams of a mixed approach.
However, Nalcor is banking on the development of reserves as yet undiscovered.” I expect a resurgence in offshore with three or four more projects being identified,” says Martin. “In order to further the development of these projects, the government will take a more active role in the industry, funding and distributing exploration data, taking on more risk with a revamped royalty system, and ultimately holding a stake in every new project. But even as the province is championing oil and gas development, it will take the royalties garnered from those project to fund the development of clean, green energy solutions: hydro, wind, and other.”
“ Of course, hydroelectricity from our rivers is a cornerstone of our renewable, long-term future,” says Martin. The most obvious source of hydroelectricity in Newfoundland and Labrador is the Churchill Falls generation facility. The river was dammed in the mid- 20th century, but the lion’s share of the benefits have gone to Hydro Quebec. This deal, which many in Newfoundland and Labrador see as highway robbery on the part of the Quebecers, has led to continued tensions between the two provinces.
Nalcor is currently pushing forward on the development of the Lower Churchill River, and there is every indication that the project will go ahead, despite a number of major stumbling blocks. First and foremost of which is the fact that Nalcor still has no good way to get its power to market. The route through Quebec is prohibited by politics, and the route to Nova Scotia is made difficult by having to cross the Gulf of St. Lawrence. Neither of these are impossible, but both suggest that when Nalcor is able to get its power to market, it will do so at above market rates or the province will be operating at a loss.
Premier Dunderdale Is Well Aware Of The Potential Difficulties
“Right now, we’re an isolated system,” she says. “It’s no good having all this energy if you can’t get it out of here. We need energy for our own use, and that’s the primary objective we’re dealing with in Muskrat Falls [in the first phase of the Lower Churchill Development]. But in terms of building, or rebuilding our economic base on renewable … we have to hook to the grid in this country and in this continent.” And continued from page 33 Ed Martin 34 WINTER 2011 as to the notion of cost? The premier may well have tipped her hand. “We have the best wind regimes in North America,” she says. “And we talk about [developing] 5000 MW in Labrador…there’s far more than that, that we can develop. [But] you can’t bottle up wind. So you build a big reservoir, and when it rains and rains and rains, you fill your reservoir right up to the brim. Essentially, the role of hydro development will be to smooth out the valleys in abundant, but intermittent sources, like wind, solar, and perhaps wave technology. That’s why the development of the Lower Churchill is so important, because it adds such a value to every other renewable that we have, and that we can go into the market place, at a very competitive price to sell our wares. So we’ve got a hungry market. We’ve got an excellent product. We’ve got reliability, and we’ve got lower cost,” explains Dunderdale. The authors of the energy plan project that oil production (of undiscovered resources) will peak in the late 2030s. If in that time, the government of Newfoundland and Labrador has been able to leverage their one- Sustainability for our kids time game into an industry that is clean, green, and renewable for the remainder of the foreseeable future, they’ll be in a pretty good place. As governments and consumers start mandating clean energy and forward thinking, Newfoundland and Labrador has set itself down a path that is looking pretty good.
“In addition to economic viability, environmental sustainability is key in the screening of these alternatives,” says Martin. “We have a significant innovation path to follow.” This isn’t just a turn of phrase. Dunderdale offered that great things can be accomplished with clear goals and achievable benchmarks. Phase one of the energy innovation plan was completed in 2010. Phase two starts early this year.
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