Resource Committee — department of natural resources — 8 May 2017

2017-05-08

Newfoundland and Labrador — Committees

PDF Version

May 8,

RESOURCE COMMITTEE

Pursuant to Standing Order 68, Keith Hutchings, MHA for Ferryland, substitutes

for Kevin Parsons, MHA for Cape St. Francis.

Pursuant to Standing Order 68, Graham Letto, MHA for Labrador West, substitutes

for Pam Parsons, MHA for Harbour Grace.

The

Committee met at approximately 9 a.m. in the Assembly Chamber.

CHAIR (Warr):

Good morning, again.

We are

now live. We'll get some introductions out of the way and we'll start with Mr.

Hutchings.

MR. HUTCHINGS:

Good morning.

Keith

Hutchings, MHA, District of Ferryland.

MS. DRODGE:

Megan Drodge, Researcher with the Official Opposition Caucus.

MS. MICHAEL:

Lorraine Michael, MHA, St.

John's East – Quidi Vidi.

MR. MORGAN:

Ivan Morgan, Researcher, NDP Caucus.

MR. BRAGG:

Derrick Bragg, MHA, Fogo

Island – Cape Freels.

MR. LETTO:

Graham Letto, MHA, Labrador

West.

MR. FINN:

John Finn, Stephenville –

Port au Port.

CHAIR:

My name is Brian Warr; I'm

the MHA for Baie Verte – Green Bay and I'll be your Chair this morning.

Welcome

and I'll ask the Clerk to call the first subhead.

CLERK (Murphy):

1.1.01.

CHAIR:

1.1.01.

Minister Coady, if you would take a few minutes – you have up to 15 minutes and

I'd ask you to have your staff introduce themselves as well – and good morning.

MS. COADY:

Good morning. Thank you,

everyone.

Siobhan

Coady, MHA, St. John's West. I'm happy to be here this morning as Minister of

Natural Resources. Thank you for the opportunity to go through the Estimates of

the Department of Natural Resources. It's an important department, as all our

departments of government.

I'd

like to introduce my team. I brought everybody here this morning in anticipation

of having some great discourse and dialogue on the opportunities within the

natural resources of the province. I have our deputy minister, a new deputy

minister, Gordon McIntosh. Gordon, maybe you can introduce yourself and then

we'll just go down the line and introduce everyone that we brought with us this

morning.

MR. MCINTOSH:

Yes, thank you very much, Minister.

Gordon

McIntosh, I came here in December from the UK. I'll now pass to my left.

MR. CANNING:

Perry Canning, Assistant Deputy Minister of Mines.

MR. FOOTE:

Good morning.

Wes

Foote, I'm Assistant Deputy Minister for Petroleum Development.

MR. SNOOK:

I'm Corey Snook, Director of Electricity and Alternative Energy.

MS. SULLIVAN:

Lynn Sullivan, Assistant Deputy Minister, Royalties and Benefits.

MR. IVIMEY:

Philip Ivimey, Departmental Controller.

MS. NOSEWORTHY:

Tanya Noseworthy, Executive Director of Planning and Policy Coordination.

MS. HOLLETT:

Nancy Hollett, Executive Assistant to Minister Coady.

MS. QUINTON:

Diana Quinton, Director of Communications.

MS. COADY:

So as you can see, we

brought everyone this morning. The key I keep saying, because in my former life

I was a business person, we really have three lines of business in the

Department of Natural Resources. And I'll say this before we get into a little

bit more detail of the department, but we really look at the development of the

oil and gas industry and responsible regulation of the mining industry, and then

development and responsible oversight of energy.

brought all of the assistant deputy ministers who are subject experts, as well

as other key team players and team members so that anything you would like to

know about the department, we'll be happy to give that to you.

First

of all, I'd like to take a few moments to have a few opening remarks. Throughout

the past year, the Department of Natural Resources has focused really on

developing the oil and gas industry, ensuring its effective oversight, looking

at finishing up or really putting on track the Muskrat Falls Project through

Nalcor and supporting the mining industry.

This is

National Mining Week, just for those who may be interested – a great opportunity

to highlight the departments work in supporting growth of the mining industry.

We do so through public geoscience – we'll talk a little bit about that –

efficient and transparent regulation, the Core Storage Program, promotions,

prospective training, mentoring and the Mineral Incentives Program; all of that

combines to make some strength in our mining industry.

I will

note that in 2016 we had a tremendous lot of activity and maybe a little later

on we could talk more about it, but we had a tremendous amount of activity in

the mining industry in the Province of Newfoundland and Labrador, and perhaps

one of the highest minerals claim stakes, I guess, in the last number of years.

Assistant Deputy Minister Perry Canning can talk a little bit more about that,

but we had a real lot of claims staked. That's a very positive indication of not

just the prospectivity in our mining industry, but also the opportunity to

develop good mines in the Province of Newfoundland and Labrador.

Budget 2017

continues to support mineral exploration and growth in the mining industry. We

have investments that include close to $5 million in the geological survey. We

all know how important the geological survey is and the benefits it does bring

to the province in terms of understanding the opportunity in the Province of

Newfoundland and Labrador, providing companies with opportunities of

understanding some of the prospectivity, but also understanding where we go into

the future.

It also

includes $1.7 million for the Mineral Incentives Program, including an

additional $200,000 in the Junior Exploration Assistance program over the next

two years; and $2.14 million over the next three years for orphaned and

abandoned mines – the Dam Safety Program which is very, very important of

course, ensuring dam safety with regard to the orphaned and abandoned mines.

For oil

and gas development, we are positioning the province to be a global leader and a

preferred location for offshore oil and gas development. Since January, we've

been meeting regularly with the Oil and Gas Industry Development Council as we

work to advance a more sustainable and competitive industry.

We're

continuing to promote the significant resources in our offshore. I just returned

from the Offshore Technology Conference in Houston and, as I said a little

earlier, I'm sensing a cautious optimism returning to the industry and certainly

a marked improvement over last year. People are adjusting to the new normal and

we have to ensure, in this province, that we continue to be and remain highly

competitive in a very intense global environment.

I heard

many positive comments in the opportunity and development of our offshore

Newfoundland and Labrador and the great work being done on the scheduled land

tenure system and the reduction of geological risk, the opportunities of

prospectivity and the continued opportunities. In fact, I had an opportunity to

meet with a number of new entrants – we had seven new entrants to our offshore

oil and gas industry last year.

We met

with people like Anadarko and Hess and others – Total, for example – that have

now entered into our offshore oil and gas, are doing exploration, and continuing

to encourage them to grow their opportunity in Newfoundland and Labrador.

We put

significant effort and investment into finishing the Muskrat Falls Project and

interconnecting to the North American electricity grid. In

Budget 2017 we provided an equity

investment of $485.4 million in Nalcor Energy. Now, that is significantly lower,

about $827.6 million lower than in 2016, which is a good direction to go in.

I do

want to point out one thing, because when you look at the overall conglomerate

budget of Natural Resources, it seems quite large, but our core operating budget

is $ 21.8 million. Through some management reorganization, the department did

eliminate 12 positions, which resulted in a savings of $645,200 for

Budget 2017 . I do want to note that

six of these positions were vacant, five individuals left the department and one

returned to a permanent position. Of the five that left the department, I think

three were eligible for retirement.

There

are currently 159 employees of the department. There are 174 positions, so we

are in the recruiting process for a number of positions. Our current staffing

level, just for your interest, is the same as it was a decade ago. For 2017, our

salaries are $13.4 million. I thought I'd give you that upfront because I'm sure

there will be a lot of questions coming out of that.

We have

a great team in Natural Resources who are committed to moving ahead on our

mandate and ensuring the development of our natural resources respectfully and

responsibly in the province. I want to thank them for their continued hard work,

because do work very, very hard. They put in a lot of extra effort to make sure

that we have great success.

The

department generates approximately a billion dollars – about $900 million in

offshore royalties, then there are mineral royalties, permits, fees, taxation.

So when you combine that together, it's approximately about a billion dollars

the Department of Natural Resources is responsible for contributing to the

province. We are looking to grow that. We think there is opportunity here, both

in the mining and the energy, as well as the offshore oil and gas opportunities.

With

that, Sir, I'll leave my remarks for as we go through the page by page, because

I'm sure there are lots of questions.

Thank

you.

CHAIR:

Thank you, Minister.

Before

we get started, I just wanted to let everybody know on the substitutions

morning. Mr. Hutchings is substituting for Mr. Parsons. Mr. Letto is

substituting for Ms. Pam Parsons.

Mr.

Hutchings, you'll have 15 minutes to respond to the minister on 1.1.01 and then

we'll pass it to Ms. Michael.

MR. HUTCHINGS:

Okay, thank you, Mr. Chair.

Good

morning. Minister, just in some of your commentary there I have a question in

regard to the positions. I think you indicated there were 12 positions that were

removed from your department, as opposed to the last fiscal year. Six were

vacant. Were they vacant and budgeted for last year, or did they become vacant

since the last fiscal year?

MS. COADY:

No, some of the positions

had been vacant for a number of years, actually, and they just weren't filled.

MR. HUTCHINGS:

Okay.

You

indicated of those six that were vacated, three were retirement.

MS. COADY:

They were retirement

eligible.

MR. HUTCHINGS:

Okay. Did they avail of

retirement?

MS. COADY:

Some of them did. I'll just

check with Tanya – yes?

OFFICIAL:

(Inaudible.)

MS. COADY:

Yes.

MR. HUTCHINGS:

Okay.

So was

that part of government's attrition plan or was this a process in the department

– I guess my question is if it's attrition, you would try to reassign duties or

reassign the functions of the department, or was it just outright retirement,

and you will refill the positions, or the positions are gone, or …?

MS. COADY:

No, just for clarity, five

individuals left the department. Some of them chose to retire. They were

eligible for retirement; they were not retirement positions.

MR. HUTCHINGS:

Okay.

MS. COADY:

If you can understand that,

the nuance. I'll just give one example. We combined two directors in one

division to take it down to being one director. That was royalties and

economics. In the elimination of one of those positions, they chose to go into

retirement.

MR. HUTCHINGS:

Okay, thank you.

Just

one line item question in 1.1.01, Minister's Office. There's a very small

reduction when you look at Transportation and Communications under that heading.

Last year it was $53,000, didn't spend all that and then this year it's down a

little bit again. Can you just give me some idea about that, please?

MS. COADY:

Well, we're trying to be as

cost efficient as possible; we are moving in the direction – it was quite

substantially higher than that, even in the budget before that. The minister

does travel, on occasion. Last week I was in Houston. I've had to travel to FPT

meetings. So we're trying to reduce the amount of travel, trying to be very

effective and efficient when it comes to choosing the travel routes, how we

travel, and try and keep the cost as low as possible. But there are requirements

for ensuring that the minister does travel to meet a lot of the companies that

do business in our offshore oil and gas industry, travel to PDAC, for example,

the Prospectors & Developers Association of Canada.

I know

ministers in the past – I have not had the opportunity. I've been to China

before, but I have not had the opportunity to travel to the mining conference in

China. We're trying to open up new avenues and continue to grow and expand

natural resources in the province. So we're continuing to be as lean as possible

and the minister travels – I hate speaking of myself in the third person, but we

travel as cost effectively as possible.

MR. HUTCHINGS:

Okay, thank you.

That's

good for me, Mr. Chair, 1.1.01.

CHAIR:

Thank you, Mr. Hutchings.

Ms.

Michael.

MS. MICHAEL:

No questions for that

heading.

CHAIR:

No questions?

MS. MICHAEL:

No.

1.2.01 to 1.2.03 inclusive.

Ms.

Michael, would you like to start, please?

MS. MICHAEL:

Okay, so we're changing a

bit because usually it's 10 minutes for one group and 10 minutes for the other.

We're just going to do it by heads, is that it and not worry about timing?

MR. HUTCHINGS:

(Inaudible.)

MS. MICHAEL:

Okay. Well then, I'll start

off. Thank you.

With

regard to 1.2.01, Minister, I know you gave the overview of the positions that

were lost and the savings in salaries but could we, in the Salaries

section

here, have the specifics for this division?

MS. COADY:

Certainly. Thank you for the

question.

There

are changes to the management structure, and you'll see them reflected there.

There was an elimination of the associate deputy minister's position. In Natural

Resources we had not only a deputy minister and I think four ADMs – assistant

deputy ministers – we had a position called an associate deputy minister, and

that position has been eliminated. It was an associate position, and we felt we

could – with the strength of the assistant deputy ministers, we felt we could do

without the position, and that person has been redeployed within government.

MS. MICHAEL:

So the reassignment of the

work of that person wasn't difficult to take care of, I take it?

MS. COADY:

Well, it's always difficult

to reassign, but because we have strong assistant deputy ministers they assume

their roles very, very well. The deputy minister – as you know, we have a new

deputy minister. The deputy minister has taken on a lot of the other functions

of the associate deputy minister, and we also have strength in our team. So it

was well done.

We also

eliminated the position of executive director of iron ore. That position, during

what I'm going to call the high iron ore interest, we had an executive

director's position. It had been vacant for a number of years and we eliminated

that position. Of course, the assistant deputy minister in mining has reassigned

any of those responsibilities within the mining group – and there was an ADM

secretary's position that was vacant. So between those three is what you're

seeing reflected in the change.

MS. MICHAEL:

Thank you very much.

MS. COADY:

And that position as well

was vacant.

MS. MICHAEL:

Okay.

We've had a slight increase

there because there's a Clerk I position that was transferred from Fisheries and

Land Resources into the Department of Natural Resources. Previously, Land

Resources were part of Natural Resources. If you remember back, Forestry used to

be part of Natural Resources.

MS. MICHAEL:

Yes.

MS. COADY:

There was one position that

was carried under the Forestry that has now been moved back to Natural

Resources. That's why you've seen a slight increase there.

MS. MICHAEL:

What is that position? What

are the responsibilities of that position?

MS. COADY:

Clerk I position is more of

an information position. That is the person who greets people when they come

through the door of Natural Resources, making sure they are going to the right

place. It's really an information position and clerical duties.

MS. MICHAEL:

Okay, thank you very much.

Again,

under 1.2.02, the revenue; $10,000 was budgeted last year and there was no

revenue, and this year it's $5,000. What exactly is that revenue line?

MS. COADY:

It's a miscellaneous revenue

line. It really is a catchall for any credit or any miscellaneous funding that

comes back to the department.

let's just say we know we paid for something and there was a credit coming back,

you have to have a position, a place for that credit to come back in to the

department. So that's the holding place for it.

MS. MICHAEL:

And how long has it been

that you allow for it but nothing does come in?

MS. COADY:

That's a good question.

Phil?

MR. IVIMEY:

There has, in previous

years, been revenue that has gone into that line item. It just so happened in

'16-'17 we never had any. You'll see that it was reduced, like you mentioned,

from $10,000 in the previous year down to $5,000 is because we've tried to

rightsize it to the historical amounts of revenue that have come through that

area.

If you

go back over a period of four or five years, you would see that $5,000 is

approximately the historical amount of revenue in that year. It's just last year

we had none.

MS. MICHAEL:

Okay, thank you very much.

I have

no questions for 1.2.03.

CHAIR:

Mr. Hutchings.

MR. HUTCHINGS:

Thank you, Mr. Chair.

Subhead

1.2.02, Administrative Support; in the heading there, Minister, can you just

explain again, you mentioned in regard to the salary, what was estimated, what

was revised and then the estimate for this year. You mentioned a position, I

think Fisheries and Land Resources, they are an entity that stands on their own.

Just explain to me why there's a position in the department related to that.

MS. COADY:

Certainly, I'd be happy to.

You

will recall that Forestry used to be part of the Department of Natural

Resources, and they were housed in the building of Natural Resources.

MR. HUTCHINGS:

Yes.

MS. COADY:

When they moved – and this

was in the previous administration. When they moved to join forces with, I think

it might have gone to Industry at the time. Originally, Forestry went with

Industry, and now it's, of course, Fisheries and Land Resources.

There

was a position that was housed in the Department of Natural Resources but funded

out of the Department of Forestry. In the last year it was identified that this

position was actually still housed in the Department of Natural Resources, still

doing the work in the Department of Natural Resources, just the funding

mechanism was through the Department of Forestry. So we just transferred that

position to make sure the funding was coming out of the Department of Natural

Resources.

The

other slight increase, I think it's $40,000, was related to filling of a vacant

position of a budget analyst. So a position has been filled. I meant to mention

that previously.

MR. HUTCHINGS:

Okay. Thank you.

Minister, on that same line of Salaries, 1.2.02, last year if you look at the

Estimates for 2016 it was $863,500, this year it has been restated as $908,300.

I'm just wondering if we can get clarification on why that's so.

MS. COADY:

Is this 1.2.02?

MR. HUTCHINGS:

Subhead 1.2.02, Salaries. If

you go back and look at last year's Estimates –

MS. COADY:

Nine hundred and eight.

MR. HUTCHINGS:

– for budgeted, for this

year it's $863,500, but if you look at the line there today it's $908,300. I'm

just wondering about that difference.

MS. COADY:

Okay.

Certainly; I'm going to ask the controller.

MR. IVIMEY:

That number was restated to reflect the movement of that Clerk I position that

minister referred to. So if you took the previous year's budget amount and added

the $37,300 to that, it should bring you up to the $908,000, and the $37,300 is

that Clerk I position.

MR. HUTCHINGS:

Okay, and that was for the

period of time that the clerk was in the (inaudible).

MR. IVIMEY:

Yes, correct. Exactly.

MR. HUTCHINGS:

Okay, yes. Great.

Thank

you.

Subhead

1.2.03, Administrative Support; Minister, there appears there is $100 put in

this just to keep the heading open. Why would that be, and why wouldn't you just

dissolve that heading?

MS. COADY:

It's a placeholder for

vehicle purchase. We keep it open because over time we will have to renew the

fleet. We will have to do some things. We're limiting, as fine as possible, the

use of the vehicle fleet and maximizing, I guess where possible, the opportunity

to lower costs.

Right

now we have about 19 trucks and SUVs within the department, and as you can

appreciate, we are servicing the whole of Newfoundland and Labrador. We do the

geological survey and we do have to have those kinds – and the orphaned and

abandoned mines. That's a placeholder position for when we need to do the

vehicle replacement.

MR. HUTCHINGS:

So there would have been no

purchases last year either, right?

MS. COADY:

No.

MR. HUTCHINGS:

Okay.

Thank

you.

CHAIR:

Can I ask the Clerk to

recall the subheads, please?

CLERK:

2.1.01 to 2.1.03 inclusive.

CHAIR:

2.1.01 to 2.1.03 inclusive.

Shall

the subheads carry?

All

those in favour, 'aye.'

SOME HON. MEMBERS:

Aye.

CHAIR:

All those against, 'nay.'

Carried.

CLERK:

3.1.01 to 3.1.05 inclusive.

CHAIR:

3.1.01 to 3.1.05 inclusive.

Mr.

Hutchings.

MR. HUTCHINGS:

Thank you.

MS. COADY:

Three or two?

CHAIR:

3.1.01 to 3.1.05.

MS. COADY:

2.1 –

MR. HUTCHINGS:

2.1.01 is the first heading

we're starting.

MS. COADY:

Yes, okay. Yeah, it's

2.1.01.

CHAIR:

Sorry, okay.

Can I

ask the Clerk to recall the subheads?

CLERK:

2.1.01 to 2.1.03.

CHAIR:

2.1.01 to 2.1.03.

Mr.

Hutchings.

MR. HUTCHINGS:

Thank you.

Salaries in 2.1.01, again, there's – I know the controller indicated, on the

last line there's a small discrepancy as well from what was estimated in

Budget 2016 and what's provided here.

I assume that's related to salaries or some rearrangement.

MS. COADY:

Yeah. If you look at budget

2016-17 and the revised, that's

either through retirements or maternity leave that that slight difference is

there, but there have been changes in the management structure. We did reduce

one geologist position. We also have attrition management reduction due to

retirements.

MR. HUTCHINGS:

Okay.

MS. COADY:

There is an adjustment for

some filling of vacant positions, and then there is one other change. There was

a temporary position for coastal erosion and vulnerability. It was a project

that was funded which is no longer funded. It was a temporary position. It was a

monitoring role which is no longer being funded.

MR. HUTCHINGS:

What was that called,

Minister, coastal erosion?

MS. COADY:

Coastal erosion and

vulnerability. It was a project that was funded mostly through climate change

and a lot of the work was done in the Department of Natural Resources. We're

still doing some of the work. I'll call it, we still have coastal erosion as

part of our overall geological work that we're doing but that position is no

longer funded as part of that project.

MR. HUTCHINGS:

Yeah, that was looking at

particular areas of the province I think where there was an indication of

challenges in regard to coastal erosion and do some analysis over a period of

time.

MS. COADY:

Yes and that analysis had

been carried out over time.

MR. HUTCHINGS:

Yes.

MS. COADY:

That temporary position has

wound up, but some of the work still continues through the geological survey.

People are going out doing geological work, bed mapping and looking at till

geochemistry. They're still doing some of that geological work.

MR. HUTCHINGS:

So the work is being done

but it has been, I guess, farmed out to other positions to do it. There wouldn't

be a sole person directed to do it.

MS. COADY:

There's not a sole person.

MR. HUTCHINGS:

In terms of the idea behind

it and from a policy perspective it's still being pursued?

MS. COADY:

Really, that temporary

position was funded through Climate Change –

MR. HUTCHINGS:

Right.

MS. COADY:

– and they're continuing to

do some aspects of that.

MR. HUTCHINGS:

Okay.

MS. COADY:

But from the Natural

Resources Department, when we're doing the geological survey that's also part of

what we're doing.

Correct, Perry?

MR. HUTCHINGS:

Okay. Thank you.

You

mentioned there was one geologist position. How many geologists would be part of

this actual group here and the work that's being done? Could you give me an

idea?

MS. COADY:

I can give you – there are

49 positions in total. I know there are 22 in a field program with seasonal and

students.

Perry,

I don't know – or I should say, Assistant Deputy Minister Canning, could you

advise how many are there now?

MR. CANNING:

The total number in the geological survey is 49. Most all of them, if not all of

them are geologists, many with Ph.Ds. So we do have a very strong complement of

staff in that particular division.

MS. COADY:

So if I could, there are 49

positions in total. By far, those are permanent positions. There are some

temporary positions. We're moving those through and moving them towards, if

required, moving them towards permanent positions.

There

are 22 seasonal students mostly in field positions, because as you can

appreciate, the geological survey, a lot of the work is done during the summer.

MR. HUTCHINGS:

Yes.

MS. COADY:

And we have 22 field

programs. There's a slight bit of overtime as well because, of course, if you're

over a weekend – if you're in the interior of Labrador, for example, and you

have to over weekend, it's by far better to pay the overtime cost than try and

take somebody out for the weekend.

MR. HUTCHINGS:

Okay.

Minister, under that same heading, 2.1.01, we've seen a slight increase in

Purchased Services. Could you just give an explanation on that and what that

line item would be used for in this division?

MS. COADY:

It's basically rightsizing

the budget. If you can appreciate, what we've done is kind of – when we did our

zero-based budgeting, is really looking at all of the different expenditures

that are required under Purchased Services.

under Purchased Services we'd have analysis of field samples, radiocarbon

dating, we'd have micro-fossil identification. There are rentals, for example,

for the rock storage. There's vehicle repair maintenance. There's scanning and

printing costs. There's staff training. All of those things come under the

Purchased Services.

As you

can appreciate, this is a geological survey. There are a lot of expenditures

going on and that's where they're housed. So it was a rightsizing of the budget.

MR. HUTCHINGS:

Okay.

Thank

Ms. Michael, 2.1.01 to

2.1.03 inclusive.

MS. MICHAEL:

Okay, thank you.

Just

continuing in 2.1.01; under Supplies, Minister, Supplies last year was budgeted

at $169,900. The revision is exactly the same, which is sort of odd actually,

and then this year it's less by $53,800. Could we have an explanation of – I

could have a wild guess at what the supplies are in this division, but an

explanation of why it looks like it's okay to take out almost $54,000 from that

line.

MS. COADY:

Again, when we did line by

line on that particular area we reprofiled some of it back into Transportation

and Communications. So you'll see that Transportation and Communications are up

while Supplies are down slightly.

MS. MICHAEL:

Yes.

MS. COADY:

Really it was, as you said,

$53,800 which was the reduction. It was reprofiling to rightsize the budget.

Under Supplies, that would be things like laboratory consumables.

MS. MICHAEL:

Right.

MS. COADY:

So almost $37,000 in

laboratory consumables alone. There are field supplies; that is rock hammers and

sample bags and things. The geological survey requires a lot of these kinds of

supplies, shovels and things of that nature. Then there are, obviously, office

supplies. So that's what's comprised of the supply area.

Even

things like gasoline – no, does gasoline come under Supplies?

OFFICIAL:

MR. IVIMEY:

I'm not 100 per cent I can

verify if the one that you have is up to date because that is updated and posted

by the Department of Finance. It wouldn't be done individually by the

department, so I'm not 100 per cent sure of that.

MS. MICHAEL:

Okay. We got this quite

recently, so it depends on the Department of Finance then you're saying.

MR. IVIMEY:

Yes. They would be responsible for posting it online.

MS. MICHAEL:

Okay. Thank you very much,

so that we know that.

Under

Grants and Subsidies, Minister, in the same subhead the $7,500, I think we've

been told –

OFFICIAL:

(Inaudible.)

MS. COADY:

Oh, sorry.

MS. MICHAEL:

That's okay.

So the

$7,500 under Grants and Subsidies in the same subhead, 10, we've been told in

the past this is for the Mineral Incentive Program. Can we get an idea of what

that means, currently?

MS. COADY:

Excuse me for one second.

Thank

you, I just wanted to make sure I had the right and accurate information for

you.

There

are two particular meetings that do generate some contributions; one is the CIMM

which is $5,000. Assistant Deputy Minister Canning, could you just advise what

the CIMM is?

And

then there's the GAC Newfoundland and Labrador annual meeting and the Atlantic

Universities Geological Conference contribution. That adds up to be $7,500.

There are a lot of acronyms here and if you could just clarify what those are.

MR. CANNING:

Thank you, Minister.

I think

Thank you very much.

MR. CANNING:

You're kindly welcome.

MS. COADY:

Just for clarity – I think

it's a little farther on – we will get into those other grants that we do. These

are more incoming from awards luncheons and things of that nature.

MS. MICHAEL:

Right.

The

ones that we've just talked about are basically professional organizations?

MS. COADY:

Correct.

MS. MICHAEL:

Thank you.

Under

2.1.02, the only question I have is under Purchased Services. Under Purchased

Services, $70,000 was budgeted, $90,000 was the revision and, this year, we're

down to $65,000. So just an explanation of that whole line, please, Minister.

MS. COADY:

Certainly. That again goes

back to the zero-based budget review reduction. Under Purchased Services the

$65,000, approximately $21,000 of that is Moneris banking fees. So when you're

looking at quarries, we do take in some money – we have about 2,000 quarries in

the province and we do take in some money from there. There are also vehicle and

machinery rentals in there, vehicle repair and maintenance. There's some

maintenance of safety equipment and warehouse cleaning, some miscellaneous

things like that in the Purchased Services.

MS. MICHAEL:

So was there something last

year that was not expected, because there is a $20,000 differential between the

budget and the revision?

MS. COADY:

Certainly. There was

additional repairs and maintenance required on some vehicles that have now been

done. As well, there was some additional Moneris fees associated with the

department's online claim staking system. You recall in my opening remarks I

talked about how in the fall of 2016, we had a tremendous amount of claims

staked, especially in Central Newfoundland.

MS. MICHAEL:

Yes.

MS. COADY:

It was one of the highest

claims staking in the last number of year. I think it was, if memory serves me,

21,000 claims staked within a very short period of time. It was a tremendous,

I'll call it, rush, on claims staking in Central Newfoundland, and most around

the gold area.

MS. MICHAEL:

I was going to say, was it a

gold rush?

MS. COADY:

It was a gold rush, yes.

But

what was really interesting about the amount of claims staked at that particular

time is how it mirrored the Geological Survey. So it really does speak to the

importance of the Geological Survey in identifying opportunity, but that did

draw it – because it had such a rush on claim staking, it drove Moneris fees

quite substantively, and that's why you had that anomaly and additional, besides

the repairs and maintenance on some vehicles.

MS. MICHAEL:

Right, thank you very much.

2.1.03,

under Transportation and Works, last year $104 000 was budgeted and only

$45,000, approximately, was spent, so a big drop there. Then, this year, there's

still a drop from what was budgeted last year to what is now allowed for this

year. Could we have an explanation?

MS. COADY:

Certainly. There was savings

related to the elimination of the executive director of iron ore because that

person wouldn't be flying back and forth. Historically, we had to put in funding

for that person to go back and forth, obviously. Labrador was the hub for iron

ore during that period of time. We also ensured that we really did reduce

discretionary travel to try and have some savings.

In the

$69,800, just let me tell you that there's

Mining Act compliance – we have six

staff who have to make sure that people are compliant with the

Mining Act. We have a Mineral

Incentive Program where there's some travel involved in that. The orphaned and

abandoned mine inspections have to be carried out, so there's some travel

involved in that.

mentioned before about the mining conference in Toronto, the Prospectors &

Developers conference in Toronto and Baie Verte. There's a helicopter required

under that for Hope Brook water sampling. So there's some money allocated for

that. Then, of course, there's the requisite communications, landlines and

cellphones. So that's what comprises of that travel and communications.

MS. MICHAEL:

Thank you.

CHAIR:

Ms. Michael –

MS. MICHAEL:

CHAIR:

Thank you, Ms. Michael.

Mr.

Hutchings, 2.1.01 to 2.1.03, further questions?

MR. HUTCHINGS:

Thank you.

Minister, 2.1.01 under the heading Geological Survey, is there funding in the

budget for geoscience online for that function?

MS. COADY:

I'm going to turn to the

assistant deputy minister.

MR. HUTCHINGS:

Sure.

MR. CANNING:

There is quite a bit of information available online, and I know the division

has been looking at opportunities to improve that. I'm not sure if that's what

you're referencing.

MR. HUTCHINGS:

Yeah, I guess.

Is it a

static site or is it always being updated?

MR. CANNING:

It's always being updated, yes.

MR. HUTCHINGS:

Okay.

So the

current online portal now, there's no new investment in it. It will carry on as

is.

MS. COADY:

Thank you for the question

because I think it's an important one.

We are

continuing to drive more and more online and digitalization. You've seen that

throughout the department in things like oil and gas, and in mining, and in

trying to drive more activity because, of course, it is very helpful to the

industry.

We have

not allocated any major dollars towards – I'm going to call it investments in

improvements this year, but it is something that is top of mind. We'll continue

to drive what we can internal at this point but I think it is a valid comment

that we want to put some more investments in there as time goes by.

MR. HUTCHINGS:

Okay. Thank you.

well, there are geo files. Is that part of that online, or that's the search

tool, I think, is it?

MR. CANNING:

(Inaudible.)

MR. HUTCHINGS:

Yes. So that's part and

parcel of what we're talking about I guess, the whole – okay.

Thank

you.

I had a

general question on Geological Survey; last year, Minister, when we discussed

this I think there was reference to – there were two programs underway in

Labrador and six on the Island. There was bedrock mapping west of Labrador,

Labrador Trough. I think we talked about mapping in Southern Newfoundland, the

Great Northern Peninsula, Central Newfoundland. There was a lot of work being

done. I'm just wondering was that work completed. What is the status on some of

those?

MS. COADY:

Well, I'll just give a

general overview –

MR. HUTCHINGS:

Sure.

MS. COADY:

– and then we can have

Assistant Deputy Minister Canning speak. This year's survey will have bedrock

mapping, as you indicated, in Labrador, and Eastern, Southern Newfoundland and

Labrador. They're looking at mineral deposits in Western Labrador and Central

Newfoundland and Labrador, and there's till geochemistry happening at well. So

that's the three components of what will be worked on in this year.

As you

can appreciate, there's an ongoing effort to continue to update our geological

survey and making sure we have the data that people are most interested in. We

have a technical advisory committee that does look at how that's being delivered

and what we're doing. We do publish, of course, every year, this year it was for

the – during PDAC conference we did have the results of the geological survey.

I don't

know if there's anything further, Mr. Canning, you'd like to add to that.

MR. CANNING:

Yes, this work continues.

Western Labrador is a good example. This year they're going to be looking at

north of the Trough away from, say, Lab City, Wabush. They're going to be

looking at bedrock and some of the mineralization. They'll be focused more up

along that border of Quebec, but this work continues.

I just

want to re-reference a point that was made by the minister early on about the

recent activities, staking activities and how it aligns so clearly with the core

basic research that is done. If you look at this map, for instance, and you see

this big blue band where there was significant staking completed, you can see

the band ends where the geological survey had ended their work, but they're

continuing to progress that.

So the

message from that is really good, basic research in the field by our geological

folks, and they do a lot of work in the field. Then they come back, and it takes

quite a bit of time to document that in their research and document it online

and document it in publications. But it really does incentivize folks to go in,

prospectors and others to go in and look at those areas, and I think that's a

key attribute of their work.

MS. COADY:

I'm happy to distribute that

map that you have there, Mr. Canning. We'll certainly get that to you as well.

It's good visualization of where claims are being staked and where the survey

overlaps it.

MR. HUTCHINGS:

Okay. Thank you.

2.1.02,

Mineral Lands – I'm not sure if Ms. Michael covered this, if she did, I

apologize.

Salaries, there's a small increase from what was budgeted last year to what was

revised. Then it's down from last year, what was originally estimated. Is that

due to a position, or what exactly would that be?

MS. COADY:

I'll deal with the revised

from 2016-17, which is a little different from the Estimates of 2017-2018. The

revised really does look at a reclassification of positions within the Mineral

Lands division. A director, manager and – the manager of mineral rights and the

manager of quarry rights, they had some changes, reclassifications. It's been

going on for about five years. So it's been a long-standing reclassification;

that reclassification has come through. We also had some – then looking at the

2017-2018 Estimates, we had some adjustments due to retirements.

MR. HUTCHINGS:

Okay, thank you.

Minister, in your salary budget, would you have included there any salary

increases this year, or would it be status quo?

MS. COADY:

Salary increases across the

board you mean, or –?

MR. HUTCHINGS:

Yes. Well, obviously there

are negotiations undergoing in regard to –

MS. COADY:

Right.

MR. HUTCHINGS:

So would you have put in

I don't – just one second.

MR. HUTCHINGS:

In the appeals process.

MS. COADY:

Are there many in the appeals process, is the question, in JES.

OFFICIAL:

There were a couple. I think most of them have been resolved, but we can confirm

(inaudible).

MS. COADY:

There were a couple, but

most of them have been resolved. We'll confirm how many there are still

outstanding, but there are very few.

MR. HUTCHINGS:

Okay, thank you.

The

heading here, 2.1.01, Mineral Lands –

MS. COADY:

2.1.02?

MR. HUTCHINGS:

MS. COADY:

I'm assuming it, but I will

confirm, that would be anybody in the industry who wants to have discussions

with regard to the quarries or anything of that nature, but I'll just turn to my

assistant deputy minister to see if there is anything there that – when we call

an external client, I would imagine we're talking about industry.

MR. CANNING:

Could you help me to the

line item that you're speaking of?

MR. HUTCHINGS:

2.1.02, Mineral Lands, the

description. The last sentence says, “… support on such matters to Government

and external clients.” I was wondering about the external clients.

MR. CANNING:

Yeah. I'd have to get

clarification on exactly what constitutes an external client. I can give you an

opinion but I'd rather give you the facts. Can I take that under advisement and

respond back to you?

MR. HUTCHINGS:

Sure. Yes.

CHAIR:

At this time, Mr. Hutchings,

I'm just going to turn it back over to Ms. Michael on 2.1.01 to 2.1.03

inclusive. Any further questions?

MS. MICHAEL:

Thank you very much, Chair.

Yes,

I'll just continue in 2.1.03, because Mr. Hutchings hasn't moved into that and I

was sort of in the middle of it, so we'll go back there. We finished up on

Transportation and Communications.

Under

the Professional Services, there are a number of variations here. One from the

budget to the revision last year and now the Estimates for this year is well

below the budget of last year. Could we have an explanation, Minister, of what

exactly these professional services would be and why we have a $72,000 drop for

this year's budget?

MS. COADY:

The drop was mostly in a

reduction of reprofiling to rightsize the budget. If you recall, we did

zero-based budgeting. We've really built it from the base up. When we looked at

Professional Services, we could rightsize it to that, $251,000. I will tell you

what's included in that, just so you can get an idea.

kind of between – some of the work is in Professional Services. The majority of

it is in Purchased Services. It was a planned increase and we'll increase it

again next year.

We have

a four-year plan for this because we must maintain and mitigate any risks with

these orphaned and abandoned mines. We just felt it was just that important that

we had to put some money towards that end.

MS. MICHAEL:

Minister, does your book

What I'm interested in is

I'm making an assumption, which could be a wrong assumption, but I would be

hoping that in the more recent mines, more modern mines, because of

environmental assessment, that we will see this number going down in terms of

not having new ones coming in.

MS. COADY:

You are absolutely correct.

There are two ways, actually, that it is captured, as you said, under

environmental assessment, but also the requirement for mitigations under the

Mining Act as well.

MS. MICHAEL:

Yes. Okay.

MS. COADY: And

it was in the previous administration that that was resolved, but we do have a

number of orphaned and abandoned mines in the province that we must deal with.

MS. MICHAEL:

Yes, absolutely.

MS. COADY:

Rambler mine comes to mind immediately, that we have to keep ensuring are well

maintained and contained.

MS. MICHAEL:

Absolutely. Thank you.

I have a couple of general questions now before going into

something else under the subhead, but related to the subhead. My first one has

to do with Voisey's Bay and with the underground development. Can we get an

update on what is going on? Has it been delayed? Is it moving ahead? Some

details here would be helpful .

MS. COADY:

Certainly. Yes, it is moving

ahead and work continues.

You may

recall last fall I mentioned, during Question Period actually, that Voisey's Bay

mine, Vale, was doing some additional work with regard to procurement to bring

their costs down. That was, I'm going to call it, pretty significant work that

needed to be done; they wanted to reduce their costs.

The

primary objective is still to have the ore production from the underground mine

by 2019-2020, so that continues. But within that time frame, because of some of

the changes that they're doing with regard to procurement and making sure they

have all the engineering done, there are some

schedule changes within that which

we are considering.

The end

result will be the same; the end result in terms of employment will be the same.

Vale has to come to us and said to ensure that we keep the best

schedule and the

best costs we would need some slight changes within that period of time.

wouldn't mean necessarily that there would be a change to the Development

Agreement at all. It might just be a letter of agreement in terms of some of the

small changes. It won't be an amendment to the Development Agreement, but it

might provide some waivers with regard to some time frames. That's under

consideration, but the end result is the same and the end result is what we're

considering is the most important thing, and that's maintained.

MS. MICHAEL:

And you said that's 2019 …?

MS. COADY:

2019-2020. I don't know, I

think it's the – I'm going to get you the exact date. 2020, isn't it?

MR. CANNING:

(Inaudible) 2020, but that

could just be on either side of that line.

MS. MICHAEL:

Right.

MS. COADY:

The end of '19 into 2020.

MS. MICHAEL:

and we've been working with some of those to see if there is an opportunity to

restart the mine. We're continuing to focus on that.

There

are still people who are interested in reopening the mine. As you might have

heard publicly, there is another one who wants to use it for something else. The

monitor is looking at the best use of that and we're continuing to work with

proponents to help them through considerations for reopening that mine.

MS. MICHAEL:

As you know, we all know,

you still have the former workers who have their grievance – not a formal

grievance, but they're upset about the whole issue of pensions and I'm assuming

no matter what happens, that's not something that will ever be considered as

part of a new company taking over.

MS. COADY:

It's a very, very difficult

situation for those employees. I have great concern and empathy for them.

That

would be something that the monitor would consider. I would not anticipate, at

this point, that would be anything that would be in our purview, but it would be

something that the monitor, in looking at people who are coming forward. But

Cliffs are the ones who hold that responsibility at this point in time.

MS. MICHAEL:

Thank you.

I only

have a few seconds left; I was going to ask about, and I can still do it,

whether you want to do it now or wait until after Mr. Hutchings, but just an

update on the Alderon Kami Mine, the Julienne Lake iron ore deposit, the Quest

Rare earths limited, just some sense of the iron ore part of the industry.

MS. COADY:

Certainly.

We have

had discussions with Alderon who are – as you would have heard in the media –

continuously updating their numbers and their economics and looking at ways to

move forward. They are committed to doing so and they would like to do so as

quickly as possible.

It is

really is, I think, the price of iron ore dependent at this point, but they have

redone a lot of the scope of their work and are actively considering how they

can take the next steps. So that's a very positive sign.

You

asked about Julienne Lake, nothing new to report at this point. It is on the

radar screen. It is a tremendous opportunity. For any potential investor who

wants to be involved in the Julienne Lake mine there is an opportunity there,

again, probably commodity-price dependent at this point. There are a lot of

other – I think you mentioned Quest.

MS. MICHAEL:

Quest.

MS. COADY:

Rare earth minerals, I think

– that's Quest, isn't it?

MS. MICHAEL:

Yes.

MS. COADY:

Rare earth minerals. They

are really actively – there are a couple of rare earth mineral opportunities in

Labrador. We've had some discussions with them, most recently at PDAC. They're

very anxious to move forward and are sharpening their plans to do so. I know

that they are anxious to start that work. It really will depend on markets and

commodity pricing.

MS. MICHAEL:

Okay. Thank you.

MS. COADY:

Just anything to add there,

Assistant Deputy Minister of Mining?

MR. CANNING:

(Inaudible) Tata Steel.

Tata, that's in Schefferville, hires a fair number of people from our province.

We continue to work with them as well to fill the picture up fully on the iron

ore piece.

MS. MICHAEL:

Thank you.

CHAIR:

Thank you, Ms. Michael.

Mr.

Hutchings, anything further on 2.1.01 to 2.1.03 inclusive?

MR. HUTCHINGS:

Yeah, 2.1.03.

Ms.

Michael asked about Professional Services and Purchased Services. I'll just go

back to those again. On the Professional Services what was budgeted and then

what was actualized dropped and the estimate for this year is down. Can you just

give me an explanation on that again?

MS. COADY:

Sorry, you asked for

Professional Services under 2.1 –

MR. HUTCHINGS:

Yes.

MS. COADY:

Professional Services.

Last

year, the variance was due to a lower than anticipated cost associated with the

dam safety inspections, so the actual was a lot lower. When we looked this year

and we did zero-based budgeting and built the budget up, we felt $251,000 was

required there. That's about the orphaned and abandoned mines for dam

maintenance. The dam repair program is about $156,000 of that professional

service. Then there's the independent engineer for the Voisey's Bay Development

Agreement. So we have some money set aside there for that particular

professional service as well.

MR. HUTCHINGS:

Okay, so the last year with

the amount you had budgeted, would you have identified orphaned and abandoned

mines that you would do work on?

MS. COADY:

Oh yes.

MR. HUTCHINGS:

So were there ones that you

didn't get to do the work –?

MS. COADY:

No. We did the work on those

orphaned and abandoned mines that was required, but the requirements for the

safety inspections were lower. That's what I understand. If there's anything new

– I'll ask my assistant deputy minister, is there anything new there that you

need to say?

MR. CANNING:

No, you've covered it. There

is another $40,000 review by a dam structure professor of the program.

MR. HUTCHINGS:

Okay.

I'm

just wondering, could we get a list of what was identified to complete last year

and what was completed? As well, what's been identified for this fiscal year?

MS. COADY:

Certainly.

MR. HUTCHINGS:

Okay.

MS. COADY:

We are very pleased to put a

four-year program in place for those orphaned and abandoned mines and have a

very, what I'm going to call, significant program now to make sure we are doing

all that we can for those orphaned and abandoned mines.

MR. HUTCHINGS:

Okay, thank you.

Purchased Services, we'll go there. I'm not sure if we covered this. There's a

significant increase there from where we were last year to where we are in this

estimate.

MS. COADY:

Remember that I said the

orphaned and abandoned mines program was a four-year commitment; this year's

commitment is $690,000. In that Purchased Services is a lot of the money that we

will be requiring. It's split kind of between Professional Services and

Purchased Services, but there's a fairly significant dam repair program going on

at Rambler. That's where a lot of that Purchased Services is going towards this

year.

MR. HUTCHINGS:

Okay.

MS. COADY:

Just for clarity, under the

$665,800, that is a safety maintenance program, fences and things of that

nature, safety maintenance. There's dam maintenance, there's dam repairs. Then

there are different things like lab analysis, vehicle repairs and a small amount

of money for those types of things, but the majority of the money is in the dam

repair program.

MR. HUTCHINGS:

Okay.

The

Budget 2017 documents under mining

industry, one of the bullets says: $2.14 million over the next three years for

orphaned and abandoned mines dam safety.

MS. COADY:

Yes, $2.44 million, yes.

MR. HUTCHINGS:

$2.14 million is in the

document.

MS. COADY:

Oh, I have $2.44 million.

MR. HUTCHINGS:

Okay.

So this

is what you're referring to in regard to, going into this line.

MS. COADY:

Right. So in '16-'17,

$300,000 was budgeted and spent. In '17-'18, it's $690,000. In budget '18-'19 –

you'll see this when you get your books – $740,000, and then in budget '19-'20

we're allocating $710,000.

MR. HUTCHINGS:

Okay.

MR. CANNING:

This is the Mineral

Incentive Program. It's Prospector Grants and it's the Junior Exploration

Program that we have.

One of

the points I'd like to reference here is once you take the benefit of that basic

research from our geological survey and this prospector program then is to

incentivize and help prospectors, because there's not a mine that I know of that

doesn't have a prospector in its history. The Prospector Grants are there about

$6,000 per person, and we also facilitate some training for those folks.

There

are also funds available to help the junior exploration companies complete their

exploration. If we think about a world where we have low commodity prices, these

sorts of programs help incentivize and de-risk some of those activities which

are key to generating the next new mine.

Collectively, they're the Prospectors Grant and they are the Junior Exploration

grants.

MS. COADY:

If I could just add, so it

will add up correctly for your numbers. The Mineral Incentive Program, which is

the Prospectors Assistance Program, $350,000.The Junior Exploration Assistance

is $1.3 million. Then we have a Matty Mitchell Room in the Department of Natural

Resources, which was actually funded by Mining NL, Natural Resources, and that's

$50,000 allocated. So that brings you up to your $1.7 million, but I wanted my

assistant deputy minister to tell you how important those programs are.

I'm

going to say this, in a down commodity cycle this is very important money to

ensure that we have the opportunity to make discoveries and then be globally

competitive in terms of opportunity and 'prospectivity' and it's very important

to have that prospector allocation to continue our programs, especially in down

cycles.

MR. HUTCHINGS:

Okay.

So last

year everything was basically maximized. So it was pretty busy in terms of –

MS. COADY:

Yes.

MR. HUTCHINGS:

Are you seeing an uptake now

in regard to these programs, or is it constant? What's your view of where it's

going to go in the next year or so? Are we going to see an increase in terms of

prospectors and the support programs for the industry, or where do you see it

going?

MS. COADY:

Well, certainly, we had some

incredible interest in this program. We made some changes last year to ensure it

was maximized and making sure that we were incentivizing people to do the

development work. Junior exploration is the core and the foundation of making

sure mines happen, and I heard that time and time again at the prospector's

development conference in Toronto earlier this year.

What

we're seeing is a good uptake on that, which – we spend up to the $1.7 million,

which might mean, if there are more people interested, lower assistance. It

really does depend on what type of program that you're doing and how much money

we have available to encourage people to invest, obviously, in exploration.

while there may be – on occasion there's an uptake in it. What happens is when

more people come it might mean a little bit less for everybody if we don't have

enough money.

MR. HUTCHINGS:

Okay. Thank you.

Ms.

Michael asked about Voisey's Bay and some of the discussions of a possible

rearranging of

schedule to get us to 2019-2020. You indicated before – I think I

asked questions in the House in regard to the procurement piece and how they may

be rearranging that engineering and procurement of that service. You also

mentioned a development agreement.

Are you

contemplating opening that development agreement to meet the needs or the

requests of the players?

MS. COADY:

Thank you for the question.

No, we

don't anticipate at this point opening the development agreement. What has been

requested, which we are analyzing now, is basically a waiver of a couple of –

actually, there's only one timeline – to allow for some flexibility within the

schedule.

The

outcome is the same, but some flexibility within the

schedule to allow for these

procurement and engineering changes that Voisey's Bay has been making to ensure

their costs are as low as they possibly can. It was one of the things they

identified when they were building their smelter – or I wouldn't call it that –

when they were building their most recent facility.

OFFICIAL:

Processing plant.

MS. COADY:

Thank you.

I'm

trying not to say smelter; processing plant. Thank you.

When

they were building their processing plant is the further along they were with

engineering the better the procurement, the lower the cost and the better

schedule they could have. So they've come to ask for some waivers of some

specific time frames within the project itself but the outcome will be the same.

It will not open the development agreement.

MR. HUTCHINGS:

Okay. So it's just difficult

to understand. Within that window, if you're going to change milestones within

the project management, if they have to wait or there's a delay – I don't know

if the word is delay – or procurement and engineering design is not going to get

done or it's going to be done at a later point, how are you still going to meet

the deadline of 2019-2020? I guess that's the challenge in terms of

understanding, trying to get there.

MS. COADY:

Sure.

We're

still in discussions, obviously; we haven't made any decisions on this. But they

did come and say: We want to make sure we have all the development, all the

procurement and all the engineering done on time.

You may

recall in 2015, I think, there was a waiver that was signed by the previous

administration.

MR. HUTCHINGS:

Yeah.

MS. COADY:

This would be similar to

that.

MR. HUTCHINGS:

Okay.

MS. COADY:

So it would be something

along the lines of instead of starting something the first of March, we'll start

it in, I don't know, I'll use the 1st of July scenario. It doesn't open the

development agreement, it doesn't change the end result, doesn't really change

the process, it just changes some of the dates within that time frame.

MR. HUTCHINGS:

Okay. Thank you.

CHAIR:

Mr. Hutchings, I have to

interject here.

Ms.

Michael, do you have anything else on 2.1.01 to 2.1.03? Nothing?

MS. MICHAEL:

No, I don't, thank you.

CHAIR:

Mr. Hutchings.

MR. HUTCHINGS:

A couple more, yeah.

I want

to reference Ms. Michael again. She asked about Wabush Mines. It's great there

are some interested parties. I think there were four proposals you indicated.

That's certainly good news.

The

issue in regard to Cliffs and the pension issue Ms. Michael spoke of as well, my

understanding is there's a federal piece of legislation that needed an amendment

to try and go back, if it was ever the case, in trying to provide some

assistance to those pensioners. Could you give me an update in regard to that

lobby?

I know

we had a private Member's motion here in the House from the Member for Lab West.

It was agreed that the lobby would start with the federal government and with

our MPs to see what could be done. Is there any update in regard to that

legislation or challenge to getting it changed?

MS. COADY:

As that is a pension issue,

it doesn't fall within the Department of Natural Resources. It would be best

either answered by the minister responsible or by the Member. Probably they

would have the most up-to-date information.

MR. HUTCHINGS:

Okay.

I guess

further to Ms. Michael in terms of going forward and dealing with the new

operator, it's not something you're considering in regard to the arrangement

with that new operator in terms of pensions and how we look at it going forward.

That wouldn't be something you would be considering now?

MS. COADY:

Our discussion to date with

any of these, with any group that has come forward, obviously, is under the

regulations and requirements of the

Mining Act . Requirements under anything else would be with regard to another

requirement. We've been providing information and requirements under the

Mining Act .

MR. HUTCHINGS:

Okay. Thank you.

Just a

general question in terms of our mineral resources; obviously she said it's up

and down based on the commodity price. At downtime there's an awful lot of

activity in regard to availing of incentive programs to drive it.

there any overview of our mineral or mining sector underway? Do you envision

doing anything like that or are you set in regard to, I guess, a mineral

development plan for the province as we move forward. Do you see any changes, I

guess, in terms of what's happening now or looking at a review or anything like

that?

MS. COADY:

We have had very good

discussions with mining Newfoundland and Labrador and continuing to look at how

we continue to encourage, market and promote mining in Newfoundland and

Labrador. We are very globally competitive. We rank I think it is number seven,

in terms of competitiveness globally, which is pretty substantive.

continue to work with mining Newfoundland and Labrador, with our prospectors. We

meet with them on a regular basis to see if there's anything that needs to be

done to encourage. We've been working internal to our department to increase,

I'm going to say, or to reinvigorate our promotions, to reinvigorate the types

of presentations that we're doing so that we can maximize our opportunity here.

I think

we have a tremendous opportunity in mining and you can see that through some of

the interest. We've had an expansion of IOC, Voisey's Bay going underground.

I've told you about the amount of staking that's happened in Central

Newfoundland and Labrador. I have met with a tremendous number of people moving

towards a mine and that's very, very positive.

Just to

answer your question, I think we will always continuously review and adapt as

the requirements continue, but working with mining NL, with a prospectors group

of continuing to ensure that we are leading in this area.

MR. HUTCHINGS:

Okay. Thanks very much.

Okay, I

think I'm good for that section.

CHAIR:

Okay.

I'll

ask the Clerk to recall the subheads, please.

CLERK:

2.1.01 to 2.1.03 inclusive.

CHAIR:

2.1.01 to 2.1.03 inclusive.

Shall

the subheads carry?

All

those in favour?

SOME HON. MEMBERS:

Aye.

CHAIR:

Those against.

Carried.

motion, subheads 2.1.01 through 2.1.03 carried.

CHAIR:

Before we get into our final

set of subheads, the Chair is going to call for a break. We'll just break for 10

minutes and return back again at 10:35 a.m. or so.

Recess

CHAIR:

Welcome back.

I'll

ask the Clerk to call the final set of subheads, please.

CLERK:

3.1.01 to 3.1.05 inclusive.

CHAIR:

3.1.01 to 3.1.05 inclusive.

Mr.

Hutchings, you still have five minutes on the clock.

MR. HUTCHINGS:

Okay. Thank you.

I just

want to go back, if I could, and ask a general question. I missed it before in

regard to maybe an update, Minister, on the St. Lawrence mine; reactivation of

that mine, some of the monies that have been invested and just the status on

where it is.

MS. COADY:

Thank you very much for the

question.

We're

indeed pleased to have Canada Fluorspar reopening. Work has already begun.

I will

turn to Assistant Deputy Minister Perry Canning to give you more in-depth

details. Perry, if you would.

MR. CANNING:

Before that, just a point of

clarification for a question that was raised earlier by the hon. Member. The

answer to the question about the external clients and such, that's the Mineral

Rights Adjudication Board, just to clarify that to put it into the record.

MR. HUTCHINGS:

Thank you.

MR. CANNING:

With respect to St.

Lawrence, construction is ongoing. It is on schedule. They are fully permitted

up from our end and we expect completion sometime this fall. So on

schedule as

these projects go.

MR. HUTCHINGS:

I know the funding, the $17

million that was originally agreed to a number of years back – actually, I was

part of the administration but it was all part of when the business model worked

or where the commodity needed to be to make the business plan work. Has that all

been expended or do you have any idea in regard to that? Or should I ask the

other department in regard to funding to the project?

MS. COADY:

Thank you for the question.

The

funding comes from TCII.

MR. HUTCHINGS:

Yeah.

MS. COADY:

Perhaps the question would

be better directed to TCII.

MR. HUTCHINGS:

Okay.

MS. COADY:

Thank you.

MR. HUTCHINGS:

I'm just wondering as well,

if you're aware, the original approval looked at the wharf docking

infrastructure. That was the original plan. My understanding is that was

reconfigured and there are other items now on priority in regard to that

infrastructure and expenditure. You mentioned, I think, just then that you

expect the work to be completed in the fall.

Could

you just give me an idea of what work is actually being supported by the

government? In the fall, what is it we're going to have in regard to is it an

active mine? What exactly are we going to have?

MS. COADY:

Thank you.

Anything to do with the funding by the provincial government obviously comes

from another department, TCII. I would suggest if you would direct those

questions to that department, it would be more fulsome in being able to get

those details.

The

mine should be available – I'll just turn to Assistant Deputy Minister and ask

the timelines on when activation will happen.

MR. CANNING:

We understand this fall.

MR. HUTCHINGS:

Okay. So forgive me, but

when you say activation, just describe what that means. They'll be …

MR. CANNING:

We understand the

construction completion will occur this fall.

MR. HUTCHINGS:

Okay.

MR. CANNING:

The ramp-up on the

production is something that I would have to look into.

MR. HUTCHINGS:

Okay, but they'll be in the

production mode.

Okay.

Thank you.

MS. COADY:

Thanks Perry.

MR. HUTCHINGS:

Do you want me to go on?

I'll keep going?

CHAIR:

Sure.

MR. HUTCHINGS:

Okay. Where are we, 3.1.01?

MS. COADY:

Thank you.

CHAIR:

Yes.

MR. HUTCHINGS:

Energy Resources and

Industrial Benefits Management. I just have a general question first, Minister,

if I could, in regard to the Energy Plan that was brought in, in 2007. From your

perspective, are we in a mode of reviewing that or updating the plan? Maybe give

me some information on that.

MS. COADY:

Well, thank you for the

question.

Obviously, energy policy is critical to the province and a good opportunity – a

tremendous opportunity for the province. The Energy Plan that was brought in by

the previous administration, as you know, we've been working through most of

those components.

We are

undertaking a review. We have a new deputy minister who has great experience in

this area and we are looking at how we move forward.

MR. HUTCHINGS:

Minister, is there a

timeline to complete that or is it just an ongoing process?

MS. COADY:

It's an ongoing process at

this point, but we'll certainly advise when we have more details as to how we

are going to proceed.

MR. HUTCHINGS:

Okay. Thank you.

MS. COADY:

If I may.

MR. HUTCHINGS:

Yes.

MS. COADY:

At this point in time you

can appreciate that the division is really consumed with ensuring

interconnection and ensuring NERC and FERC rules; that we're compliant with them

and really focused on – I'm going to call it – the transformation of the energy

sector.

That's

what's consuming a lot of the policy work of the department at this point in

time. As we move through that we'll be able to turn our attention to other

things.

MR. HUTCHINGS:

Okay. Thank you.

I guess

related to that is the new generic Royalty Regime that was identified or

announced in November of 2015. My understanding is it hasn't been adopted by the

current administration. At the time, the current premier sort of indicated he

was somewhat in agreement with the outline of it.

I know

I've asked before and you indicated by March 30 we would have announced a new

Royalty Regime framework. To date, I don't think that's been done. Can you give

us an update on where that is?

MS. COADY:

Certainly. Thank you for the

question; it's a very important point.

As you

can appreciate over the last several years – certainly since 2015 and during

2015, even back into 2014 – changes were occurring in the oil and gas industry.

They continue to occur because of the down cycle in the oil and gas industry.

Because of the lower commodity prices we've basically seen a tremendous upheaval

in the oil and gas industry.

We have

undertaken a good review of the generic Oil Royalty Regime. We want to continue

to ensure that we are globally competitive. As such, we have now an Oil and Gas

Industry council that is looking at ensuring that – one of one of our goals is

to ensure that Newfoundland and Labrador is a preferred location for offshore

oil and gas development. We are also doing a tremendous piece of work around

what I'm going to call the ball of value, so not just the Royalty Regime, but

also benefits and other components of the full ball of value. That work is

ongoing.

Because

we want to ensure that we are globally competitive, because we want to be the

preferred location, we are working very closely on those particular pieces to

make sure that we are aggressively pursuing opportunity in our offshore. I'm

sure Members opposite would agree that we want to make sure we do everything we

can to be that preferred location.

The

generic Oil Royalty Regime is one piece of that. While a lot of work has been

done on the requirements of that, we are going to continue to do those other

couple of pieces with the Oil and Gas council making sure that we are globally

competitive and making sure that we look at, not just one

section of the ball of

value, but all sections. That work is continuing.

MR. HUTCHINGS:

Okay. Thank you.

There's

talk in regard to the White Rose Extension with Husky and hopefully moving that

project forward. Your work on the Royalty Regime, is that tied to that benefit

agreement discussion? What's your view of that?

MS. COADY:

No. You will recall in the

previous administration that there was an agreement with Husky with regard to

their royalty. We're not in any discussions at this point in time on the Royalty

Regime because, of course, that was solved back in 2014.

Husky

is working with their partner, which is Suncor, in consideration of how they can

best move forward with the wellhead platform. We're hopeful for the announcement

of a wellhead platform. We know that work is between those two partners at this

point in time.

MR. HUTCHINGS:

Can I just ask one more

question, just to finish this up?

CHAIR:

Sure.

MR. HUTCHINGS:

Okay, I just have one more

question. The original royalty agreement for White Rose and the partners, that

would have been established some time ago when they started their project.

This

one here now, would you foresee, based on the Royalty Regime that was introduced

in November 2015, we wouldn't be in a position where we'd copy or change what

was done 2015 to match what they originally had? Wouldn't we look at a

progressive Royalty Regime in terms of moving forward?

MS. COADY:

The former administration

had reached an agreement with Husky on the –

MR. HUTCHINGS:

Extension?

MS. COADY:

– wellhead platform. I'm looking at my assistant deputy minister to ensure that

is correct. The royalty was already established before I became minister, in

terms of that wellhead project.

CHAIR:

Thank you, Mr. Hutchings.

MR. HUTCHINGS:

Thank you.

CHAIR:

Ms. Michael, 3.1.01 to

3.1.05 inclusive.

MS. MICHAEL:

Thank you very much, Mr.

Chair.

3.1.01,

the first one is straightforward again, Minister. Knowing that you gave us the

overall picture of Salaries, could we have the specifics under Energy Policy

with regard to positions?

MS. COADY:

Certainly.

The

variance in 2016-'17 was due to vacancies within the division. The 2017-2018,

you're seeing the – there are some changes in management structure. We merged

two directors.

Pardon

me. I have a tickle in my throat.

There's

been an adjustment, basically an increase, related to the filling of vacant

positions. So we have a couple of new – I think it's an increase due to filling

Director of?

MS. COADY:

Electricity and Alternative

Energy.

MS. MICHAEL:

I like that title. Thank

you.

MS. COADY:

We did too.

MS. MICHAEL:

Thank you very much.

Under

Professional Services, the revision from last year's budget was $165,000 less.

The allotment for this year is also less than last year's budget, but only

$66,800. Could we have an idea of what the professional services are in this

area? Why the drop last year and again the drop this year?

MS. COADY:

Certainly.

The

drop in the revised 2016-2017 was due to the Muskrat Falls Project. If you

remember, in June of last year the newly revised

schedule was made available.

Because that work wasn't required, because of the delay in the Muskrat Falls

Project, it was delayed until '17-'18. That was on the work on interconnection

because, of course, the

schedule has changed on Muskrat Falls. That's why the

difference in '16-'17.

The

$181,200 under Professional Services, I'm going to give you some indication.

There is an electricity system regulation review and regulatory requirements for

reliability. Open access regimes have some legal ramifications and there's a

review that will enable legal and regulatory changes to connect to the grid.

That's around $90,000 of that money.

There's

the – I'm going to call it NERC – North American Electric Reliability

Corporation; we have to strengthen our reliability regime. We're dealing with

other provinces which are involved in NERC as well. We are doing work with the

Federal Energy Regulatory Commission, that's FERC, which will help us to sell to

states if it meets the FERC requirements and to get FERC clearances.

So all

that is taking up a tremendous amount of professional services; there's some

work under regulatory affairs, a development of a framework regulation under

some of consultations that have taken place with regard to regulations in the

offshore oil and gas industry. There's some work on energy policy with regard to

transmission to North America interconnections. So all that work – and that's

what I referred to earlier. There's an awful lot of work in preparation for

NERC, for FERC, for that interconnection.

MS. MICHAEL:

Minister, with regard to

Muskrat Falls and the delay, I guess I don't have enough knowledge to know how

exactly this department of government would be related to something like that

with regard to the actual work of Muskrat Falls and what the professional

services would be that didn't get used because of that.

MS. COADY:

Certainly.

The

department would be consumed with ensuring that we have the right policies

around the interconnectedness. So as you can appreciate, there's a lot of work

with the North American Electric Reliability Corporation, as well as with the

Federal Energy Regulatory Commission in the United States to ensure compliance,

to ensure we have the right regulatory framework so that we can obviously

transport the electricity as required. Because of the delay of course, that

means we had some extra time to be able to do that work; therefore, we've placed

more money in this year than we would have used last year.

I don't

know, Corey, if there's anything you would like to add as being responsible for

the electricity system, if you'd like to add anything there to that, for that.

MR. SNOOK:

I think, Minister, that covers it. It's about the fact that we're not connecting

as soon as we thought we would, so the work wasn't required at this time. It

wasn't in a position where we were ready to do that work.

MS. MICHAEL:

I get that. Now I guess I'd

like to know, what would be the relationship then between the department and

Nalcor with regard to these issues?

would seem to me – I can understand the government being involved on a

regulatory level but then wouldn't some of that work also be Nalcor work? How do

you work together in these cases?

MS. COADY:

We work very hand over hand

with regard to ensuring an effective electricity system, but I'm going to turn

to the subject matter expert to say what exactly is happening. I think that's

more your question, what exactly is happening?

MS. MICHAEL:

Yes.

MS. COADY:

It all has to do with

preparing the regulatory environment and the policy environment to ensure that

Muskrat Falls is in directive and interconnected.

Corey,

is there anything you'd like to add here?

MR. SNOOK:

Certainly.

For

example, the minister mentioned open access requirements. The US Federal Energy

Regulatory Commission requires jurisdictions that move power to have certain

rules in place to make sure that you don't discriminate. So if you own a

generating plant and you own the transmission, you can't give preferential

treatment to your generating companies. You have to have rules around that.

Nalcor

in this instance, for example, would make a recommendation or make a suggestion

or highlight that this is an issue and it would be then our responsibility as

government to ensure that the legislation is in place to meet those conditions

or to have regulations in place that will enable that structure, whether that's

a direction to the PUB, for example, it could also be in there.

MS. MICHAEL:

Thank you, that's helpful.

Thank you very much.

That

was the Professional Services.

Under

the Grants and Subsidies, I notice it wasn't totally used last year and in this

year's budget it's going up by $300,000 over last year's budget estimate. Could

we have an idea of – is somebody new being added? Could we get this list of

people who've been getting grants and subsidies and maybe just a little

refresher of who exactly gets these grants and subsidies?

MS. COADY:

Certainly.

The dip

last year in the revised 2016-2017, it was lower than anticipated costs

associated with the NSP diesel subsidy which was $2.05 million versus $2.3

million, a $250,000 savings. That diesel subsidy is basically for Labrador

isolated residential customers.

MS. MICHAEL:

Right, yes.

MS. COADY:

It brings rates in line with

the Labrador interconnected rates.

MS. MICHAEL:

Yes.

MS. COADY:

When you look at the Grants

and Subsidies, I'll break it down for you. The diesel subsidy for 2017-2018 is

$2.3 million, and this will be given to you in your notes as well. The other

additional one, which I will point out, is an increased funding for the CF(L)Co

trust agreement for 2017-2018. You may be aware, or you will recall that the

Supreme Court of Canada has agreed to now hear the case –

MS. MICHAEL:

Yes.

MS. COADY:

– and there is $600,000

allocated there for that. That goes in trust to CF(L)Co for that case.

MS. MICHAEL:

Okay.

Thank

you very much.

MS. COADY:

That's what comprises the

$2.9 million.

MS. MICHAEL:

Right, thank you very much.

I only

have a couple of seconds left, so I'll pass over to Mr. Hutchings.

CHAIR:

Thank you, Ms. Michael.

Mr.

Hutchings.

MR. HUTCHINGS:

Thank you.

I just

want to go back and make sure I understand. Professional Services, Minister,

there was – Ms. Michael, I think some of that you talked about the significant

reduction. I guess it was due to the protest in regard to Muskrat Falls; some of

the work was delayed? Was that related to that or something different?

MS. COADY:

If you recall, back in June

of 2016, Nalcor gave an update on cost and schedule.

MR. HUTCHINGS:

Okay.

MS. COADY:

This was just following the

appointment of the new CEO. There was a significant increase in cost noted and a

significant increase in

schedule noted. Because the

schedule is now different

from Muskrat Falls and the transition to the North American connectivity, the

interconnection work has been changed because of those timelines. It's been

pushed to 2017-2018. That's why the change occurred. So it wasn't due to what

happened in the fall, it was really due to what was noted in the change in the

schedule and the cost of Muskrat Falls.

This

year you'll see the Professional Services, and I can just run down again through

that, it was Energy Policy. So a paper on the transmission and North American

interconnection, there's work there with the North American electricity

reliability. There's work there with the Federal Energy Regulatory Commission as

well. So all those things combined is what makes up the regulatory affairs

requirements and policy requirements around the interconnection.

MR. HUTCHINGS:

Okay, thank you.

mentioned the delay with the protest last year. Has it been quantified what that

actual delay has cost the project to date?

MS. COADY:

No, you're referring to what

happened in November of 2016.

MR. HUTCHINGS:

Yes.

MS. COADY:

The CEO of Nalcor, Stan

Marshall, has indicated that he will be having an update this spring, likely in

June, where he will give any changes to the

schedule or to costs.

MR. HUTCHINGS:

Okay.

MS. COADY:

And he will, at that point,

be able to quantify. But I understand it wasn't as significant an impact as was

originally thought.

MR. HUTCHINGS:

Okay. Thank you.

The

Grants and Subsidies, that's related to the offset of – it's a subsidy, right,

for the Labrador coast, those other areas?

MS. COADY:

Right, because they use

diesel.

MR. HUTCHINGS:

Right. And then the others,

know, we have a tremendous number of communities that are currently reliant on

diesel. As part of my mandate, how can we move forward in getting these

communities off diesel for all kinds of reasons, environmentally, cost wise and

others?

We've

been working diligently with the Canadian Energy Strategy. We co-chair a group

that's looking at diesel communities. We also are working with Hydro to look at

doing an expression of interest to see how we can have people bring forward

ideas on how we eliminate or reduce the use of diesel in these communities.

I think

it's something that we all have a responsibility to try and reduce the amount of

diesel that we're burning in these communities, give reliable service and look

at alternate energies. We're going to continue to do that work. I think it's an

important time to be able to take advantage of some of the new technologies.

MR. HUTCHINGS:

Okay. Thank you.

Just a

question on the revision of the Agreement on Internal Trade which has been

talked about the past number of months, the past year, and the updated agreement

and reference that was made, I know, by the Premier in regard to the

opportunities for the wheeling of power interprovincially. No one has – I'm not

sure what the correct word is – really discriminated against based on what

they're doing in their own province.

It's

called the Canadian Free Trade Agreement now, I think.

MS. COADY:

It is.

MR. HUTCHINGS:

Is it your understanding

there's still an ability for a province to basically opt out of a provision as

it did in the previous Agreement on Internal Trade?

MS. COADY:

The Canadian Free Trade

Agreement includes a regulatory framework governing electricity transmission. It

was something that was very important to this province, both this administration

and the former administration. It provides rules and builds on the principles of

open access and non-discrimination outlined in the Canadian Energy Strategy.

Those rules are there in the Canadian Free Trade Agreement.

addition to the development of these rules, we have agreed, at the request of

provinces and territories and the federal government, to engage with the

province of Quebec to discuss electricity transmission. The rules are there in

the Canadian Free Trade Agreement, but there is a bilateral discussion that will

be occurring with Newfoundland and Labrador and Quebec on electricity

transmission and on energy.

So at

the current status the Canadian Free Trade Agreement does have the rules. They

will be enacted in two years, but there will be an exemption agreement, as

you've just pointed out. What we're hopeful for and I think what provinces are

hopeful for is that we can come to some agreement with Quebec on energy

transmission and on energy as it is so that when we start those discussions with

Quebec, we'll have that desire and goal in mind.

MR. HUTCHINGS:

Yeah, it's certainly

encouraging that within the agreement itself there's reference to engaging in

those discussions and identifies the party.

I guess

the concern historically has always been that there's a definitive decision,

made by whoever, that you get to wheel power east to west and that's always been

the challenge. If you look at the Constitution in

section 92A(1), I think, in

regard to the non-discriminatory provision, there's always been reference to

that there, but whatever political party in Ottawa has never had what was needed

to work collectively as a nation to get an east to west electricity grid.

I'm

hopeful, but yet again, this document doesn't confirm or doesn't ensure that

it's going to happen. If you're having discussions, that's great. I certainly

hope they're fruitful.

MS. COADY:

Thank you.

agree. We're all hopeful that we'll be able to have a very constructive and

positive dialogue on the requirement of an east-west energy grid. It's certainly

something that I've been supportive of for quite some time.

I think

the rules under FERC and NERC also are supportive of those. Having a serious

dialogue with Quebec on electricity and electricity transmission is very, very

important. I think that's why our colleagues across the country encourage that

bilateral discussion which we will be starting in the near future.

MR. HUTCHINGS:

Thank you, Minister.

Are we

on to 3.1.02? We are, right?

CHAIR:

Yeah.

MR. HUTCHINGS:

Yes, okay.

MS. COADY:

3.1.02 now?

MR. HUTCHINGS:

Just in the first heading,

3.1.02, Salaries. Minister, there's a reduction in what was budgeted and the

revision. I assume that's related to a position within the department?

MS. COADY:

In the revised 2016-2017

there were vacancies in the division during the year. That was why the revised

was lower than the Estimate. You will see a slight uptick in the 2017-2018

Estimates.

MR. HUTCHINGS:

Yeah.

MS. COADY:

That's an increase related

to a particular position that was transferred from Royalties and Benefits into

Petroleum Development. It was just a transfer. The money is a follow-through on

that. There are also some JES adjustments in that area as well. That's why it's

increased from last year.

MR. HUTCHINGS:

Okay. So that position came

from –

MS. COADY:

Within the department.

MR. HUTCHINGS:

– petroleum benefits, I

This particular division,

Petroleum Development, is more around the development of –

MR. HUTCHINGS:

Sure.

MS. COADY:

– opportunity rather than

the royalties.

MR. HUTCHINGS:

Okay.

MS. COADY:

But we can go back and forth

as you see fit.

CHAIR:

Ms. Michael, further

questions on 3.1.01 to 3.1.05 inclusive?

MS. MICHAEL:

Thank you very much, Mr.

Chair.

Yes,

before I move on to 3.1.02, I'd like to pursue a little bit more with you,

Minister, what you were talking about with regard to the concerns around diesel

usage. Particularly, in coastal Labrador, I think is the main area.

Obviously, I think the Ramea wind project – one of the hopes of that project is

to be able to come up with a solution with regard to diesel. I guess I have two

or three different points I'd like you to speak to; one would be just to bring

us up-to-date on what is happening. Is Ramea taking longer in terms of ironing

out the wrinkles? We all know this is experimental; it is research, actually,

that's going on.

The

other: Is any work being done to look at if it turns out that the Ramea project

shows us it really is successful and it could be a viable way of not using

diesel, is there work started at all in looking at what the potential for wind

energy is on the Labrador coast, any work being done at all with anticipation of

that possibility?

Then I

guess the third point is why I liked the name of the new director was energy and

electricity and alternate. Would that director be involved in this piece of

work?

MS. COADY:

Excellent questions, and

thank you for them.

The

whole area of use of diesel in remote communities has been a subject of national

interest. It's not just Newfoundland and Labrador who has a lot of communities.

It's a subject of national interest, and Newfoundland and Labrador has

co-chaired a committee under the Canadian Energy Strategy to look at how we can

move from diesel generation to other alternate forms. That work is continuing.

We are working at, across the country, looking at how we can improve alternate

forms of energy. How do we improve energy opportunity for these communities

while lowering costs and lowering ecological and environment impact?

The

Ramea project was one such hope. For those who are not familiar with the Ramea

project, it was really taking wind, converting it to hydro and then energizing

the community. It has not been, I don't think – and I'll say this from my

perspective. It hasn't been as easy a transition or a project as one would have

hoped it would be. Mostly around – Nalcor has some proprietary work around the

transmission or transduction, I don't know the exact word, of energy from the

wind to hydro, but that's been a challenge in and of itself.

I'm

going to turn to the director who would know the inner most details, but that

project has struggled I think in terms of opportunity, in terms of making sure

that the backup and the energy requirements are there. That's the Ramea project,

and I'll ask Corey to further on that.

The

Canadian Energy Strategy does talk a lot about wind energy. It does speak about

the opportunity around solar, hydrogen, title power. So there are a lot of

different, other opportunities. There have been wind studies in Labrador. Hydro

has undertaken multiple studies of alternate energy opportunities, and as we

move forward with doing an expression of interest we will make that information

available to those that are expressing interest in utilizing some of those other

opportunities, be it wind or solar or other.

There

are new and emerging opportunities of how alternate energy may be used in this

province. I think it's an exciting time, in that we do have a tremendous wind

opportunity in the province. It's about how we get that wind to market, whether

it would be an international market or a North American market, that's being

worked through.

The

person responsible for alternative energies – perhaps, Corey, you can give more

information on that. So if you could give us maybe your update on Ramea, as well

as the position looking at alternate energy.

MR. SNOOK:

Thank you, Minister.

Ramea;

the minister referred to the technology which is the wind blows, they use the

electricity to power the community when the demand is there. When there's

surplus generation, it powers an electrolyzer it's called. So it takes the wind

energy and creates hydrogen, that stores in a tank for such a time as the demand

is there for it.

When

the project was first created, they had a hydrogen generator from Natural

they haven't had the results from that unit that they had hoped. That was in the

first phase, they called it.

In the

second phase, they were going to look at other technologies and more fuel cell

technology, which is more leading edge. When the project was first initiated

they had a free unit from NRCan, so they wanted to try to make that work. Now

they're looking at fuel cell technology. They've done some work and that's

ongoing to figure out if and when they can get fuel cell technology into that

system.

MS. MICHAEL:

I'm sorry; I'm not getting

what kind of technology you're saying.

MR. SNOOK:

Fuel cell technology. It takes hydrogen and allows you to turn it into

electricity.

MS. MICHAEL:

Right, but that's always

been there.

MR. SNOOK:

No, it wasn't fuel cell. It wasn't converting hydrogen using fuel cell. It was

converting hydrogen using a combustion generator.

MS. MICHAEL:

Okay.

MR. SNOOK:

So that's sort of a little more old school, basic technology. I shouldn't say

basic, but not akin to what companies like Ballard Power and other companies

around the world are doing with fuel cell technology.

MS. MICHAEL:

Okay.

MR. SNOOK:

They're trying to assess whether or not they can integrate that in a way that's

economic.

I think

with the wind systems in general, and the minister mentioned the Coast of

Labrador and the data that's been collected to convert these communities. Diesel

continues to be very important to isolated systems around Labrador and the Coast

of Newfoundland, but around the world because they're proven. The technology is

understood. You have local repairs. People understand diesel mechanics.

So in

the middle of a winter in a cold northern environment, people want reliable

power, number 1.That's the foremost for safety and comfort.

MS. MICHAEL:

Yes.

MR. SNOOK:

So trying to find that balance between, number one, reliability reigns; and,

number two, cost. You can take these systems out, but at what cost. We're trying

to make sure people can afford the power they have. It's great if you have all

wind and batteries, but it needs to be reliable and it needs to be somewhat

affordable. So we're trying to find that balance, is what the minister referred

to, expressions of interest seeking what's out there to look at options to

reduce diesel. Not necessarily eliminate it, possibly eliminate it, but we have

to balance reliability with cost.

MS. MICHAEL:

Right.

Thank

you.

MR. MCINTOSH:

(Inaudible) the point I was going to make is that I, fortunately, have some

experience in hydrogen fuel cell technology and its application and the use of

electrolyzers around the world, and if anyone wants more information on that, I

think there is something in terms of education that needs to be done on that

front. Tremendous strides have been taken going forward, especially Canadians –

Ballard, Hydrogenics, but also in the Far East in South Korea and the Japanese

with major steps forward.

MS. MICHAEL:

If I could just ask one more

question, again related to what you've said about on a national level everything

is being looked at. I hadn't planned on this question, but brought on by that.

There

was a lot of noise when the tidal energy system in the Bay of Fundy was brought

online. What's happening with regard to monitoring that and how successful it is

or is not? I haven't heard a word about it since that day, I don't think.

MS. COADY:

It's certainly something

that we're watching with great interest. I'm going to ask my deputy minister,

who's actually been meeting on this, because tidal energy is evolving rather

rapidly and the systems around tidal energy are changing completely. What used

to be almost like a turbine from an airplane is now down to a small apparatus.

I know

the deputy minister has done some work in this area even recently. So we are

carefully monitoring and carefully keeping an eye on that opportunity, because

it's not just – I mean, we have a great wind opportunity, but we also have a

great tidal opportunity.

MS. MICHAEL:

That's right. Yes.

MS. COADY:

Maybe, Deputy Minister, you

can just say a few words about that.

MR. MCINTOSH:

Thank you, Minister.

Yes,

certainly. Two weeks ago I spoke at a conference in Halifax. I was able to

monitor what's happening in terms of force and the progress in the Bay of Fundy.

That's going forward, really, tremendously well.

addition, I've been closely involved with EMEC in the Orkney Islands of

Scotland, which is the European Marine Energy Centre for tidal energy and wave

energy. We have one project at the moment we are looking at here in Newfoundland

that's quite exciting in terms of tidal energy. We're hopeful of taking those

projects forward.

The

specific project is looking at what can be learned from the technology. There

are at least 35 to 40 different tidal energy apparatus machines that have been

tested around the world. We're beginning to get to the point where there are

commercial applications in relation to tidal energy which is very, very

positive.

MS. MICHAEL:

Great. Thank you very much.

MS. COADY:

As you're hearing today,

there's a lot of work being done on these alternate technologies and alternate

energy opportunities for the province. I think it's an exciting opportunity.

We are

looking at, as I said, the expression of interest off the coast of Labrador for

any of our isolated diesel communities. We are pursuing opportunities in solar –

not solar, sorry – in wind and in tidal, and even considering some solar

opportunities, but we don't have as much sun as we would hope in this province.

MS. MICHAEL:

piqued my interest listening to Ms. Michael in regard to – there was a project

in Lourdes on the South Coast. It was tidal action. We supported it through the

former Department of IBRD. Is the department involved with that at all? I'm just

wondering what any results out of that were?

MS. COADY:

I'm not –

MR. HUTCHINGS:

Not aware? Okay.

MS. COADY:

I had not heard about it.

I'm looking at the director and I see him shaking his head.

MR. SNOOK:

MR. HUTCHINGS:

Okay.

MS. COADY:

I had been speaking to them.

Of course, we're always open to discussions with the refinery. As you know, they

need to be continuously looking at their competitiveness, but nothing new to

report.

MR. HUTCHINGS:

Okay. Thank you.

well, just to ask, I know in the last sitting of the House there was – I forget

the bill number – a bill related to controlling the carbon footprint, greenhouse

gas emissions. I think there were five operators in the province that were

included in that piece of legislation.

Since

then, the federal government has come out and said they're going to mandate the

provinces to come up with greenhouse gas reductions, percentage-wise, over a

number of years. I'm just wondering, as the Minister of Natural Resources for

the province – and you look at places like Come By Chance, you said about being

competitive – what's your thought on those two models and how we move forward to

look at greenhouse gas emissions, but as well look at the economic viability of

industry in our province?

MS. COADY:

Thank you for the question.

I think it's a very important one.

Competitiveness is essential in our industries. I think that is why the Minister

Responsible for Climate Change worked so diligently to ensure we have a

provincial solution, and working with our federal colleagues to find the right

balance there.

The

Minister Responsible for Climate Change has been very engaged with industry and

continues to be very engaged with industry, ensuring that we recognize unique

circumstances in our province with regard to the offshore oil and gas industry

and with regard to mining and the refinery itself. I know he is completely

involved and aware of ensuring that competitiveness.

MR. HUTCHINGS:

Okay. Thank you.

Minister, I just have a couple of other questions on line items; 3.1.02, in

particular, Purchased Services. There seems to be a significant increase. I

don't know if we've covered that or not. It went up significantly in the revised

and then it's down again this year, down, actually, below what was estimated

last year. I'm wondering if you can give me some explanation on that line there.

MS. COADY:

Certainly.

The

increase, I understand, was because of an annual software maintenance program:

Petrel software. We also had some relocations for three employees during that

time. That's what the increase is. You'll see, I'm going to call it, rightsized

again under 2017-2018 at $264,000. That's basically because of zero-based

budgeting and, again, building it up.

I will

go through with you some of the Purchased Services that are required for that

$264,500. Under Petroleum Engineering, that's software and the software

licences; it's Petroleum Geoscience, so that's core storage that is required.

There's marketing in there as well; for example, floor space and booth rental,

space in exhibit, exhibition management services at OTC and ONS. The

registrations, marketing material and advertising is in that as well.

It's a

large number, but it really does speak to a lot of our marketing requirements as

well as some of our software requirements for the division.

MR. HUTCHINGS:

Okay. Thank you.

MS. COADY:

In doing some of the

rightsizing and moving things around, you'll note that we bumped up

Transportation and Communications. You'll see some, I'm going to call it,

movement of funds from Purchased Services up to Transportation and

Communications.

If you

look at Transportation and Communications, it's up from previous years and the

reason for that is because we are doing so much marketing and promotions. We

have to go to the NAPE Summit; we have to go to APPEX. These have all been

identified by a consultant.

MR. HUTCHINGS:

Yeah.

MS. COADY:

It's a recommended marketing

plan and making sure that we're getting out there and telling the story of the

prospectivity and opportunity of offshore Newfoundland and Labrador.

MR. HUTCHINGS:

Okay. Thank you.

3.1.03:

that's the Canada/Newfoundland and Labrador Offshore Petroleum Board and the

Grants and Subsides. The relationship with C-NLOPB, it's all good? Any changes

or …?

MS. COADY:

Actually, it's very good. We

do meet regularly with the C-NLOPB. We have an ongoing dialogue to ensure that

industry. They are responsible for the safety, for the benefits for development

of that industry.

MR. HUTCHINGS:

Are all board appointments

filled at C-NLOPB now?

MS. COADY:

Yeah, that's a very good

point. I was just about to raise it, actually.

We are

in the final stages. There was one vacancy available on the board of C-NLOPB. It

was a provincial vacancy. We've gone through the Independent Appointments

Commission and they've made some recommendations that will soon be coming

forward.

There

is a second vacancy that just recently opened up on the untimely and unfortunate

passing of one of the board members. That will be moving forward through the

same IAC process. But because they've been recruiting for some time, they'll

have a pool of people to choose from, I'm sure, and we'll get to that

expeditiously.

MR. HUTCHINGS:

Okay. Thank you.

Minister, we talked about last year, I think – and I was somewhat familiar with

it – in regard to the seismic vessels that were coming and the change in

Transport Canada regulations. You sort of downloaded them to the provincial

Occupational Health and Safety. We had some challenges with changing of crews

and all of those types of things. Has it worked through that or is that still an

issue?

MS. COADY:

Well, allow me first to tell

you what's happening this summer with regard to seismic.

MR. HUTCHINGS:

Sure.

MS. COADY:

Because I think that's very

exciting. Then, I'll talk a little bit about the OHS regulations. I'll turn it

to our assistant deputy minister for further clarification because that's very,

very important.

There

will be two 3-D seismic vessels – which is very, very good – off our coast this

summer doing 3-D seismic which is more in-depth and in detail and one 2-D

seismic. I'm just turning to assistant deputy minister to make sure I'm correct

in that.

We have

the largest seismic program in the world today in offshore, so it is tremendous

that this continues and especially at the degree and level that we're seeing

now. 3-D seismic is really advancing the knowledge and information.

As you

are aware in the last couple of years, there's been a tremendous investment

through the land tenure; over a billion dollars in 2015 and $776 million in '16

with oil and gas companies coming to the shores of Newfoundland and Labrador to

do exploration. To see that seismic activity, really, continue is phenomenal. It

speaks to our prospectivity, it speaks to the encouragement, I think, of the

industry of ensuring that they have the information that they can make

investment decisions and hopefully move from prospectivity to production in a

very short period of time.

It's

one of the things that we are considering through the oil and gas council. How

do we shorten that time from prospectivity to production? We want to move

forward as quickly and as responsibly as possible to do that.

On the

OSH regulations, I can tell you there was a concern a couple of years ago, a

huge concern, with regard to having – there were some new regulations brought

in. There are now some transitional regulations about to be brought in that meet

the requirements of the regulation, but also are probably meeting the needs of

the operators as well in terms of moving forward rather expeditiously.

For

more details on that, I'm going to turn to the assistant deputy minister

responsible, Wes Foote, to give you probably a more detailed update on the OSH

regulations.

MR. FOOTE:

Thank you, Minister.

Yes, as

indicated, there were amendments made to the Atlantic Accord act that came into

effect in December of 2014. As part of that comprehensive OSH regime which we

had been working on for a number of years – it brought in modern OSH principles:

the right to refuse, et cetera – the regulations that came along with that

regime were older regulations that were promulgated in the federal system.

It was

always planned from the beginning that these older regulations would be replaced

by more modern permanent regulations and there was a five-year time frame given

in order to allow that. But in order for the legislation to come into effect,

you had to have some regulations. Those were what we referred to as the

Transitional Occupational Health and Safety.

There

were two provisions that the province felt would get us through that short

period and that allowed the chief safety officer of the C-NLOPB to either

substitute or exempt requirements.

MR. HUTCHINGS:

Yeah.

MR. FOOTE:

As it turned out, the chief safety officer went more on the substitution route

than the exemption. In order to substitute, there were submissions that needed

to be made, so there was some paperwork that had to happen.

Two

things happened during that period. There were a group of operators – and the

process that the board uses is called a regulatory query. It's a formal process.

The operators who were in this area were familiar with that. The geoscience

contractors, geophysical contractors are not so much familiar with that, so it

caused some concerns.

Also,

as part of the new legislation that came in, there was a requirement to publicly

publish for a 30-day period to get any comments from outside. There never were

any comments but the publishing period was required. All of that to say those

were the concerns in the spring of 2015.

Those

concerns have been alleviated now; everyone understands the process. Basically,

if you use the same asset that you bring in, once you've gone through that

process, you don't have to go through it again, you're good.

As the

minister alluded to, be

Document details

Collection	Newfoundland and Labrador — Committees
Citation	2017-05-08
Type	committee
Volume / chapter	committees standingcommittees resource ga48 2017-05-08rcdepartmentofnaturalresources
Language	en
Format	html
Source	PROVINCIAL
Identifier	a1dc043630b82a2523af3afeb942b23899a0808a

Source file is stored in the law ingest library (html).