Atlantic & East Coast Report

Newfoundland and Labrador to Map Energy Future

Last week, Newfoundland and Labrador Natural Resources Minister Ed Byrne and Premier Danny Williams presented a discussion paper and announced that the process of public consultation was beginning on the developing of a comprehensive energy plan for the Province.

The provincial government is soliciting input from concerned stakeholders, including members of the general public, with the objective of developing a long term plan that will determine the direction for development and use of energy resources in the province over the coming decades.

The discussion paper is available online through a link on the province’s official web site: www.gov.nl.ca/ and a feedback area has been set up, giving the public the ability to provide comments and suggestions.

In addition to the ability to provide input online, public consultations will be held across the province in the coming months. The Government’s intention is to develop a plan that will set a course for development and management of its electricity and oil/gas resources up to and including the year 2041 when the controversial Upper Churchill purchase agreement with Hydro Quebec, which has been in place since the late 1960s, is set to expire.

Why is an energy plan so important to the province?

Newfoundland and Labrador’s offshore oil developments currently account for 80% of Atlantic Canada’s petroleum resources and the province will soon be producing approximately 50% of the Country’s light conventional crude. The potential for further finds are high and the province has yet to seriously develop its offshore natural gas industry which has estimated reserves expected to surpass 60 trillion cubic feet.

The province is also a major hydro electricity producer in Canada. Several hydro generating plants exist in the province, including the massive Upper Churchill plant, from which most of the power is exported out of the province. In addition to the Upper Churchill and several smaller operations, plans are also under review for development of the Lower Churchill Hydro project, commonly referred to as the last hydro electric mega-project in North America.

The province is a major bulk exporter of both hydro carbons and hydro electricity. In 2004, Newfoundland and Labrador exported over 110 million barrels of oil and during the same year, the province’s 247,000 retail customers utilized less than 27% of the 41,400 gigawatt hours of electricity generated in the province. The remaining electricity was exported to Quebec at 1960s prices and sold into the North American grid by Hydro Quebec.

Due in large part to its booming energy sector and speeded along by record oil prices, Newfoundland/Labrador has become a leader in Canadian GDP growth during the past few years, yet there has never been a comprehensive management plan put in place for those resources. To date, each project has been developed on a standalone basis, without a common long term goal in mind. The new energy plan is intended to address this uncontrolled and undirected development.

What are some of the major issues?

Currently the province exports most of the energy it produces. While producing billions of dollars worth of raw petroleum, it has almost no secondary processing capacity of its own. There has been little done with developing energy infrastructure in the province that would allow it to take advantage of its own resources. There is no infrastructure in place for the storage and distribution of natural gas and there is practically no refining capacity in the province.

Another odd circumstance exists within the province’s hydro industry. The ability exists in Newfoundland and Labrador to recall a limited amount of power from the existing purchase agreement with Quebec. This power could be used internally in either Labrador or the island part of the province. While this clause exists in the current agreement parts of the province, especially communities in Labrador, continue to utilize diesel generators for power because the distribution lines have never been built that would allow the recall clause to provide true value.

These types of conflicts are nothing new to the Province of Newfoundland and Labrador which has been a lesson in contradictions ever since joining Canada in March of 1949. The vote to enter into Confederation with Canada gave the province the dubious distinction of being the only independent nation to willingly give up its sovereignty, yet many still regard themselves as a distinct culture.

Contradictions abound. The province has a huge land area yet an extremely small population. Approximately 60% of the population lives in and around metropolitan areas, yet the province’s economy is largely driven by those living in rural areas and working in the resource sector.

While the province is leading the country in economic growth, it also continues to have the nation’s highest unemployment rates and as mentioned, it exports bulk energy while segments of its population must generate their own power to heat and light their homes.

How can these issues be resolved?

The existence of these contradictions speaks volumes about the need for a comprehensive energy plan. One of the primary reasons for the current situation in the province is the lack of internal development and value added use of the abundant resources available. A well developed plan with the overriding intention of providing primary benefit to the people of the Province will go a long way toward improving the current situation.

Newfoundland and Labrador has a very small and localized manufacturing sector. Ensuring the availability of dependable, economical and abundant energy across the entire province will go a long way toward growing smaller centers and attracting labor intensive business and industry. This in turn will provide much needed jobs, leading to a reduction in unemployment rates and less of a dependence on the unstable and undependable resource based employment currently driving the rural economy of the province.

The reality is that although the province’s hydro capacity may continue for centuries, the oil and gas resources won’t. This is why it is so critical for the people of Newfoundland and Labrador to provide as much input as possible into the development of a homegrown "Newfoundland and Labrador first" energy plan. A plan that will provide for the future growth and sustainability of the province and ensure that full advantage is taken of the opportunities that currently exist, as well as those that will present themselves in the coming months, years and decades.