April

3, 2001 RESOURCE

ESTIMATES COMMITTEE

The Committee met at 5:11 p.m. in the House of

Assembly.

CHAIR (Mr. Walsh): Order, please!

I would like to welcome Committee members to this

Resource Estimates Committee. This evening we will be dealing with the

Department of Mines and Energy. There are a couple of things to deal with first.

I want to just lay out the format that we have been using in our Committee. Our

tendency has been to ask the minister for any opening statements he might have.

We have not stayed strictly to the Estimates, but we have stayed very close. We

have allowed members, in particular our colleagues in the Opposition, to take as

much time as they might require. Then, should government members be so inclined,

they would be entitled to any questions they might want to have. So, we will do

it somewhat freewheeling.

With that in mind, I will ask my colleagues in the

House if they would introduce themselves. Then I will go to the minister, who

can introduce his officials.

Wally, we will start with you for the record.

MR. ANDERSEN: Not a problem, Mr. Chairman.

Wally Andersen, MHA for Torngat Mountains.

MR. ROSS WISEMAN: Ross Wiseman, MHA for Trinity

North.

MR. OTTENHEIMER: John Ottenheimer, MHA for St.

John's East.

MR. T. TAYLOR: Trevor Taylor, MHA for The Straits

& White Bay North.

MS JONES: Yvonne Jones, MHA for Cartwright-L'Anse

au Clair

CHAIR: For the sake of Hansard, Minister, when the

officials identify themselves, I would ask also, as their voices may not be as

familiar to our folks in Hansard, should you be answering a question, I would

ask that you identify yourself so that Hansard will know exactly who is speaking

at that time.

Mr. Minister.

MR. MATTHEWS: Lloyd Matthews, Minister of Mines

and Energy.

I will let the officials introduce themselves.

MR. MAYNARD: Brian Maynard, Deputy Minister of

Mines and Energy.

MR. A. TAYLOR: Allister Taylor, Deputy Minister of

Mines.

MR. SAUNDERS: Bruce Saunders, Assistant Deputy

Minister of Energy.

MR. CROCKER: Ralph Crocker, Executive Assistant to

Minister Matthews.

CHAIR: I would suggest also that most members in

the House today would be fully aware that the minister is working on the last

part of a vocal chord that is left. I am sure that the officials will be more

than ready to pitch in today as well.

Minister, if you have an opening statement, then by

all means go ahead.

MR. MATTHEWS: Thank you very much, Mr. Chairman.

I would normally attempt an opening statement, but I

apologize for not being able to. That is the good news for all of you, but

better news is that I have officials who can tell you everything you need to

know.

With that, I am going to defer to my deputy as my

spokesman today.

Thank you.

MR. MAYNARD: First, I thought I would provide the

Committee members with an overview of the Department of Mines and Energy.

The Department of Mines and Energy promotes and

facilitates the sustainable development of the Province's mineral and energy

resources through its resource assessment and management and development

activities. Through these activities, the department strives to develop the

Province's mineral and energy resources in the overall best interest of the

people of Newfoundland and Labrador.

As the minister, Minister Matthews is responsible for

the supervision, control and direction of all matters relating to mines,

minerals, quarries, quarry material and beaches, onshore and offshore petroleum

resources, royalty matters, maintaining and developing electrical resources, and

the administration of twelve specific acts.

The department is also responsible for the

Newfoundland and Labrador Hydro Corporation and the Bull Arm Site Corporation,

and shares responsibility with the federal minister of Natural Resources Canada,

the hon. Ralph Goodale, for the Canada-Newfoundland Offshore Petroleum Board, or

C-NOPB as it is commonly referred to. We believe that through the demonstrated

leadership of the department, Newfoundland and Labrador will realize the full

potential and benefit from its energy and mineral resources. Over the next

couple of years, the department will face many exciting challenges that will

advance our long-term goals.

Over the past five years, Mines and Energy has become

one of the most well-known and publicized departments within government. The

citizens of this Province recognize the growing potential of their natural

resource base and demand that Newfoundland and Labrador receive maximum benefits

from the development of the various energy and mineral projects in the Province.

Our mining and energy sectors are currently worth

$1.35 billion, representing 14 per cent of the provincial gross domestic

product. These sectors also generate approximately 5,600 annual person years of

direct employment, with indirect employment estimated at 9,200 person years. The

people of the Province realize the importance of these industries and want to

see further mineral and energy developments.

With respect to oil and gas, we have witnessed many

developments that have exemplified the value of our natural resources. Hibernia,

the first and largest Canadian offshore oilfield, is currently producing about

140,000 barrels a day and has approval to increase production to 180,000 barrels

a day. Terra Nova, the Province's second oil project, is scheduled for

production later this year, bringing further benefits to the people. Last year,

the project employed an average of 1,900 people. We anticipate that the White

Rose project will be sanctioned later this year with a target of first oil in

2004. We are also optimistic that the Hebron-Ben Nevis proponents will proceed

with our fourth major oil development project shortly.

In the recent budget, $300,000 was announced to

develop and implement a natural gas strategy for this Province. This will permit

us to facilitate the development of natural gas sooner rather than later, and in

a manner that maximizes the benefits that the Province will receive.

We have had twenty-three significant offshore oil and

gas discoveries, as well as one discovery in our western Newfoundland onshore

area. Since the first exploration expenditures occurred in 1966, over $13

billion has been spent in exploration, delineation, and development in our

offshore area. Significant discoveries have led to some $2.1 billion barrels of

oil, 9 trillion cubic feet of natural gas, and over 400 million barrels of

natural gas liquids being discovered.

Industry has committed to spending some $680 million

in exploration expenditures over the next five years, which could and should

result in even further discoveries. With the future oil production coming on

stream from Terra Nova and hopefully White Rose, we will be producing more than

one-third of Canada's conventional light crude oil within the next five years.

With respect to electricity, our electrical power

industry is also promising exciting developments. Granite Canal wind power and

co-generation projects are just a few new initiatives being undertaken by

Newfoundland and Labrador Hydro that will see increased energy capacity for the

Province. The Lower Churchill project, with an estimated capital investment of

approximately $4 billion in Labrador and production capacity of approximately

2,000 megawatts, could also be a major development. This renewable energy

development has the potential to contribute significantly to the provincial

economy during both the development and production phases.

Turning to the mines and minerals section, our mineral

sector is just as exciting. This Province now produces over a dozen mineral

commodities including iron ore, gold, dolomite, limestone, gypsum, peat,

dimension stone, and sand and gravel. Western Labrador produces approximately 55

per cent of Canada's iron ore products. Currently underway in Central

Newfoundland, there is exploration work being conducted on the Duck Pond zinc,

copper, lead, gold and silver deposit near Millertown.

The department is actively promoting the establishment

of a silica smelter in Labrador West. This initiative has the potential of

creating upwards of 130 jobs. As well, the recently announced $19.3 million

epoch rock facility in Argentia is a very promising development in our evolving

dimension stone industry. We will also soon begin negotiations with Inco on

development of the rich Voisey's Bay deposit in Labrador.

As you can see, our mineral and energy resources are

vital to the economy of Newfoundland and Labrador. Within five years, 2,000 new,

direct mining and petroleum sector jobs could be created. Associated net

spinoffs could double indirect jobs from these sectors. New projects will be

developed. Current projects will mature. We, as a Province, will grow with our

industries. Strength in our economy will come with this growth.

Every new project, however, presents a new challenge,

and our department must be there to address these challenges. It is the

department's job to ensure that these growing sectors are developed efficiently,

responsibly, and in the overall best interests of the people of the Province.

The total gross budget for the Department of Mines and

Energy for 2001-2002 is $23 million. This is an increase of $5.3 million over

the 2000-2001 budget. The realignment of the major projects benefit group,

consisting of the Bull Arm Site Corporation and the Voisey's Bay Secretariat,

from the former Department of Industry Trade and Technology, accounts for some

$600,000 of this increase; $3 million in additional funds was also allocated for

the reclamation of the former Hope Brook gold mine; $230,000 has been allocated

for the implementation and monitoring of the new mining act, which was

introduced last year; $300,000 has been allocated for the development and

implementation of the natural gas strategy, as I previously mentioned; $528,000

in additional funding has been allocated for the Canada-Newfoundland Offshore

Petroleum Board, to address the significant increase in activity that we are

seeing in the offshore; $250,000 has been allocated to fund the

soon-to-be-formed petroleum price regulation commission, and I understand that

bill will be introduced shortly. These increases represent some of the growing

activities and responsibilities that the department has to control.

Mr. Chairman, the Department of Mines and Energy has

responsibility for many activities that are diverse in nature. The department's

policies are designed to meet the requirements of our industry client groups, as

well as provide for the efficient and effective management of the Province's

mineral and energy resources.

The department is a small department, with a total

approved staff complement of 116 permanent positions, of which 105 are assigned

to our two branches, Mines and Energy. Our Mines Branch is responsible for the

department's mineral resource management program. This branch is divided into

three divisions. These include: Geological Survey, the Mineral Lands Division,

and the Mineral Development Division. The Geological Survey is responsible for

mapping and describing the geological formations of the Province in order to

identify and record the mineral occurrences and the mineral potential in the

various regions. The provision of this data is a fundamental service provided by

all jurisdictions in Canada, and is one of the key ways that Newfoundland and

Labrador remains competitive in trying to attract national and international

investment dollars.

The Mineral Lands Division is responsible for the

administration of the Province's mineral land and tenure system, regulating

mineral exploration activity, managing quarry material resources, and preserving

drill cores from exploration drilling activity undertaken by the private sector.

The Mineral Development Division is responsible for

the implementation of the regulatory requirements of the new mining act, which

includes the development, operation and termination phases of mining operations.

This division also oversees and administers the mineral exploration program that

provides funding to provincial prospectors and junior companies, junior

exploration companies that wish to start new exploration programs, and dimension

stone companies that wish to establish new operations within the Province.

Our Energy Branch is also a very vital part of

petroleum and energy resource development in Newfoundland and Labrador. This

branch is responsible for the petroleum resource management and electricity

industry development programs within the Province. The branch is divided into

four divisions: Petroleum Resource Development; Petroleum Projects Monitoring;

Electricity Industry Development; and Policy and Strategic Planning.

The Petroleum Resource Development Division promotes,

regulates and facilitates the identification, exploration, development and

management of our provincial petroleum resources.

The Petroleum Projects Monitoring Division is

responsible for the promotion, monitoring and implementation of relevant

petroleum sector policies and the maximization of provincial fiscal benefits.

The Electricity Industry Development Division strives

to ensure fair and reasonable rates to provincial consumers, fair benefits

through the development of public controlled electricity resources, and that

rates support provincial goals for economic development.

The Policy and Strategic Planning Division develops,

coordinates, evaluates and facilitates energy's policy, strategic planning and

program frameworks for energy resource development and management.

Mr. Chairman, as the Committee can see, the Department

of Mines and Energy is responsible for many challenging and technical aspects of

our mineral and energy resource sectors.

In conclusion, I would like to restate that the

Department of Mines and Energy is a growing department that is essential to

ensuring that the mineral and energy resources of this Province are developed in

a responsible manner and in the overall best interests of the people of the

Province. As more projects are discovered and developed, we will see the

department expand even further. I am hopeful that we will see many more projects

developed in the near future and we will continue to witness this department's

growth.

Thank you very much, Mr. Chairman.

That is my opening statement. We would be happy to

take any questions that you may have on the detailed Estimates.

CHAIR: Thank you very much, Brian.

I ask the Clerk to move 1.1.01.

CLERK: Sub-vote 1.1.01.

CHAIR: So moved.

John.

MR. OTTENHEIMER: Thank you, Mr. Chairman.

I thank the minister and his officials for being here

this evening. Mr. Maynard, if it is okay, maybe if you could forward me a copy

of your introductory comment. It was quite thorough and would be of interest to

me.

MR. MAYNARD: Sure.

MR. OTTENHEIMER: Maybe, with the minister's

consent, we could have a copy of that particular statement.

I have a few questions with respect to the Estimates

in particular and then a few general comments and a few general questions that I

would like to pose afterwards.

First of all, on page 142 of the Estimates, under

heading 1.2.02., Major Projects Benefits Office, I wonder, Mr. Minister, or one

of your officials, if you could share with us exactly - I can certainly guess

what the answer is but I would like to know with perhaps greater certainty -

what projects are administered under the Major Projects Benefits Office as is

described.

MR. MAYNARD: That account covers two basic

activities. One is the former Voisey's Bay Secretariat, responsible for

discussions and trying to advance that file, as well as the Bull Arm Site

Corporation which is responsible for the administration and maintenance of the

Bull Arm site.

MR. OTTENHEIMER: It is limited to those two, is

it?

MR. MAYNARD: It is.

MR. OTTENHEIMER: Okay.

Under those headings under .01 Salaries, we see a

slight increase from the revised figure of 2000-2001 where salaries are now

showing at $439,200. I am just wondering exactly what the increase is a result

of.

MR. MAYNARD: The increase is additional staff

members for the Voisey's Bay negotiating team for the upcoming year. I think it

is an analyst and some support staff.

MR. OTTENHEIMER: Is that also a result of the

transfer?

MR. MAYNARD: That is a result of the transfer,

yes.

MR. OTTENHEIMER: We see under .05 Professional

Services, under the same heading, again a revised figure last year of $3,000,

although it was budgeted at $94,000, but this year actually the estimate is

showing $94,000.

MR. MAYNARD: That reflects the reduced activity

associated with that file during the previous year.

MR. OTTENHEIMER: Under Professional Services, can

you be a bit more specific in why we are seeing $94,000 being estimated for this

year?

MR. MAYNARD: That would reflect what we expect to

require in outside expert legal advice from mining consultants and industry

consultants. We are hopeful that there will be some increased activity on the

file in the upcoming year.

MR. OTTENHEIMER: These professional services, is

that restricted to our Province or does the department go outside the Province

in seeking professional services?

MR. MAYNARD: It is just professional services.

There are no legal services included in that. We do go outside. We have several

national and international experts engaged.

MR. OTTENHEIMER: Again, can you be more specific

in terms of the nature of the work or the services that they would provide?

MR. A. TAYLOR: The consulting work that the

Voisey's Bay secretariat has utilized before dealt with a review by two

consultants of the capital and operating costs that were being proposed by the

company, as well as two engineering firms looking at some of the technologies

that were being presented by the companies. That is the type of thing that we

see using these funds for in this particular fiscal year.

MR. OTTENHEIMER: So the government seeks their

services and provides their conclusions to government exclusively, that is the

purpose of this?

MR. A. TAYLOR: Yes.

MR. OTTENHEIMER: If I could - again, before we get

into some more general area - turn to Mineral Development on page 144, heading

2.1.03.06, under Purchased Services, obviously we see a significant increase

from the revised and budgeted figure of last year to this year's estimates of

some $7.5 million. I wonder if maybe one of your officials, Mr. Minister, could

give us an explanation of that?

MR. MAYNARD: That activity is associated with the

reclamation of the Hope Brook site. Last year we did not spend what we had

originally estimated on Hope Brook. We engaged consultants to provide a detailed

reclamation plan, and that took a little longer than we had anticipated. We had

hoped to have been in and cleaning up that site at this point in time. What you

are seeing is a carryover of that funding to the upcoming fiscal year where we

should be ready to fully commence the reclamation and get a substantial portion

of it completed this year.

MR. OTTENHEIMER: The anticipated would be

completed by the end of this fiscal year?

MR. MAYNARD: No, it is roughly eighteen to

twenty-four months.

WITNESS: Thirty months.

MR. MAYNARD Well, there is roughly eighteen to

twenty-four months of site work and then we are anticipating ongoing monitoring

to ensure that the work has been conducted accordingly in an appropriate manner.

So there will be some ongoing monitoring up to a thirty month period.

MR. OTTENHEIMER: On page 145, under Policy and

Strategic Planning, heading 3.1.01.10, Grants and Subsidies; I know the amount

is $85,700, exactly what does that involve?

MR. MAYNARD: That involves grants for the National

Climate Change process which is the National Implementation Strategy engaged in

all the provinces and the federal government developing the Kyoto response

mechanism. As well, there is $3,000 for smog and acid rain issues, again

associated with climate change. In addition, there are some funds for a

membership in the Canadian Energy Research Institute of $25,000. That is an

institute of academic, industry and government organizations that does energy

research on energy policy issues. As well, there is some funding of

approximately $48,000 for the Energy Council which is an international research

institute, basically North American, that again engages in policy issues, debate

and discussion.

MR. OTTENHEIMER: How are these groups or

associations selected?

MR. MAYNARD: That is basically a balance between

how much money you have to put into an institution, because they require a

sponsorship or a membership fee. You try to target your money to get the best

value. The Energy Council, and SERI in particular, were identified as very good

vehicles for advancing the Province's issues on an international and a national

front. A big part of what we do is promotion and things like that. The Energy

Council, in particular, is made up of energy legislators in South America, North

America, various jurisdictions that have oil and gas, electricity issues and

things like that. I do not know if that directly answers your question.

MR. OTTENHEIMER: There is obviously a great deal

of discretion, I would think, within the department in dealing with these grants

and subsidies pursuant to that subsection?

MR. MAYNARD: Well, no. When the submission was

made to Treasury Board these were specifically identified as - what we saw as an

opportunity to get a significant amount of value for the money. The Treasury

Board process being what it is, it is certainly a high level scrutiny.

MR. OTTENHEIMER: The next heading under Petroleum

Resource Development, again we see in Professional Services, 3.1.02.05, an

increase of approximately - well from last year's budget figure of $210,700, to

this year's estimated figure of $310,700. Can you please provide some detail of

the nature of these services that are required?

MR. MAYNARD: Petroleum Resource Development is

mainly engaged in promotion of the Province's offshore and onshore oil and gas

resources. The increase in funding of $100,000 is directly attributable to the

focus on natural gas, and trying to facilitate early development of natural gas.

The remainder is used to engage people, outside consultants, to cover areas of

expertise that we do not have within the department to address, whether it is a

promotional item or an evaluation of an existing discovery, or a potential

discovery. We use a fair amount of it to promote the offshore resources to new

players. We are constantly trying to attract new players into the industry, into

our local industry particularly. Exploration is the key to long-term success and

we do what we can to encourage additional exploration. So, a lot of this is

focused on trying to encourage (inaudible).

MR. OTTENHEIMER: Is there any overlap at all with

this particular office and the work of the C-NOPB? Is there any overlap? Are

they two separate entities or is there a varying of information?

MR. MAYNARD: They are two separate entities with

considerable sharing. It is a very close knit working relationship, but the

C-NOPB has no authority nor responsibility for promotion itself. It is purely

the regulator of the offshore activity and as such, there is an obvious conflict

of interest situation where the regulator is also out as the promoter. We, the

department, take on the promotion aspect. The Offshore Petroleum Board is more

the regulatory agent. We have a very close working relationship between the two

of them.

MR. OTTENHEIMER: If I could just talk briefly

about the C-NOPB, it is the next heading on page 146. When do you anticipate

hearings with respect to White Rose? I know it has been in the media now for

some while. I believe the minister, if I am not mistaken - perhaps it may have

been before Christmas, Mr. Minister, when there was some indication that

hearings would be proceeding in the not-to-distant future. Can you give us some

indication from correspondence or information that you have received from

C-NOPB, when the actual hearings will take place with respect to the mode of

development of White Rose?

MR. MAYNARD: The commissioner has been appointed

and has received the documents from the C-NOPB which starts at the clock. He now

has - that started two weeks ago, Bruce?

MR. SAUNDERS: Two weeks ago.

MR. MAYNARD: He now has a ninety day time frame.

He puts the documents out for public comment and input, and after that ninety

day period he will go to the public hearing process which will take another

ninety days.

MR. OTTENHEIMER: So he selects a date after this

ninety day period?

MR. MAYNARD: The public hearings will start after

ninety days. The nature and duration of the public hearings will depend on how

much input he receives during this public comment process. People now have the

ability to provide comments, questions, requests for clarification to the

commissioner at this point, or to indicate that they would appreciate an

opportunity for a more public -

MR. OTTENHEIMER: What role will the Province play

in the hearing process?

MR. MAYNARD: The Province will play an observer

role during that process.

MR. OTTENHEIMER: Not a participatory role in

anyway?

MR. MAYNARD: It depends on the nature of the

intervention or the nature of how the process is unfolding. We have an ability

to provide our comments to the commissioner, but we will attend all the public

hearing sessions and if there are comments, questions or points of clarification

that are requested that are outside the Offshore Petroleum Board or the

commissioner's mandate, we will be there to provide clarification on those types

of issues and that type of role. Really, this is stand back and watch because

this is the public review process and it is appropriate for the public to be

making comment at this stage.

MR. OTTENHEIMER: Will the Province be making a

submission as such?

MR. MAYNARD: At this stage, there is no

anticipation of making a submission.

MR. OTTENHEIMER: Is it possible that the Province

will -

MR. MAYNARD: We have the ability to make a

submission.

MR. OTTENHEIMER: Pardon me?

MR. MAYNARD: Yes, we could submit.

MR. OTTENHEIMER: Has a position been developed by

the Province?

MR. MAYNARD: A position with respect to?

MR. OTTENHEIMER: Motive development?

MR. MAYNARD: No, not formally.

WITNESS: That's what the hearings are all about.

MR. MAYNARD: Yes.

MR. SAUNDERS: If I could add to what Brian just

said; the process is such that you will go through the public review process.

The commissioner will then file a report with the C-NOPB. The C-NOPB then takes

a decision with respect to approval or rejection of the development plan

application which includes motive development. That decision then comes forward

to the respective ministers, the federal Minister of Energy and the provincial

Minister of Energy, for his decision on it. So for the Province to be

participating in the process and then taking a decision at the end of the

process, puts us in bit of an awkward position. You let the process unfold with

respect to the public hearings, the board taking its decision, and that decision

then coming forward to the minister for final decision. The minister has an

opportunity to make a final decision on the development application, including

the motive development, at the end of the process.

MR. OTTENHEIMER: But nevertheless, the Province

presumably reserves the right to participate more fully if it so chooses,

despite the fact that it plays a key role in the ultimate decision that is being

made in concert with the federal government?

MR. MAYNARD: Yes, the process does allow that. I

think what Bruce is pointing out is that there would be a reluctance to get

involved in the process. I think it is more appropriate for the commissioner to

take the public comment, provide that in his report to the board for their

consideration, and allow the process. I think it would be an extraordinary

circumstance where the Province would see to get involved during the public

hearing process in, I guess, a directive way or in a directive manner.

MR. OTTENHEIMER: If I could just shift to another

one or two areas, then I will let my colleagues continue. Is that okay, Mr.

Chairman?

CHAIR: Carry on.

MR. OTTENHEIMER: I know recently you were fairly

involved, Mr. Maynard, as deputy minister in the hearings that took place in New

Brunswick on the Laurentian Sub-basin and, of course, this ongoing dispute with

the Province of Nova Scotia. It is my understanding that a decision may be

expected relatively soon, and what I am not sure of is what happens from there.

If, in fact, the decision supports our Province - the preliminary decision that

is supportive of our Province - then the process could continue well into the

future with a further hearing stage, further questions being asked, and a

further determination obviously having to be made. What I am not sure of though

is if, in fact, the decision goes against our Province, does that then limit the

time frame that we are dealing with in terms of ongoing determination of any

further decision?

MR. MAYNARD: You have a very good understanding of

the process. The first phase, which we have just recently concluded the oral

hearings, was focused on one issue and one issue only, and that was Nova

Scotia's assertion that the matter had been resolved by agreement; that the line

that they show in their accord act had been resolved by agreement of the

Premiers in 1964. The panel was only to determine whether there was an agreement

that was binding on the parties from 1964. Should the panel find in the

Province's favour that there was no agreement - and that time frame is mid-May,

they are to determine that by the middle of May - if they find that there had

been no prior agreement on the location line, they will then sit down and draw a

new line in accordance with the principles of international maritime boundary

delimitation. Should they find that there was an agreement, the matter is

resolved pursuant to that arbitration panel and the line is the line, the Nova

Scotia line. The only recourse that the Province would have at that stage would

be judicial review.

MR. OTTENHEIMER: A judicial review at the federal

court level?

MR. MAYNARD: Yes.

MR. OTTENHEIMER: The Terms of Reference, as I

recall when the panel was put in place, did give some indication that - I guess

from an administrative or procedural point of view - this finding would be

final. Is that correct?

MR. MAYNARD: Yes. So it would have to be a point

of law or a - I am not a lawyer - but it would have to be an error in a point of

law.

MR. OTTENHEIMER: Obviously, this preliminary

decision is of the greatest significance to this Province? It is a win-lose

situation, ultimately, isn't it?

MR. MAYNARD: Well, we have never accepted that the

line was determined by agreement in 1964. In 1964 there was considerable

discussion on - the whole 1964 submission was about offshore ownership rights,

and that was the primary focus. Boundaries were secondary to that primary

objective. Furthermore, in 1964 the focus was really on the territorial seas,

which was out to twelve-mile limits at that time. Within those parametres, those

lines are - I will be honest with you - fairly good, but outside the line the

only reference in 1964 was: proceeding southeasterly. Nova Scotia took

southeasterly to mean due southeast and drew a line on the 135 degree azimuth

right straight out to the edge of the international waters. That never showed up

in any shape, form, or manner, until it showed up in a Nova Scotia court. What

we have said, our objective is to have a line drawn by a fair and impartial

tribunal as opposed to have Nova Scotia unilaterally declare a line. If the

panel finds that line is in accordance with international maritime boundary law,

we have just asked for that certainty to be determined. We do not believe that

we could ever accept the situation where Nova Scotia had the unfettered right to

set a line that was binding on both of us. We are primarily asking for

certainty; certainty determined by a fair and independent tribunal. Our win is

that we had somebody, a fair referee, decide the issue. We were being

characterized as, this was a massive land grab and things like that. This was

not what it was. We are just asking for a -

MR. OTTENHEIMER: This preliminary decision is

critical.

MR. MAYNARD: It is critical, no question about it.

I am confident.

MR. OTTENHEIMER: You feel confident about it?

MR. MAYNARD: I am.

MR. OTTENHEIMER: Good.

Minister, recently you have been quoted in the media

as stating that very soon there will be a negotiation team put in place with

respect to ongoing Voisey's Bay discussions. What I am wondering is, how close

are we to finalizing our negotiating team? Could you share with us - if in fact

the decision has been made - exactly the nature of the team and when in fact you

anticipate the team to continue in the discussions with respect to the Province

and the company?

MR. MATTHEWS: I have already announced that our

team - sorry, John.

MR. MAYNARD: I think what the minister is trying

to say is that he has already given me the job.

CHAIR: Could we say attempting to say, rather than

trying to say?

MR. MAYNARD: Attempting to say. The minister has

asked me to lead those negotiations. Allister Taylor, my ADM of Mines, obviously

is going to be a critical component of that team. It is our intention to - right

now I am obviously being brought up to speed. I was involved on the edges of the

negotiations before. We are looking at some issues, meeting with some of our

consultants to ensure that we have the mechanism in place to address the issues.

We are hopeful that some time within the next month or month-and-a-half we will

be in a position to sit down with Inco and to engage.

MR. OTTENHEIMER: Presumably, the team will include

other individuals, namely perhaps consultants or other professionals, legal

advisors, that type of thing? Has that been determined yet or is that still in

process?

MR. MAYNARD: I guess the direct face-to-face team

will be: Allister; myself; Terry Paddon, who is the ADM of Finance; Gary Norris,

who is the Deputy Minister of Intergovernmental Affairs; and Charles Bown, who

is with the Voisey's Bay Secretariate, came over. That will be the face-to-face,

but of course behind that team there will be considerable consulting assistants

and things like that. Most of that will be a re-engagement of people that we

previously had under contract and things like that. That is the process that we

are going through now, getting the initial team and the support structure in

place.

MR. OTTENHEIMER: When do you anticipate that - you

indicated approximately a month?

MR. MAYNARD: A month or a month-and-a-half, I

think, would be our intention to sit down and commence the face-to-face.

MR. OTTENHEIMER: My last question, and I guess it

is perhaps more so for one of the other gentlemen, is with respect to Lower

Churchill talks. Again, with so many pressing issues publicly, Minister, you can

appreciate the fact that Voisey's Bay, which, of course, was a major public

issue some two or three weeks ago, has been replaced by other issues of public

concern. I am just curious as to where we are in terms of either new

discussions, ongoing discussions, or if, in fact, there are any discussions

presently with respect to the development of the Lower Churchill, vis--vis the

Province of Quebec.

MR. MAYNARD: I have to take that one too.

The most recent contact was about a month ago with

Hydro-Quebec. We are in the process of evaluating both a proposal from

Hydro-Quebec as well as some configurations or concepts at our own level. The

Lower Churchill file has been very difficult and complex. It is not a simple

issue to deal with. It is a tremendous project, but it has tremendous

challenges.

Right now we are in a go-slow, take-your-time, ensure

that we have identified all the potential risks - and this project is not

without considerable risk - and identifying strategies to mitigate those various

risks with the intention of developing a project wholly owned by Newfoundland

and Labrador. That is a $4 billion project. You can appreciate having to borrow

some $4 billion on the capital market, and 70 per cent of this, roughly, would

be project financing, non-recourse to the Province, but the equity portion is

still recourse to the Province. With that level of risk and that level of

financial exposure, we are taking things very, very cautiously. It is ongoing

and we are giving it the best push we can.

MR. OTTENHEIMER: Thank you, Mr. Chairman.

CHAIR: Trevor.

MR. TAYLOR: I was going to ask a question but it

seems rather small now, after listening to the Lower Churchill, offshore oil,

and everything like that. I was interested a bit in your comment on wind

generation, wind, hydro power - not hydro, obviously, but electricity generation

- in your opening remarks. I was just curious as to what might be the status of

the - I don't know if I should say proposed - potential development out in the

Bay de Verde area.

MR. MAYNARD: I am going to let Bruce make a few

comments.

Right now, government directed Labrador Hydro to issue

a request for proposals for a wind project. There were requests for proposals.

The proposals have been received, they are currently under evaluation, and we

are hopeful that within a matter of days we will be prepared to announce a study

on wind potential, basically a feasibility study. This feasibility study is

intended to result in the gathering of data over the next twelve months,

hopefully leading to a wind power project of between five and twenty-five

megawatts. Wind is something that we are very interested in, in the department,

the potential for wind power. It has come a long way, as a technology, in the

last twenty to twenty-five years. It is the greenest of powers, in the context

of environmental changes, Kyoto issues, greenhouse gases and things like that,

plus our own situation at Holyrood. We generate a significant amount of carbon

dioxide at Holyrood and some of our others. We are focused on that and would

like to see something happen with it. We are hopeful that this study will lead

us to a demonstration wind power project.

CHAIR: The Chair thanks the minister and his

officials. I am absolutely sure that whether it is wind or anything else, this

Province would, without a doubt, receive the maximum benefits and government, I

am sure, will as well.

Mr. Andersen, do you want to comment before I move the

Estimates?

MR. ANDERSEN: Mr. Chair, I just want it duly noted

that I did have some questions that I would ask directly of the minister; but,

knowing the situation that his voice is in, I will be very considerate and force

no pressure on him. I will ask my questions at a later date.

CHAIR: The Chair appreciates that decision as well

by our colleague, Wally.

MR. MATTHEWS: Thank you, Wally.

On motion, subheads 1.1.01. through 3.1.05., carried.

On motion, Department of Mines Energy, total heads,

carried.

CHAIR: Thank you again.

On motion, the Committee adjourned.