April 21, 2005 RESOURCE COMMITTEE

The Committee met at 9:00 a.m. in the House of Assembly.

CHAIR (Harding): Good morning, everyone.

I would like to welcome you all this morning to our final Committee meeting.

In this one we are dealing with the Department of Natural Resources and, as

usual, I will get the introductions out of the way.

I am Harry Harding, Chairman of the Committee and Member for Bonavista North.

MR. REID: Gerry Reid, MHA for Twillingate & Fogo.

MR. PARSONS: Kelvin Parsons, MHA for Burgeo & LaPoile, and critic for

Natural Resources.

MR. JOYCE: Eddie Joyce, MHA for Bay of Islands.

MS FOOTE: Judy Foote, MHA for Grand Bank.

MR. O'BRIEN: Kevin O'Brien, MHA for Gander.

MR. HUNTER: Ray Hunter, MHA for Windsor-Springdale.

MS JOHNSON: Charlene Johnson, MHA for Trinity-Bay de Verde.

CHAIR: I will ask the minister to introduce his officials.

MR. E. BYRNE: I am Ed Byrne, MHA for Kilbride, and Minister of Natural

Resources.

To my immediate right is Allan Masters, CEO for the Newfoundland and Labrador

Forestry Services. To my left is Bruce Saunders, Deputy Minister of Natural

Resources. Behind me is Len Clarke, Director of Financial Services, and Ed

Moriarty from the Communications Branch.

CHAIR: Thank you.

We will begin with the minister giving his opening remarks. He may have up to

fifteen minutes, if he wants.

MR. E. BYRNE: I will be very brief in my opening remarks. My experience

at these sorts of venues is, the biggest benefit, I guess, comes from the

question and answer.

The Department of Natural Resources is a fairly large department encompassing

what used to be two other departments, Forestry and Agriculture, and Mines and

Energy, responsible for forestry maintenance and operations of the forestry in

the Province, from insect control, fire suppression, the Legislation and

Compliance Division, inventory, et cetera, and also the administration of

agriculture and agrifoods in the Province, and the promotion of that industry;

responsible for the ongoing maintenance, I guess, and overview of all of our

industrial projects, whether that be from Voisey's Bay to all of our current

oil projects, oil and gas projects, as well as responsibility for the

electricity sector, Newfoundland and Labrador Hydro, the Bull Arm Site

Corporation, dealing directly with the department.

There are some new initiatives, I think, in the budget this year. Certainly,

I will highlight just a couple. On the forestry enforcement side, we have

invested about $800,000 into the Inland Fisheries Program. I believe I am

correct; I would say there are about twenty to twenty-five new CO 1's that we

are going to have to hire to help assist in the development of that program, in

the patrolling of our rivers.

On the energy side, there was an additional $2 million invested this year:

$1.1 million to maintain and promote the Bull Arm Site Corporation, another

$900,000 that would go towards the energy sector specifically; I think $350,000

for the final development of the Province's energy plan. How that will work

is, we will be releasing a consultation document which will be very

comprehensive. We are working on the final touches of that now, hoping to have

it ready before the House closes - if not, certainly shortly thereafter - but

that is sort of where our target is.

Also, money this year was invested over and above what was in last year's

budget to provide the Government of Newfoundland and Labrador with a block of

funds - I think it is $300,000 - related to the potential negotiations with

Hebron-Ben Nevis. That is there, essentially, in a budget line item. We may use

some of that, we may use all of it. That will be determined in terms of what

sort of technical advice we may need. It is put there, really, to try and put

the Province on an equal footing in the discussions and negotiations with the

industry in terms of industrial benefits, et cetera.

I guess with that sort of opening statement I can open it up, Mr.

Chairperson. I would be happy to answer any questions that you may have. If

there is any information that I do not have, I would certainly be happy to

provide it quickly to any members opposite.

CHAIR: Thank you.

Mr. Reid.

MR. REID: Thank you, Mr. Chairman.

Minister, I am just going to go through the headings very quickly and talk

about the increases and the decreases. I am going to start with heading 1.1.01.,

Minister's Office. Salaries was overspent last year by $92,700. What was -

MR. E. BYRNE: There was a departmental secretary who was on sick leave

and has subsequently retired, so the increase was wholly dedicated to her sick

leave, the hiring of somebody else, and then the severance that came as a result

of that. That was the reason for the increase, no other reason than that.

MR. REID: Under 2.1.01., Administration and Program Planning, under

Forest Management.

MR. E. BYRNE: One second now.

Go ahead.

MR. REID: Salaries have been increased by $186,000. What was that?

MR. E. BYRNE: Allan, do you want to handle that for me?

MR. MASTERS: What happened there, sir, that is the inland fish money for

the extra staff we are going to be hiring this year. It is actually a little

more complicated than what it shows there. That $3 million we had last year, the

reason it was down to $2.8 million was the strike, of course, last year, and the

salary savings associated with that, but then there was a reduction in the

budget and a supplemental increase with inland fish. So, the reason it is up

over last year is because of the extra effort in that area.

MR. REID: By the way, on the strike last year, what was the savings for

the department?

MR. MASTERS: I do not have that right off the top.

MR. E. BYRNE: I can get that for you fairly quickly.

MR. REID: Okay, thanks.

So, you are saying this is for the inland waters patrolling and stuff?

MR. MASTERS: That is correct.

MR. REID: So, the $409,000, Transportation and Communications, the

increase there, is that also attributed to that?

MR. MASTERS: Inland fish and sidearm issue. We had additional resources

of about $1.35 million put in this year's budget, and you will find it

throughout this sector because that is where a lot of it was placed, in the

Administration. That is our headquarters branch.

MR. REID: The $409,000?

MR. MASTERS: Pardon?

MR. REID: All right, you have $186,000 for Salaries there under this

heading for these personnel, I take it, who are going to do the patrolling, is

it?

MR. E. BYRNE: Right.

MR. REID: Then $409,000 is for Transportation and Communications?

MR. MASTERS: That is correct.

MR. REID: I take it that would get them there and patrol the rivers.

MR. MASTERS: Plus, that includes some of the -

MR. REID: Two sixty-one there in Purchased Services, $261,000 in

Purchased Services, the same thing? Does that have to do with the firearms?

MR. E. BYRNE: What subheading are you on, Gerry?

MR. REID: Subhead 2.1.01.

MR. E. BYRNE: Subhead 2.1.01.

MR. REID: Purchased Services.

MR. MASTERS: No, Purchased Services has nothing to do with fish. That is

a $250,000 increase we got in our budget this year for an inventory program.

That is for doing aerial photography for our forest inventory.

MR. E. BYRNE: On a systematic basis - I just want to speak to that for a

moment. The aerial photography is fairly costly in terms of the leasing of the

aircraft that you need, but it is ongoing. Over the last several years there has

not been a significant increase or any increase in that and, as a result, our

ability, the science of the division in terms of the ability to know what the

inventory is, to properly assess it, and to feed that into the process of annual

allowable cuts and the district management plans that are within each forestry

district - that was an increase this year to be able to try to get us back to

where we were, to try to, I guess, from a science point of view, the best way to

put it, so that the information that we have and the science that we have based

upon making decision on our annual allowable cuts on a sustainable basis. So,

that is the importance of that.

My own sense is that over time we are going to need to put more resources

into this heading. In Labrador, for example, we have a fairly significant piece

of work to do on forest inventory, and that is going to cost additional

resources over time but it is something that we are going to need to get to

fairly quickly in my view. If we are going to develop the industry further, then

we are going to need access to the tools to be able to provide us with the

science and the information that we need to properly make the decisions that we

need to make on annual allowable cuts and what really is available from a

sustainable basis.

MR. REID: Under 2.1.02., Operations and Implementation, Salaries there

have decreased. Salaries in Operation and Implementation have decreased by

$357,000.

MR. E. BYRNE: Go ahead, Allan.

MR. MASTERS: That is correct, sir. That is part of our budget cut process

from last year. It is a reduction in the salaries in that account.

MR. REID: How many jobs are affected there? Where are they, and what did

they do?

MR. E. BYRNE: Before you specifically answer, I just want to note that we

have tried to achieve any of those savings and reductions through attrition.

With that comment, I will let Allan get into the details of it.

MR. MASTERS: As the minister says, there are no physical layoffs involved

with this. This was all achieved through attrition. This was identified in

2004-2005 as a reduction we needed to make, and through attrition throughout

that year we managed to get these positions; but, you are right, there was

$357,000 less in that particular area.

MR. REID: How many positions?

MR. MASTERS: That is a tough one. Positions are about $40,000 each, so

you are probably looking at about eight or nine. That is a rough ballpark,

obviously.

MR. REID: Any idea what these people did?

MR. MASTERS: Yes, some of them were conservation officers. Some regional

ecologist position, I know, was one that went. It was really not strategic in

where they went from; it was the people who were retiring, because we were

trying to get it through attrition, so the positions - we do need to do some

strategic realignment within the branch, but in order to achieve the targets

that we had from 2004-2005, we got these through attrition.

MR. REID: You have eight or ten people gone from that division, yet

Transportation and Communications has increased by $170,000.

MR. MASTERS: That is correct. Again, that is tied to the inland fish

program. So, even though we had that much permanent salary gone, we are going to

have extra bodies out there on a seasonal nature this summer to do the fish.

MR. E. BYRNE: We reinvested theirs that we talked about.

MR. REID: Insect Control, Transportation and Communications -

MR. E. BYRNE: What subhead are you at?

MR. REID: 2.2.01, Insect Control, a decrease of $1 million there and

$853,000 for Supplies. You are not doing some spraying this year, is that what

that is about?

MR. E. BYRNE: If I could just make a comment, first of all.

Insect Control, the program has been extremely successful over the past

couple of years. I guess the commentary coming from staff is that we kind of got

it isolated and kept back to where we need to get it back. So the program has

been successful and these are, I guess, our best estimates of what is required

this year, based upon what has happened over the last several years.

Allan, do you want to provide some more detail on that?

MR. MASTERS: What has happened there, sir, is over the last three years

we have seen a continued reduction. Two years ago we spent nearly $7 million in

Insect Control. Last year we are down to three-point-something or other. This

year we are estimating it to be no greater than that. Obviously, it is based on

last fall's forecast, and weather and everything has an impact. The reason you

saw reductions last year from budgeted, because we budgeted as if it was going

to be at about five point four but when we actually went out to do the bugs

there were a lot less of them, which was a good thing. We spent less money.

MR. REID: Last year under Fire Suppression and Communications, 2.2.02. It

appears that you generated $1.25 million of unbudgeted revenue. Where do you get

the revenue?

MR. MASTERS: That was a fire that happened in Port Hope Simpson two years

ago and it was caused by flares from the army exercise up there. So we billed

the federal government for the cost of that suppression effort, and it is just

showing up now.

MR. REID: So, you got the money?

MR. MASTERS: We got the money.

MR. REID: Good. You should bill them for the inland waters, too, by the

way.

MR. E. BYRNE: It is in the works.

MR. REID: Because it is their responsibility, isn't it?

MR. MASTERS: Absolutely.

MR. REID: I just find it ironic that this government lets the federal

government off the hook in something like this and we pick up the tab for it,

but something like an auditorium for Labrador, which is provincial jurisdiction,

we are basically saying we are not going forward unless we get federal money for

it. That is just a comment anyway.

MR. E. BYRNE: No, I appreciate your comment, but I will respond this way.

I do not think we are letting the federal government off the hook at all. We

have continued to pressure them on this program. The cold, hard reality is this.

As a government, do we stand by and watch the activity that has gone on for some

time, in possession of information, that we know that poaching in the Province

is very well-organized? It is not like it used to be - or culturally what I

guess people think it is - that a few fellows from a community are out doing

some poaching. That is not correct.

We have caught people who have been selling antlers on ebay. Our conservation

officers have seized people with M-45s, sort of automatic rifles. Poaching has

become a very well-organized, well-orchestrated activity in the Province. We

could sit by and watch it, have the debate over the federal government having to

participate and it is their responsibility, knowing full-well that if we do not,

the resource is becoming increasingly more at risk. As a result of that, we made

a decision that we were going to move in this direction and continue to pressure

and try to embarrass the federal government into anting up more and matching

ours. So that is a work that is in progress, I guess, I say to the member.

MR. REID: I have not seen too many red faces in the federal government. I

agree that something needs to be done, don't not get me wrong. What I am

saying is government could be setting a dangerous precedent because we could be

letting them off the hook for education in our native communities. In the same

light, if once we start - it is easy for the federal government to walk away

from the table.

We hear about the need for social workers in Aboriginal communities as well

and other ministers in your Cabinet saying this is a federal responsibility, we

are not touching it, but we have done it here. We can do it for wildlife and

things like that, but we cannot do it for Aboriginal children. So what I am

saying is that it is a dangerous precedent. It is a concern to me because I know

that the problem existed before you were in government because we raised it with

the federal government as well but -

MR. E. BYRNE: Oh, no question. Yes, I know you did.

MR. REID: - this is the second year now you put money into that and I do

not see too many embarrassed federal politicians around these days because you

are doing it.

Under 3.1.03. Land Development. It looks there is $300,000 taken from the

budget this year for Professional Services.

MR. E. BYRNE: Under 3.1.03?

MR. REID: Yes.

MR. E. BYRNE: What is your question?

MR. REID: Why was there $300,000 taken from the budget for Professional

Services under that heading?

MR. E. BYRNE: Under that heading, $300,000 taken for Professional

Services?

MR. REID: Yes, Land Development it says.

MR. E. BYRNE: Right. Appropriations provide for the construction of

agricultural roads and for the acquisition of farmland which is then sold as

Crown land leases to farmers under the Agricultural Land Consolidation Program.

Is that the one you are talking about?

MR. REID: 3.1.03. Land Development, and under the heading there of

Professional Services. Is there one there?

MR. E. BYRNE: No, Purchased Services.

MR. REID: Purchased Services, I am sorry.

MR. E. BYRNE: Purchased Services.

MR. REID: Yes, there is a $300,000 reduction.

MR. E. BYRNE: I am just trying to look here. Do you want to answer that?

OFFICIAL: The major difference is that there is an additional $1.8

million if you turn to the next part of it, which is Property, Furnishings and

Equipment, which was put forward for land, acquisition land consolidation. So it

more appropriately shows up in the proper heading this year. It is not

necessarily a decrease from $500,000 to $200,000. The money was being used for

the same thing but more appropriately shows up as the $1.8 million in the next

line.

MR. E. BYRNE: Speaking on that program for a second, because it was

announced in the Budget as a five-year program.

The Land Consolidation Program was essentially designed for the Northeast

Avalon, originally. This year we turned it into a provincial-wide five-year

program being driven primarily by the need for an additional 20,000 to 25,000

acres of ground to be able to make available to the industry, Province wide, to

take advantage of, primarily the industrial milk quota and the expansion that is

happening in other areas of the agrifoods sector, such as fur, potential for an

increase as well in vegetable production - which we can talk about after or

whenever you want to.

The program, essentially, is $3.5 million over five years. It is a $17

million program; $2 million a year dedicated exclusively to the acquisition of

land. That would be land which would be held by private owners or private

interest. The other $1.5 million is related directly to - or $1 million of that

would be related directly to land clearing because there is a significant amount

of land that we are going to access which is going to need to be cleared and

appropriately leveled, I guess, for agricultural purposes. It is a two-part

program, but it is multi-year, five years. It has been welcomed by the industry

because, one: it is province-wide; two, unless we utilize the industrial milk

quota we lose it. So unless we use it, we are going to lose it. The industry

will not be in a position to use it unless the land is made available to them.

So, it was a fundamental building block that was required. That is sort of the,

I guess, policy that was taken and decisions taken around land stewardship.

There is a plan that has been in place for some time. I know that former

Minister Beaton Tulk, who in his capacity as the Minister Responsible for ITRD,

had presented a plan. That plan has been modified and upgraded to reflect the

passage of time in terms of where the land would be available and suitable, and

where would we get the best bang for our dollar. That is what that program is

about. How is it administered? There is an independent committee in place that

is comprised of industry representatives, officials from within government and

an independent chairperson. The division of agrifoods enters into negotiation -

we spent, I think this year, $300,000 on land consolidation. So the division

enters into, along with the Department of Transportation and Works, who is the

government's relator, they enter into a negotiation on a particular acreage of

land, for example. Then once a conclusion is reached or an agreement is reached,

then that is all vetted through the Department of Transportation and Works

through their staff and they do the realty transaction.

It is an independent committee that has been in place for some time. We have

expanded it to include an industry representative which was not there before.

That industry representative, basically on behalf of the Newfoundland and

Labrador Federation of Agriculture, plays a direct role in deciding: Okay, what

is the next block of land that we require? What is the next best piece to go

after from an industry point of view? So, it is all done arm's-length and

independent to ensure that: one, we get the land we require. Two, that we get

the most land we can for the value of the money that we have invested, and

three, with industry directly involved in their decision making process, that

the industry is really in the driver's seat in many ways of picking the areas

where they know they need the land base. So, that is how that works.

MR. REID: Thank you.

Speaking of land, on the Salmonier Line where the old penitentiary used to

be, there was a fair amount of farming gone on over the years up there.

MR. E. BYRNE: Forty, fifty years.

MR. REID: Yes. Whose department does that fall under, Justice?

MR. E. BYRNE: I think it is two departments: one, Transportation and

Works. Originally, administration fell under Justice when it was a facility -

penitentiary, for lack of a better term. Right now, where that activity is not

occurring there, all the buildings and the administration of the buildings are

under works, services and transportation, as they are for every government

building. We are about to complete a study on what ground would be suitable for

agriculture, because there is a lot of agricultural land up there. The view of

the department - and I think this is the view within government - is that

whatever is suitable for agricultural purposes will be maintained for

agricultural purposes. For example, last year, you know, the ground was fallow,

it wasn't being used, so we pushed to have the ground being utilized last

year. As opposed as to giving it to producer A, B, C, D or E, we introduced what

was, I guess, a bit of a model like, Bruce, in the land sales of, you know, when

we go out for parts of land on offshore. We went out and said, look, we have x

number of acres available. Anybody who is interested, you can make an offer to

government, and we had seven or eight different offers from different producers

as far away as Lethbridge. Then we picked the one that provided the best benefit

to government per acreage.

That is the sort of process we are in with lands, so it has been used. It

continues to be used, and we are about to finalize a strategy on how much of

that land can be put into agricultural production in the long term.

MR. REID: So, what you are saying, once that determination is made, that

will be zoned agriculture?

MR. E. BYRNE: Well, right now within the Province there are nine

agricultural zones, or what are known as ADAs, Agricultural Development

Authorities. There is only one that is legislated, and that is the one on the

East Coast, for whatever reason - it was done way before my time - but that is a

piece of work that we have to do. Once the land consolidation program is

concluded in terms of the expenditure of that amount of money, then all of those

areas, whatever is going to be into an agricultural area, we need to, as a

government, have a look at: Do we legislate these agricultural areas in

perpetuity?

That is a decision we have not taken yet, but it is certainly one, in my own

view, that we need to move to if we are going to protect the land base for the

industry, on the one hand, and to ensure that the industry will grow and thrive

on the other.

Much of the activity in agriculture and agrifoods takes place in the more

rural parts of our Province. There is a huge opportunity, in the next five

years, to literally double the size of the industry and create - in the dairy

industry alone, there is an opportunity to double the size of the dairy industry

and put another 1,000 people to work. That is the truth of it. So, that is where

we are, trying to take advantage of those opportunities that are in front of us.

You look at the yogurt facility on the West Coast, for example. Right now,

Gerard Cormier and Brent Chaffey have about forty people full-time working on

their payroll. My best guess is that, over the next several years, you will see

that double and triple in size as they add new products to their shelves, but

this is all being driven by the industrial milk quota and the opportunity to

grow it. If we do not have the land base, we will not be able to do it. That is

how important it is.

MR. REID: At this point, there is no decision made by government as to

what will happen with that land out there?

MR. E. BYRNE: On the Salmonier Line?

MR. REID: Yes.

MR. E. BYRNE: No, not finally, but there is certainly a decision that

whatever can be maintained for agriculture will be maintained for agriculture. I

think that would be a fair comment.

MR. REID: I guess the rest of it would be offered up on public auction or

something, would it?

MR. E. BYRNE: Again, I would assume, if there is no use for the buildings

- like, there is still some agricultural infrastructure out there. In my sense,

I would want that maintained for agricultural purposes.

MR. REID: There must be other land associated with it. Beside the

buildings and beside the (inaudible) there must be a fair amount of land that is

Crown land.

MR. E. BYRNE: There is, and there is a fair amount of land out there, I

say to the member, that is not suitable for agriculture; a lot of water, bog,

marsh, that would not be suitable for agriculture. The lands and soils division

have done their piece of work for us in terms of what would be suitable, and

that is part and parcel of the assessment that will be complete, I would think,

in the next couple of months.

MR. REID: Thank you.

CHAIR: I just want to make a point here that I just had a call from the

media people down there. They are not familiar with the departmental officials,

so, any time you speak, if you could identify yourselves.

MR. E. BYRNE: Okay.

CHAIR: Thanks.

MR. REID: Subhead 3.2.01., Production and Market Development

Administration, Purchased Services has been slashed from $300,000 to $40,000.

MR. E. BYRNE: Purchased Services?

MR. REID: Professional Services.

MR. E. BYRNE: Professional Services.

Go ahead, Bruce, if you want to answer that.

MR. SAUNDERS: This is another one where you see funds being reallocated

from one subhead to another subhead. The government committed $250,000 for

development of cold storage throughout the Province. If you look a little

further down the page, you will see that has been more appropriately aligned

with Grants and Subsidies. The $250,000 is really moved from one subhead to

another subhead.

MR. REID: Under subhead 3.3.03., Agriculture Initiatives, there is

$400,000 added to Grants and Subsidies.

MR. E. BYRNE: That is part of that land program I talked about. Two

million dollars was for land acquisition, and then $1.5 million for land

clearing and the Provincial Agrifoods Assistance Program. That is basically

reflective of the $3.5 million a year that was committed, part of that, over a

five year period.

MR. REID: Subhead 4.1.01., Geological Survey, Mineral Resource

Management.

MR. E. BYRNE: Subhead 4.1.01.?

MR. REID: Yes.

Purchased Services, under the Geological Survey, increased by $111,000.

MR. E. BYRNE: Increased by $111,000.

Go ahead. Do you want to take that one, Bruce?

MR. SAUNDERS: We have allocated $150,000 for (inaudible) geoscience, and

it is hoped that will be matched by the federal government. They are still

waiting for confirmation of that, so that is why the increase there.

MR. E. BYRNE: That was under a federal-provincial initiative for

geological survey across the country. We were told, or I think we certainly

anticipated it to be announced, that it was going to be announced in the federal

budget, as did every other Province, but we are still waiting for that. We are

understanding that some discussions are still ongoing within the federal

government about matching this, but I guess this was born out of a

federal-provincial meeting, certainly from the provincial minister's point of

view, of what was required for geological survey, mapping, et cetera, over the

next several years.

What we decided to do, as the deputy minister has correctly pointed out, is

to allocate that in the budget up front in anticipation of that federal

initiative being signed off. That could happen. Our hope is, from across the

country, as provincial ministers, that will happen at the federal-provincial

territorial meetings this summer.

MR. REID:

Section 5.1.05., Electricity Industry Development, Professional

Services - or is it Purchased Services?

MR. E. BYRNE: Just a second here now.

Okay, what is your question again? Sorry.

MR. REID: The budget has increased by $300,000.

MR. E. BYRNE: Yes, that is the deal with the comprehensive energy plan

that we are bringing forward, the strategy that we announced this year in the

budget.

For the last seven months we have been working towards, I guess, the

parameters of how that will work, because I mentioned up front that we will be

in a position in the very near future. Our plan is to have it announced, ready -

the consultation document, which is going to be very comprehensive - we are

hoping to have it ready before the House closes; if not, shortly thereafter.

That is going to be a public document released to anybody and everybody,

stakeholders within the oil and gas sector, certainly the electricity sector, to

talk about wind, thermal energy, et cetera.

Then, this fall, the plan is to have a public consultation around the

Province, after individual stakeholder consultations, in an attempt to develop

the long-term energy plan and how we best utilize it to the benefit of the

people of the Province. That is what that reflects right there.

MR. REID: One general question before I clue up, or a related question.

When is the rig going to be taken out of Marystown?

MR. E. BYRNE: When is the what?

MR. REID: The rig that is under construction in Marystown, or the work

that is being done on it -

MR. E. BYRNE: Related to White Rose?

MR. REID: Yes.

When is that scheduled to go out?

MR. E. BYRNE: The latter part of this year is what we understand.

MR. REID: You talk about the development of the new field there. Is it

the Hebron-Ben Nevis?

MR. E. BYRNE: The Hebron-Ben Nevis field, yes.

MR. REID: They are looking at it now, and, listening to one of the

officials with one of the companies the other day, they said that they would

know roughly in a year if they are going to proceed one way or the other.

MR. E. BYRNE: Right.

MR. REID: If they do, in fact, decide that they are going ahead, and they

go with a gravity-based, or whatever kind of platform they are going to use,

when is the earliest time that we could expect to see some construction in the

Province with regard to that project?

MR. E. BYRNE: We are anticipating to begin discussions with the partners

in that project, and the partners are Norske Hydro, Exxon Mobil, Petro Canada

and Chevron. For the last year we have been pushing very hard on those partners,

for them to conclude their utilization and joint operating agreement. That has

been done as of the first week of April.

It is, I guess, my sense that within the next couple of months discussions

will begin with those partners on the potential development of that project;

things like gravity-based structure, mode of development, pace of development,

industrial benefits. All of those issues are on the table, as they would have

been with any government, in terms of proceeding with a development.

I am being a bit long-winded to your answer, but I am getting to it because

it is important, I think, for us all to understand the process. Once they are at

a point where they feel comfortable in filing a development plan application -

that is all done through the Canada-Newfoundland Offshore Petroleum Board. There

is a public exercise that occurs from there. I guess once a development plan

application is filed to the time when they are getting ready for construction,

twenty-four to thirty months would be a reasonable sort of period based upon

past experience. We have been aggressively pursuing the companies to move as

quickly as they can.

MR. REID: The twenty-four to thirty would be after they have made the

decision to proceed, would it?

MR. E. BYRNE: Once the development plan application is filed -

MR. REID: Which sounds like it would be next January or February,

according to the individual the other night.

MR. E. BYRNE: It could be. It could be a little earlier, it could be a

little later, but it is around that time frame.

OFFICIAL: (Inaudible) take about a year.

MR. E. BYRNE: About a year.

So, from the time it is filed to the time - assuming that all decisions are

made and that all levels of government, particularly the provincial government,

have signed off, then from that point of view construction would begin shortly

thereafter that process.

MR. REID: So, we are talking anywhere from two to three years.

MR. E. BYRNE: Potentially, yes.

MR. REID: The reason I am asking that is, what is on the horizon for

places like Marystown in the interim? Are you talking to the company down there?

MR. E. BYRNE: Absolutely. Kiewit and company have been in on several

occasions. They are pursing projects worldwide (inaudible) for their facility.

To the best of my knowledge they have not identified another major project like

White Rose, for example, or like that, but they are aggressively pursing

opportunities on rig maintenance and rig installation. Down in the Gulf of

Mexico, I understand, there is about close to forty rigs that are going to be in

need of repair and maintenance, so they are trying to position themselves, I

guess, for potential work there. Government is working, and the department is

working, aggressively with the company in that area to try to identify

opportunities.

Speaking of Marystown and the Burin Peninsula, my sense is that over the next

- and this is a bit of a forward-looking statement, but I see it being a

realistic one, that particularly in the last eighteen months our oil and gas

industry has been confined to one basin, the Jeanne d'Arc Basin, and that is

not the case any more. With the opening of the Orphan Basin, land sales that

have occurred on Western Newfoundland offshore, the conclusion of the boundary

dispute, which was a great piece of work done by the former government, has led

to the conversion to all of the permits that were under moratorium for thirty

years.

Conoco Phillips continue to do seismic work this year. They had a farm-in by

another major company, BHP Billiton, and they are after natural gas, there is no

question about that. ConocoPhillips is one of the biggest natural gas companies

on the planet. They have been down in St. Lawrence, I understand, looking at the

infrastructure. They are looking at the infrastructure in Marystown, but there

is a significant opportunity emerging for the Burin Peninsula in that area

because, number one, it has the port facilities. Number two, it has the

industrial capacity, from the shipyard and the fabrication facility, to take

advantage of work in terms of being adjacent. From a supply and service point of

view, I think there are emerging opportunities.

Those are things that are on the horizon, but we are working with industry to

try and develop those opportunities and to assist wherever we can.

MR. REID: Unfortunately though, I think, Minister, as you already know,

if there is a lapse of a couple of years in that area, and if you consider the

age of most of the tradesmen we have in the Province, we are going to have

serious problems. The future might look bright down the road, but my problem I

see for that area is the next two to three years.

MR. E. BYRNE: Our oil and gas industry to date has been characterized by

- it has been project-specific. That has been high and low, high and low. If we

are fortunate enough to strike a deal on Hebron-Ben Nevis that provides the type

of benefits to the people of the Province that it should, the capacity and the

infrastructure provides more of an infrastructure and a more maturing industry

that, at some point, we can try to level that out as opposed to seeing it up,

down, up, down, but it is a problem, I understand that, and we are doing what we

can with the owners of the facility to try to identify opportunities for them.

MR. REID: The unfortunate thing about it, the way the fishery is going,

and with the oil industry, potentially nothing happening there for two or three

years, by the time anything else kicks in you are going to see a mass exodus

from that area of the Province. I know there is not much you can do about it

right now, but my colleague would like to have a question on that as well.

MR. E. BYRNE: We have seen it before. I am not going to try to predict

the worst that may happen, because there are opportunities around the corner

that could potentially alleviate that, but if the situation as you describe it

happens, it has happened before. People have gone to other opportunities, the

construction trades in Canada, our very mobile work force, but at the same time,

you know, when opportunities present themselves, people return fairly quickly. I

don't necessarily subscribe to that, because I think there may be

opportunities that could hopefully level that out.

MR. REID: I hope so.

MR. E. BYRNE: Well, we are working on it, because that is really what it

is all about. You know, we have emerging opportunities in Central Newfoundland

with respect to mining, significant ones that are going to require some work, so

there are other industrial opportunities occurring that may be able to fit with

some of the infrastructure on the Peninsula that could keep some of that from

dipping way down and keeping it somewhat level.

CHAIR: Ms Foote.

MS FOOTE: I just want to ask a question with respect to that, and to what

is happening at the Marystown Shipyard. I recognize that is the history in terms

of project base, and that has always been a problem. Hopefully something will

come together with Hebron-Ben Nevis.

In your discussions with a company down there, you talk about other things

that they are pursing in the Gulf of Mexico, and wherever they are doing it.

Have there been any discussions with them about whether or not they would

consider shipbuilding? Because I know at one point they had kind of ruled it out

and I know the union was being pretty vocal about that and recognizing that -

MR. E. BYRNE: They have been in and asked government, what is our vessel

replacement policy?

MS FOOTE: I am sorry, what was that?

MR. E. BYRNE: They have asked government, do we have a vessel replacement

policy? Are we planning to build new ships? If we are, is there an opportunity

for us to do it down there?

Based on the information and the meetings that I have had with the company,

this is an issue that they have raised with me. I can only assume from that, I

guess, in answer to your question, that is on the horizon and that is something

that they are thinking about, but they have asked us that, yes.

MS FOOTE: Good, because I know that is one of the issues, especially when

you talk about budgeting for a new ferry, that if there is an opportunity there

for the Marystown Shipyard -

MR. E. BYRNE: Yes, and there is.

MS FOOTE: - that would kind of help in terms of that law.

MR. E. BYRNE: Yes.

I have met with the unions down there, and I meet with them regularly, the

personnel, and I know there is a concern from the company, from their point of

view, that the company may want to get out of that all together and just

concentrate on the fabrication part of it.

MS FOOTE: That is right.

MR. E. BYRNE: To the best of my knowledge, and based upon the discussions

and meetings I have had with them, that is the notion of shipbuilding they have

raised with myself and the department, from government's point of view, or

from a provincial point of view, are we going to get into shipbuilding? If that

is the case, they would see it as an opportunity for their facility. They have

directly mentioned that to me.

MS FOOTE: Thank you.

CHAIR: Further questions from the Committee?

MS FOOTE: I have some general questions, I guess, that I can get out of

the way.

I guess I am just wondering about the agriculture research facility on

Brookfield Road. I know, with the meetings that you had with the federal

minister, you came back and suggested - I think you suggested - that facility

would actually remain there.

Now, I have not heard anyone say that federally. I have not even heard Andy

Mitchell say that. I have heard him say that they are going to work with trying

to make sure the research continue.

MR. E. BYRNE: All I can tell you is that, here is the agreement that was

made - and he has confirmed this publicly, by the way - that station was slated

to close, out of the business all together. All the research capability was

going to be moved to Memorial. There was just one hitch: Memorial was not aware

of it.

They had some level discussions about: Is there was some opportunity for us

to do things together? Memorial said: Sure, there might be. No one talked to

Memorial, to Dr. Christopher Loomis or Dr. Meisen, about the move of research

and development opportunities to Memorial University. I think they were

embarrassed by it; as a matter of fact, I know they were. Not Memorial, but the

federal government.

We put as much pressure on immediately, as we could, and it was timely in a

sense because the next week, the week after the decision was made, we had

federal-provincial ministerial meetings on agriculture in Ottawa. We sat down

with Andy Mitchell, myself and the Deputy Minister of Natural Resources, Mr.

Saunders; the ADM of Agriculture, Mr. Pierre Tobin; and the Director of

Communications for the department, Carmel Turpin, with their officials, and

said: You know, if you move in this direction we will have the distinction, and

you will have the distinction, of ensuring that the Province of Newfoundland and

Labrador is the only Province in Canada that does not have significant research

capability.

The fundamental reason why that facility was set up was because the climate

and soil conditions in the Province are completely and radically different than

any other place in the country, and that is why it was called the Atlantic Cool

Climate Research Facility.

So, here was the agreement that was made, and it was exactly what I stated

publicly: Number one, that the same amount of research and development that is

occurring now, and all of the technical support associated with that research

and development - and that is a critical piece - would be maintained. Secondly,

the land base for federal research would be maintained, because you cannot have

one without the other.

The federal government believe that they have some significant bricks and

mortar issues in their facility, and they do. They went through a review within

government of trying to achieve savings, so, on that front, what we decided to

do was that we struck a federal-provincial committee - it had its first meeting

yesterday morning - to look at: How can we achieve the type of savings that we

wanted, but at the same time increasing the capacity and enhancing the capacity

of research and development in the Province?

Notionally, here is what we have talked about: Number one, federal research.

We do our own research. There are research and development opportunities that go

on with the provincial government. The potential for the Canadian Food

Inspection Agency to become involved in terms of a sort of warehousing or

one-stop shopping concept, if I can use that term loosely. There have been

models across the country, particularly in Manitoba and the Winnipeg area, where

ACOA, or their development agencies like ACOA out there - because they have a

similar sort of agency; I do not know what its name is right now - have been

involved in agricultural research as a business opportunity as they have in

P.E.I. So, that federal-provincial group are working right now, had their first

meeting yesterday, to identify those opportunities; but the commitment, I want

to be clear, was that the same level of research and development and the

technical support associated with that would be maintained and the land base

would be maintained, and that was the commitment that we got from Andy Mitchell.

MS FOOTE: I guess the question still remains about the actual facility,

and the fact that they do have some problems with bricks and mortar. Is it a

likelihood, then, that they will rebuild or build a new facility to accommodate

this research?

MR. E. BYRNE: I think it is too early to say that, but I will say that

the facility out there - it is only part of their facility - has some issues.

Five years ago they invested significantly in other parts of that facility -

MS FOOTE: That is right.

MR. E. BYRNE: - which he was not aware of. So, he has committed to come

down and have a look at what we are up to, I think, some time this summer, but I

am more than optimistic that will work itself out to the advantage of the

Province.

The other thing that we are putting forward in terms of research and

development, we are starting to expand significantly in Labrador. We have

identified about 800 acres of ground, for example, that will be made available

for farmers. We made a Ministerial Statement in the House about potato trials

that are occurring in Labrador. Soil is completely different in Labrador than

anywhere else. It is very sandy soil. You have to get into green manure projects

in terms of turning back the soil to get it ready, but there is an opportunity

for a Northern Agrifoods Development Strategy for the country, and we see

Labrador as the logical site.

Now, that is something that we are working on. It is something, I think, that

we could possibly be successful on, but we are building those sorts of

capacities to try to get that there because it would be an excellent location in

terms of berries, in terms of what is happening in Nunavut and other areas in

terms of agrifoods development, so there are some emerging opportunities, no

question.

MS FOOTE: Closer to home for me - when you speak about bricks and mortar,

I want to talk about wood - is the building on Winterland Road. I mentioned it

last year, I think, when we talked in the Estimates.

MR. E. BYRNE: Right.

MS FOOTE: At that time, I think, you had hoped to budget to replace the

building in this budget year. I do not know if it is. I have not been able to

find it. I know the building is in deplorable condition. I know the employee

down there is having some difficulty, and I know that it is, at times, mice

infested. I am just wondering where you are with that within the department?

MR. E. BYRNE: Do you want to answer that, Allan?

MR. MASTERS: Allan Masters, Forestry Services.

MS FOOTE: A good name from Winterland.

MR. MASTERS: Winterland is home, too, for me, so a bit of a conflict.

We budgeted it as number one on our capital, but I have not heard that we

have the money for it. I thought we had the money for it last year. We were

trying to work out something with ACOA to turn it into bigger than just a

forestry office, and I think you are probably familiar with that.

MS FOOTE: Yes.

MR. MASTERS: That had not panned out, the money slipped, so we have

re-profiled it again for this year, but it is a very high priority because I

need to go back there some day and live.

MS FOOTE: You need to be able to go back there, Allan.

What is the timing? Do you have any idea in terms of when you will know if

you have gotten - even thought it's your priority?

MR. E. BYRNE: It has to be pushed. As Mr. Masters just indicated, it is

one of the highest priorities in the division from our capital side. I am not in

a position to say the timing is going to be by June. I would like it to be

tomorrow, to be honest with you. That is a fight that we have to fight within

government; but, from a capital point of view, as he has indicated, there are

always capital improvements that need to be made. It is the highest on the list

right now.

MS FOOTE: I just hate to think that we would be here next year again

talking about it, because -

MR. E. BYRNE: No, I hear you.

MS FOOTE: - it is an horrendous situation and it is unfair to the

employees who work there as well. I am sure you can appreciate that.

MR. E. BYRNE: Yes.

MS FOOTE: I know you have announced that you are doing a consultation

process on wind energy. As you know, I have a vested interest here in terms of

St. Lawrence, and that is something that we have been pursuing for quite some

time.

MR. E. BYRNE: That is right.

MS FOOTE: I wish that had materialized before government changed, but it

didn't.

MR. E. BYRNE: That's not to say that it won't, either.

MS FOOTE: I know, but I wish that something was moving on this much more

quickly.

I hear from time to time about individual projects that are happening around

the Province. Where do they fit into the scheme of your wind energy strategy?

Are they just something that people are doing on their own accord, with no

consultation or input from government?

MR. E. BYRNE: Any proponent that wants to get into wind energy, wherever

it may be - whether it be, for example, down in St. Lawrence, Parson's Pond,

Bonavista, wherever it may be - I think we have probably ten or eleven

independent proposals before us. It was one of the reasons why - there was such

a rush that came to us quickly from proposals. They have to go list their

project. It has to be cleared from an environmental assessment, but after that

the projects are right where they are because it requires a power purchase

agreement with Newfoundland and Labrador Hydro.

We stepped back and said, okay, there are some technical questions that we

want to answer. Wind is coming to a point where it is becoming very attractive

from a cost point of view. It is almost there. It is not quite there in terms of

what is the next cheapest source of power that we can generate, but we are

almost there. There may be a possibility to introduce more wind energy than just

twenty or twenty-five megawatts into the grid. The technical analysis, there may

be some issues surrounding wind with the grid system, and basically, in terms of

the resource, as you would be aware, the wind does not blow all the time, so

when it stops -

MS FOOTE: It does in St. Lawrence.

MR. E. BYRNE: It does everywhere, but, in saying that, we have the best

sites in North America, independent estimates about the resource. We have some

of the best sites in North America for wind energy. So, we are only about six or

seven months away from a full proposal call. That is my sense of it, Judy.

I have spoken to the Major of St. Lawrence.

MS FOOTE: I am sure you have.

MR. E. BYRNE: Oh, yes, and have kept him in the loop in terms of what

government is doing so they understand what we are up to and that their project

is not lost, because it really is not. It is a good project. There has been a

significant amount of work done on it, and I would think, once we get to a point

where we are looking for a broader RFP, that their project, given the work that

has already been done, would have to stand them in fairly good stead.

MS FOOTE: Are the proponents still at the table?

MR. E. BYRNE: In terms of negotiating?

MS FOOTE: In terms of actually continuing to pursue it.

MR. E. BYRNE: No, basically they are at the table in terms of waiting for

our process to conclude.

MS FOOTE: Okay.

They have not gone away and said, forget this.

MR. E. BYRNE: No, definitely not. Actually, there was a message left for

me yesterday afternoon, I think, when we were in here, from the proponent.

No, they have not gone away. There is still significant interest there.

MS FOOTE: Okay.

What about those individual - I guess it would not be quite as large a

project as being envisioned for St. Lawrence, but I notice in the media

sometimes you will have an individual who has something up and running,

(inaudible).

MR. E. BYRNE: In their backyard somewhere.

MS FOOTE: Yes.

MR. E. BYRNE: Some people have it up in their backyard. That is

completely independent. They are independent of the grid. They are doing it

themselves, generating their own power.

MS FOOTE: There has not been any discussion with the department in terms

of...?

MR. E. BYRNE: No.

MS FOOTE: Okay.

MR. E. BYRNE: If you want to add to it, Bruce, go ahead.

MR. SAUNDERS: Maybe I could shed a little light on that.

There have been a couple of projects - and I stand to be corrected on exactly

how many - in some of the isolated communities who are doing diesel generation,

and there have been some small wind farms developed as a consequence of that.

What they are displacing is the diesel generation, but the cost of the diesel

generation is a whole lot higher than the cost of electricity on the grid

system, so they are able to enter into a different contract with Hydro for

those.

MR. E. BYRNE: Because of the uniqueness of being isolated, as you can

appreciate.

Go ahead. Sorry.

MR. SAUNDERS: That is pretty well it.

MS FOOTE: Thanks, Bruce.

Just one other thing for me again. I gave you just a heads-up on this issue

with the woodcutting down in the Corbin Road area.

MR. E. BYRNE: We will have a response for you in the next couple of days.

MS FOOTE: Okay.

I think they really feel that they have been ignored. A letter that was

written in January got no response. Now, of course, the situation has gotten

worse down there, where it is uncontrolled in terms of the cutting down there.

MR. E. BYRNE: We will have a response to that letter within the next

couple of days.

MS FOOTE: Okay.

Can you shed some light on it for me now in terms of, if there is going to be

something done about the cutting, or the permits that have been issued? Can you

stop those?

MR. E. BYRNE: Do you want to deal with this from a detailed point of

view, or would you rather we wait until the response?

MR. MASTERS: (Inaudible).

MR. E. BYRNE: Go ahead.

MR. MASTERS: I do not have the information to be able to give you a

detailed response. The letters have been there. They have been in the system.

The minister raised it with me just previous to this meeting again. I assured

him we would have something by tomorrow. I would prefer to wait until we can get

the details.

MS FOOTE: Okay.

If I can be copied on that correspondence?

MR. E. BYRNE: Yes.

What I can commit to you, thought, which is not a problem, about two days

before you got the letter, I got the letter. I put it into our own system,

saying: Provide me with the details of this, and what has happened and what has

occurred.

You, in the House, provided the letter to me, and I spoke again this morning

with the deputy on it, and he said we are just about ready to get a response

collected. As soon as I get it, I can forward it to you so that at least you are

aware, when your own constituents call, you know what the story is and you will

be briefed on it.

MS FOOTE: I appreciate that.

I think they were very courteous in their first letter, in just trying to get

a handle on it.

MR. E. BYRNE: Fair enough.

MS FOOTE: You can appreciate the second letter was totally out of

frustration, with no response whatsoever to the correspondence.

MR. E. BYRNE: Completely understood, and not appropriate.

MS FOOTE: Thank you.

CHAIR: Mr. Joyce.

MR. JOYCE: Thank you, Mr. Chairperson.

I just have six or seven questions. I will get off the tougher ones first.

The $1 million subsidy for Stephenville, was that paid out or not?

MR. E. BYRNE: It hasn't been. I have been up front with that from the

get-go.

MR. JOYCE: It is just the press release itself, it seemed like it was

paid.

MR. E. BYRNE: Not a penny has gone to Abitibi.

MR. JOYCE: It is not paid out?

MR. E. BYRNE: Not a penny.

MR. JOYCE: Okay.

Is it in the Estimates?

MR. E. BYRNE: It was not a subsidy. That was money that would have been

allocated in last year's budget. It would not be in this year's budget.

MR. JOYCE: Okay.

MR. E. BYRNE: We wanted to get something - if we were going to proceed in

trying to provide a break in electricity costs for a sixty day period, we did

not want to provide an outright grant or subsidy; because, if we did it, we

would have to do the same thing for Kruger, and we understand and recognize

that.

In terms of what we wanted from that, if we were going to move down that

road, we wanted the engineering, environmental and any intellectual property

that Abitibi had generated themselves at their own cost. We wanted access and to

be in possession of all of that information. That was the caveat. If you could

not provide that, then we would not provide this. We have not provided a penny

of what that potential agreement was about, not a cent.

MR. JOYCE: Okay.

The silviculture program as you know it on the West Coast, the Corner Brook

area, the mill, and I am sure Stephenville, the funding for silviculture, has

that increased from last year or decreased?

MR. E. BYRNE: We can just go through it. I think we have maintained

exactly the same as what was provided for last year. That is my understanding.

MR. MASTERS: Seven point three million dollars, the same as it has been

for the last two years.

MR. JOYCE: How much is that from the Province? I know Kruger does some of

their own.

MR. E. BYRNE: Kruger and Abitibi participate. Go ahead. Sorry.

MR. MASTERS: To answer your question, the $7.3 million is provincial

money. Kruger and Abitibi both put in $2 million each, so the grand total is $11

million, but the $7.3 million is actually budgeted as provincial funds.

MR. JOYCE: The other thing - I am not sure if it is as big an issue this

year as it was before - is the insect control. Is that still a problem out on

the West Coast or is it under control, or is it just something that has to be

managed year by year by year?

MR. MASTERS: Yes, it is still a problem. As the minister alluded to

earlier in response to some questions, the level of activity has been coming

down in the last two or three years and that is attributed to our protection

program and depending on what kind of weather you get in the spring. If you get

an early spring, the bugs flush and then you get a late froze, that helps more

than anything. If you do not get that, then the bugs flourish again.

We do have two insects that are really problematic. One is the hemlock looper,

that has been with us for a number of years, and the other one is the balsam fir

sawfly. The sawfly is really problematic in the sense we do not have anything to

go at it with on an operational basis. So, we are working with the Canadian

Forest Service out of Fredericton in developing a natural virus to the sawfly.

You will see that in the Estimates there, I think it was about $400,000 last

year we put into that program. We are hoping by the end of 2005 we will have

that product where we can register it and use it on a much broader basis

because, as a research product, the most we can do is 5,000 hectares, and we do

that. We use BTK, which is a biological agent for doing the hemlock looper, and

that program will continue this year. It will be all on Crown land and Kruger

land. Abitibi land this year, thankfully, is not being affected.

MR. E. BYRNE: I would just like to say one thing. The division deserves

to be complimented in terms of being able to identify and respond to the point

where - given the climatic conditions are one thing, but the ability to be able

to respond quickly and identify, really has beaten back compared to other years.

So, the division has done a great job in my view on managing that part of the

industry that is so important.

MR. JOYCE: From my understanding out in Corner Brook - and this is just a

rumor that I heard - is that there may be extra people hired on this year. Is

there any talk in the department of hiring extra people for insect control

itself? Now, that was just a few people mentioning to me that there may be an

increase in the program.

MR. MASTERS: I would not anticipate any additional people. It is our

hope, based on last fall's forecast - even though we had budgeted at last year's

level, it is our great hope that the program will be smaller this year than it

was last year, based on last fall.

MR. JOYCE: Okay.

MR. MASTERS: We do sampling in the fall, because the insects lay their

eggs in the bottom of the needles in the fall. So, we can cut them and monitor

and get an estimate of what could happen in the spring. That all gets hinged on

the weather in the spring. So, unless something funny happens this spring, and

it has not to date, we would anticipate the program be smaller than last year,

not larger.

MR. JOYCE: Of course, I have to ask about the wood supply in Corner

Brook, Stephenville and that area. Is there - and I know about the silviculture

programs, as you mentioned. Is the wood supply becoming a greater concern,

lesser concern, on par? It is always a concern, for as long as I can remember,

out on the West Coast.

MR. E. BYRNE: Generally speaking, what we are managing is being done on a

sustainable basis. We are almost - you can correct me if I am wrong Allan, but

the amount of seedlings that we are planting is almost to a point where every

tree we are cutting we are planting one. We are almost to that point, is my

understanding, or close to it.

Both companies, both Kruger and Abitibi are into offshore supply, to some

degree. But, generally speaking, the forestry industry and our own resource is

being sustained fairly well. There are emerging opportunities, particularly in

Labrador. Both companies, is my sense, are looking at those emerging

opportunities. But they are going to need to develop those in consultation with

the people in Labrador, and the people in Labrador are going to need to see some

benefit as a result of the development of that resource. That is the message

that we, in a very frank way, have given to both companies.

I do not know if you want to add to that, you certainly can.

MR. MASTERS: Just to add, this year we are completing the five-year cycle

in the wood supply analysis. So, we will be releasing figures before the

calendar year ends, December, for the next five years. We have been at this for

about a year-and-a-half, getting all the base work done. It is a reasonably

complex piece of work but we are doing the runs now for the individual

districts. There are certainly a lot of pressures on land base, as the land base

shrinks. As we manage for other values, you know it is a lot of pressure to keep

the AAC where it is at. Our feeling is we can do that, or come very close to it,

but we will know for sure in the fall because we do not have the results back

from our runs yet.

So, on a go-forward basis, and if you look back - and I have had a fairly

lengthy history, in human terms, in this field. I mean, we have always been

around that 2 million metre mark for the Island, and we are still there. We have

been as high as 2.2 million and 2.3 million, but what we have actually harvested

has not changed a lot. You hear criticisms say: Well, the AACs are dropping.

Yes, they are dropping as we get better information but the amount of harvest

that is taking place hasn't changed dramatically in the last twenty-five

years.

So, it is our goal and estimate, on a go-forward basis, that for the next

twenty years we are going to bottom out as to as low as it is going to go and

then it is going to start going the other way, just by the nature of the growth

of the forest. I think we are very close to being there at 2 million. It may dip

as low as 1.8 million, but I would not anticipate it would go below that.

MR. E. BYRNE: (Inaudible) as we are entering into an era, too, where some

of the companies are about to get into their managed lands, you know, that is

going to bring down company's costs, or it should, where it is not now

harvesting. So, as Allan said, where it is predicted, but we will not know until

the fall in terms of where the totals will be.

MR. JOYCE: Allan knows I had a lot of calls on the West Coast. Like,

there are some areas of land that Kruger cannot get at. It is on Kruger land.

They just will not cut it because it is too hard to get at or it is not

feasible, and there are a lot of local wood harvesters who would like to get at

it but they are always saying: Well, get us some Crown land and we will switch

it over. Is that a big issue in the department? Because I get a lot of calls

over my way, and Kruger knows they are not going to cut the wood on the land

because it may be up the side of a mountain or it is further back.

MR. E. BYRNE: Yes, go ahead.

MR. MASTERS: Yes, there are certainly places that Kruger or Abitibi, the

big industrial people that are heavily - obviously, have unionized operations,

cannot get to for cost purposes. But the capacity within the Crown land sector

far exceeds the availability of supply. So, what happens is you will get

somebody coming and saying there is a piece of wood in there that I cannot get

and we normally do exchanges with the company but there are no new entrants that

comes in through that because the capacity that is out there now in the Crown

can easily absorb any of those opportunities that we identify. So, a lot of

times when you get those questions, and I have had them for many years, is

usually new entrants that says: Look, there is a piece of wood there they have

left that I can go get. Well, if it is there and if they cannot get it, we can

get it for the Crown. We have in the past, but it is assigned to one of the

existing operations that we are trying to support.

MR. JOYCE: Is there still a freeze or a potential freeze on people who

are looking for licences to cut wood? Again, I use it, and this is -

MR. E. BYRNE: The most calls we get down to my office are people looking

for: I need another couple of hundred cubic metres, or I need more. I want to

open a sawmill. The answer is no, and it has to be. The deputy will tell you,

but from my own staff point of view, I do not fool around with allocations of

wood. That is what we have a science branch and a division for. I am not going

to introduce politics into who should get a stick of lumber and who should not.

That is what we have the public service for. I do not know if that is an answer

directly to your question or not.

MR. JOYCE: It is, but I was thinking more like on a regional basis out

our way because - I know one guy in particular this year who contacted me. He

makes good sense, but I do not understand the wood harvest supply problem. Last

year on the West Coast, especially, we had the big storms with the lobster

traps. There is no supply of lobster traps on the West Coast right now and there

is a little niche, a little market there for it. He was looking just to get a

permit. He has the wood. He just needs a permit to process the wood -

MR. E. BYRNE: It is the first I heard of it.

MR. JOYCE: - because of the niche for the lobsters. Last year they were

looking for about 10,000 lobster pots.

MR. E. BYRNE: Oh, yes. Have you talked to anybody on that?

MR. JOYCE: We approached the department but there is a freeze on it. This

guy here, what he is going to do is lobster traps only.

MR. E. BYRNE: You say he has access to a wood supply?

MR. JOYCE: A wood supply, yes, but you need a permit to cut the wood,

apparently.

MR. MASTERS: It would depend on where his wood supply is. If he has a

wood supply on his private land, or he can get it somewhere, buy it from

somebody, that is one issue. Then there is the issue: Do you give him a

temporary sawmill licence so that he can saw this thing? I think we would be

able to work our way through that, but if he is identifying that there is an

opportunity there for lobster pots but I have to get a piece of Crown land fibre

somewhere to be able to go cut the wood, that is a different issue because we

already have an overcapacity on the Crown land.

MR. JOYCE: From my understanding of it, he has wood that people want cut

off their land. It is private land.

MR. E. BYRNE: Okay. So, he has identified his own source on private land

with an opportunity. Is he still interested?

MR. JOYCE: Up to a month ago when I was speaking to him he was, yes.

MR. E. BYRNE: My advice, if I can provide you some, unsolicited as it may

be. I would speak to him again and ask him to get something to the department as

soon as he could for us to have a good assessment of it.

MR. JOYCE: I explained to him again about the -

MR. E. BYRNE: Can you get a copy to me as well?

MR. JOYCE: Pardon me?

MR. E. BYRNE: You can provide me a copy of that.

MR. JOYCE: Yes. I explained to him again how there was a freeze on it. I

understand it. I have no problem with it. Then, again, when it struck me last

year on the West Coast, the whole West Coast, there is not a lobster pot to be

found.

MR. E. BYRNE: Oh, there is an opportunity there. There would have to be

an opportunity there.

MR. JOYCE: Yes, and this is great for him and great for the area. So,

thanks for that.

Cold storage for agriculture across the Province, has the facilities

increased from last year, or the last couple of years?

MR. E. BYRNE: I think last year we put in $250,000 for the enhancement of

cold storage facilities and that was spent, all of it was spent, on cold storage

facilities within the Province, both in Newfoundland and Labrador.

Right now we have just - and I say we - supported a project that went forward

between the Federation of Agriculture and the Newfoundland and Labrador

Cooperatives on trying to get a snapshot of a vegetable industry because cold

storage facilities are directly related to - I think they are related to -

necessary infrastructure required if we are going to grow the vegetable industry

from where it is today to try to displace some imports. There are lots of public

policy issues coming that we are all going to need to have a frank chat about on

that stuff.

We have put an additional $250,000 this year, again into cold storage, to try

to continue to enhance what exists and to try to create other capacity in

certain regions. So, it is a commitment that we have maintained again this year

and that is a program that is available. There is an application process. All of

our agricultural representatives get all those sorts of applications out to all

of the producers who they would know would be interested and to others who may

be just coming into the business. So, yes, we are continuing that this year.

MR. JOYCE: Just the, I guess side note on that, blueberries. Has there

been a great push to start on a commercial basis with blueberries in the

Province?

MR. E. BYRNE: Yes, we have commercial blueberry farmers right now in the

Province. Some of them, you know, their products end up in restaurants in

Boston, New York, Maryland and Toronto. But the market has been somewhat

depressed. David Moores out of Bay Roberts is a fairly big producer. He is

buying up a lot. Depending on what happens in terms of Chaffey's operation and

what is occurring out in Whitbourne with Hilary Rodrigues and some of the things

that he is getting into down in Trepassey, there could be a fairly significant

opportunity, not just in blueberries but all traditional berries in the

Province; bakeapples, raspberries, whatever. It is an industry that has quite a

lot of promise in front of it.

MR. JOYCE: Great product.

MR. E. BYRNE: Oh, no doubt.

MR. JOYCE: The best healthy product you can eat.

Quarry fees, I know last year there was an increase; not this year but last

year. Has there been an increase this year in quarry fees?

MR. E. BYRNE: No.

MR. JOYCE: No fee increase?

MR. E. BYRNE: No. I don't think we have had any fee increases in the

department.

OFFICIAL: No.

MR. E. BYRNE: There has been no fee increases whatsoever in the

department.

MR. JOYCE: The last question I am going to ask, the 4-H program. I am

assuming that is still - out my way in the Bay of Islands, especially in the -

MR. E. BYRNE: It is a great program, actually.

MR. JOYCE: Oh, excellent. Yes, excellent.

I know it is very big out our way, especially on the North Shore, if not the

most active program in the Province, actually. They are always looking for

funding for the group. I did a member's statement on one of the 4-Hs that just

came back from the international conference in the U.S. Is there funding

available for each individual program or do you just give it to the 4-H

Provincial Council?

MR. E. BYRNE: We provide funding to the 4-H Council provincially. If we

have any monies left over as we go through the year, that we can assist in

whatever way we can - sometimes it could be as little as $250 but if we can to

regional 4-H clubs, I mean, we will try our best to assist or identify where

they can get it.

MR. JOYCE: Because I know over the years the money would go, even in our

time, to the 4-H Council and they administer the program.

MR. E. BYRNE: Yes, and that is the way it is today. That is exactly the

way it is today. So there is an allocation made to the 4-H Council, the umbrella

or provincial organization, and then that is the Province's commitment to the

4-H program. But if there are special things or extraordinary things that

certain regions are doing that we can have a look at, I can only encourage you

to get it to us, and if we can do something, we will. We would not hesitate.

That is what it is there for. If we do not have the money identified to do it,

then we will not be able to but, you know, I can only encourage you to get a

request to us if there is something special coming up in a particular or

peculiar region, and your own region, for example, because it is a program that

is alive and well out there.

MR. JOYCE: Oh, I think it is fifty-eight (inaudible).

MR. E. BYRNE: And in Labrador. The program is alive and well in Labrador,

which is encouraging, too. It is all about new entrants, potentially, and

bringing people into the business of agrifoods.

MR. JOYCE: Well, that is all the questions that I have. But, minister, I

do not want to leave without expressing gratitude for the staff in Corner Brook

Forestry and Agriculture that I deal with personally, and have had, over the

years, the co-operation of the staff who are always there to help with myself. I

know I have requested many meetings over the years, to sit down with

individuals, and I have never been refused. They are always the best.

MR. E. BYRNE: Yes, a good crowd out there.

MR. JOYCE: So, I just want to acknowledge the co-operation from the staff

on the West Coast that I deal with.

MR. E. BYRNE: I appreciate that.

CHAIR: Any further questions from the committee?

MR. PARSONS: Yes, just a couple of questions.

Minister, on the poaching issue and the putting up money by your department

into the training and so on, what representations have taken place between the

government and the federal government regarding their not doing what they are

supposed to do?

I am understanding that the conservation officers do what they do through

your department, and have been funded through your department, because the

government made a decision that was what you were going to do.

MR. E. BYRNE: Right.

MR. PARSONS: Which I agree with, by the way. Somebody has to do it. I

just do not think we have to pay for it, or should pay for it.

What formal representations have been made to the federal government, and by

whom, to address this problem where the federal government has totally fallen

down on the job when it comes to poaching activities in this Province?

MR. E. BYRNE: Formal presentations have been driven by the Premier's

office and the Department of Fisheries and Aquaculture, and rightfully so.

This is a file the Premier has taken a personal and significant interest in,

and supported by ourselves in terms of providing the evidence of: Look, this

activity, something has to happen here. It cannot continue to be left unchecked

or we are not going to be left with anything, only, then, that we have ten years

or twelve years worth of arguments with the federal government on who was or who

was not responsible.

The formal representations have been ongoing between both the Premier and the

Prime Minister, and between the Premier's office, in my understanding, and

Geoff Regan, who is the Minister Responsible for the Department of Fisheries and

Oceans.

MR. PARSONS: Have we given any consideration to suing them, possibly?

Legal action against the federal government for non-performance of their

obligations?

MR. E. BYRNE: I would say we would be looking at all options.

I can make an endeavour to get a list of the times and dates, if you were

looking for that - I certainly could - but we are not going to continue

discussions in perpetuity. I will leave it at that.

MR. PARSONS: Minister, on the issue of - I may be all over the map here.

I just have a bunch of general questions, type of thing.

MR. E. BYRNE: That is okay.

MR. PARSONS: Oil spills offshore.

MR. E. BYRNE: Yes.

MR. PARSONS: Maybe it is just the sequence of events or whatever, but in

the last number of months we seem to have had a number of incidents. Is it bad

luck, bad operational procedures, or a bit of both?

MR. E. BYRNE: I think it is important for us to understand what is real

and what is not real. The Member for Bellevue did not understand that yesterday,

just as a side note.

There was one significant spill, and that was the one that happen this fall

on the Terra Nova, on the FPSO. Immediately, the protocols that are in place

between the Canada-Newfoundland Offshore Petroleum Board - because they are

responsible for the immediate dealings with this. Once they are notified, they

have independent officers who are independent of this Legislature, independent

of the House of Commons, even independent of the CEO and the board itself. Once

they make a determination and issue a stop production order, there are no

questions asked. Production stops. It is just as simple as that. That person is

independent.

The investigation is still ongoing into that. Whether charges will be laid or

not is up to the appropriate enforcement agencies. We responded immediately,

when we discovered or found out, I think it was last fall, Bruce, on a Saturday

night, if I am not mistaken, 1:00 o'clock or 2:00 o'clock, or early Sunday

morning, sorry.

Now, there were two others but they were minor, and I mean minor. Some mud,

drilling mud, was spilled, less than fifteen barrels. In terms of spills, there

was an issue with the FPSO. The board stopped production, said to Terra Nova and

the owners and operators of Petro Canada: What is the situation here? They

assessed it and would not issue them another production order for an extended

period of time until they were completely satisfied, the process identified,

maintenance issues that had to be taken care of - and there are always

maintenance issues that are ongoing. They wanted all of that maintenance done

before a production order was issued. Once they were satisfied with that, then

they reissued the production order.

In terms of the spill itself, all of the appropriate procedures, to the best

of my knowledge, based upon the information and briefings that have been

provided to me - and I have no reason to believe that what was presented to me

was anything other than the truth - the response to try to limit any potential

damage that was done was immediate, and that they got as much as they could get.

I just preface my remarks by saying there was one significant incident. The

other couple of incidents were essentially drilling mud, and the consequences

were very small.

MR. PARSONS: I have no problem whatsoever with the process and procedures

that were put in place once it happened.

MR. E. BYRNE: Right.

MR. PARSONS: My concern, of course, would be, if it happened, it means

that it can happen.

MR. E. BYRNE: Sure it can. (Inaudible) risk.

MR. PARSONS: Thank God, it was no more significant than it was.

Ecological disasters from rockets is one thing, but ecological disasters -

because we do not have the proper procedures on the rigs themselves - is an even

more real problem, to me.

MR. E. BYRNE: I am not convinced that we do not have proper procedures on

the rigs.

MR. PARSONS: That is where I am coming from. Is there any concern you

have that - this happened - maybe there is something wrong with the procedures?

MR. E. BYRNE: No, I think the procedures work to the extent that - the

procedures work. Once the problem was identified, production stopped. As soon as

the weather window was provided, the independent officer at the

Canada-Newfoundland Offshore Petroleum Board flew to the site, did an

assessment, stopped production, did what was necessary, and then put in place

the mitigating measures, according to the rules and regulations and legislation

that we are governed by, how do we corral the spill and try to soak up much of

it. I think the procedures worked correctly.

MR. PARSONS: I have no problem, Minister, with that part of the

procedure, but that is all after the fact that it has happened. Nobody, I think,

is questioning the procedures, for example, from the point of the stop

production order being issued and everything that happened after that,

absolutely not. My concern is the procedures that are in place on the rigs, so

that it does not happen in the first place and where we have to get to that

point.

Where are we in terms of the investigation as to the cause of what happened,

for example, before we get to that point when we ever have to issue a stop

production order?

MR. E. BYRNE: Fair enough.

The investigation is ongoing. I cannot give you a time frame when it will be

complete or will there be charges emanating from that, and what the

investigation will identify on the cause or root causes of the problem that

created the situation of the spill. Once that document is in our hands, then we

will assess it and determine, okay, what is the path forward? Are there

necessary changes to regulations and compliance which go to your point? Once

that investigation is complete, we will have a look at it then.

I am not in a position, and I do not know if anybody is at this point, to be

honest about it, to be able to say it happened because of A, B, C, D and E. I am

personally going to let the investigation conclude and then draw the conclusions

for us, because it is independent of government, it is independent of the

operators, and - who knows? - potentially charges could be laid from this, but

we are not in a position yet.

I don't know, Bruce, if you have any recent information on when you think

that investigation might be completed, or any heads-up that has been provided to

us.

MR. SAUNDERS: No greater detail than what the minister has already said.

The only thing I can add is that the Offshore Petroleum Board has been put on

notice by this minister, and I think by the federal minister as well, that we

want to get to kind of the root cause and lessons learned from this, so we have

asked for that. As a government, you have asked for that.

When the investigation is complete, that is one of the main issues that you

have to look at: Do we need to change our processes such that this does not

happen into the future?

MR. E. BYRNE: Does it relate to the technology of an FPSO - I don't

know - as opposed to other extraction? Who knows?

MR. PARSONS: That is right.

In fact, with reference to the Member for Bellevue, my understanding of where

he was coming from is - his concern is not with what happened after - his

concern was: Do we have a problem with what happens to let this happen? That is

where he is coming from.

MR. E. BYRNE: Fair enough.

I do want to make a point. My colleague, the Minister of Environment, in a

statement he made yesterday - now, this is outside of the oil and gas industry -

if you want to make a comparison, there is enough bilge oil pumped into the

ocean just off our coast that is the equivalent of an Exxon Valdez every year.

If there is a disaster that is occurring and ongoing that we need to take

care of right in front of us from an ecological point of view, obviously that is

one, and I think we can do it, but it came to mine just sort of comparatively.

MR. PARSONS: I agree, and not only stiff fines but seizure of boats and

vessels and everything, whatever is necessary. Our Atlantic Accord is only going

to be a pittance if we let something like that continue to happen out there.

Minister, on the Expressions of Interest for the Lower Churchill, there has

been twenty-five submission made, I believe, so far in response to the request.

MR. E. BYRNE: Yes.

MR. PARSONS: What is the particular reason government will not say who

made the submission?

MR. E. BYRNE: That is for the protection of the companies involved, not

for our protection. We made a commitment that once the internal group that has

been put together within government to assess those proposals, whoever goes on

to phase two, we will make available publicly who the companies are, and the

scopes of what they are talking about. I guess, from some of the companies

points of view, it is my understanding, until they make it from one process to

the next, or if they do not, that has been essentially where we are coming from.

MR. PARSONS: How does that fit with your openness and accountability?

When you promulgated your openness and accountability platform, you did not say

at that time: We will only be open and accountable depending on whether or not

companies tell us they don't want to be.

MR. E. BYRNE: That is not what we are saying, Kelvin.

I appreciate the question, but we have put forward a document. Unlike former

approaches that were done where no one knew anything about it, we put forward a

document publicly that laid out a process that said, once stage one is

completed, whatever proposals make it to stage two, that we are going to release

it publicly, let people now about it.

The one that has come in from Hydro-Quebec and Ontario and SNC-Lavalin, that

is something that they made public themselves. So, once that process is

complete, we are going to say: Here are the companies that made it to stage two

in terms of who have realistic proposals.

MR. PARSONS: Again, you alluded to the former Administration. I say to

you again that -

MR. E. BYRNE: Former approaches, not just yours.

MR. PARSONS: Well, former Administrations.

MR. E. BYRNE: I said former approaches, not just yours. Under Peckford

and them, the same way, under Moores, the same way. This is a little different

than what has occurred any time before.

MR. PARSONS: Minister, regardless of what former Administration, all I am

commenting on here is that it is your government, of which you are a part, that

professed this new approach of openness and transparency. I didn't make that

rule. I didn't make that guideline. I didn't make that suggestion.

MR. E. BYRNE: We think we are living up to it.

MR. PARSONS: Not all of the companies who have submitted these proposals

have asked for confidentiality. The one you alluded to from Quebec-Hydro and

Ontario -

MR. E. BYRNE: (Inaudible) themselves.

MR. PARSONS: It just seems to me that it is hypocritical again to be

saying one thing - this is our policy, openness and accountability - and then,

on the other hand, and say it is done because the companies want it. Why couldn't

you just as easily have made -

MR. E. BYRNE: I didn't say necessarily the companies want it. I said we

have made a decision. We can agree to disagree on this. Your point is made, and

I will make my point.

We believe we are being open. Once the process goes from stage one to stage

two, any and everybody who has made it to that process will be available

publicly.

There it is. If you disagree with that, then you disagree with that.

MR. PARSONS: I absolutely disagree, Minister.

MR. E. BYRNE: Fair enough, and I absolutely disagree with you on it, so

there we are.

MR. PARSONS: Your definition of openness and accountability depends upon

the confines of how open you want to be.

MR. E. BYRNE: I see. Fair enough.

MR. PARSONS: That has become pretty clear.

Could you tell me, at least, if the Sino group are one of the twenty-five?

MR. E. BYRNE: Not to my knowledge.

MR. PARSONS: What is the status on the investigation involving the Sino

group?

MR. E. BYRNE: What do you mean, the status of investigation?

MR. PARSONS: As you aware - well, I asked last year in the Estimates, for

example -

MR. E. BYRNE: I have said publicly, and did an interview several months

ago, we will not be doing business with them.

MR. PARSONS: There was a comment from the Premier's office, once it

came out that there were concerns being raised about the Sino group, vis- B -vis

who they did or did not deal with -

MR. E. BYRNE: The Chinese company, part of the Chinese group.

MR. PARSONS: That is correct.

There was a statement from the Premier's office that there would be an

investigation, and the results of the investigation would be made public.

To my knowledge, other than your statement that you would not be dealing with

them, there has been nothing made public. I am just wondering -

MR. E. BYRNE: Are you looking for a document or something?

MR. PARSONS: Yes.

Were there any...?

MR. E. BYRNE: In my own sense, and this is to the best of my knowledge,

that arm of the company, that Chinese company, is still listed within the U.S.

State Department as somebody not to do business with, that has terrorist ties.

We have not been able to confirm that or not confirm it, but in the absence of

that we have decided not to participate in any way, shape or form with that

company. That is the status of it.

MR. PARSONS: Minister, I understand there was a reduction in the

Prospectors Assistance Program to the tune of about $600,000. Is that correct?

MR. E. BYRNE: Not this year, no.

MR. PARSONS: Okay.

I understand that it had been, over the last two years, reduced by that sum

of $600,000, over the course of the last two years, the last two budgets.

MR. E. BYRNE: There was a reduction last year in the budget that was

articulated, but we have maintained the entire amount the same as last year. As

a matter of fact, last year, to some degree, we struggled for a take-up on it,

to be quite frank about it, but this year we have maintained exactly what we had

last year, but there was a reduction last year.

MR. PARSONS: Six hundred thousand?

MR. E. BYRNE: I believe so, yes.

MR. PARSONS: Okay.

I got the figure right; I just got it for the wrong year.

MR. E. BYRNE: Yes.

MR. PARSONS: What is the situation on Duck Pond right now in terms of -

MR. E. BYRNE: Well, the company are proceeding. They made an announcement

in the fall. They are proceeding. I think the development is about $90 million

or $95 million. It is an exciting project for Central Newfoundland. It could be

upwards of 200 to 240 people working there for a decade.

The interesting thing about Duck Pond is that it is going to put a piece of

infrastructure in Central Newfoundland from the mining point of view by where

other marginal projects, that were considered marginal, may now be more

economically feasible. You know, the next two or three years will be pretty

exciting times for the mining industry. There are things that are happening in

Baie Verte on the old Rambler project. There are things happening in Labrador,

potentially along the Churchill River system, but Duck Pond is proceeding

according to plan is our understanding.

MR. PARSONS: Have they asked government for money?

MR. E. BYRNE: Yes, they have.

MR. PARSONS: How much have they requested?

MR. E. BYRNE: I think they were looking for $8 million or $9 million. We

haven't provided them with any money, and my sense is that we are not going

to. Any company that has the ability to come out and announce a project

themselves, that they are proceeding, and with a rate of return that is above

average - I don't want to get into releasing information from the company;

that is not my business to do - I mean, we just did not see why there would be a

need for us to provide money to a company that necessarily did not need it and

are proceeding with a project anyway. We will assist them in any way we can,

because they are good company, a company of good reputation, ideally suited for

the type of development that they are involved with. They have had other

developments of similar scope and size in Latin America, Brazil, is my

understanding, but we are working closely with Aur Resources as they develop

that project. A pretty important project, actually.

MR. PARSONS: Are you aware of any discussions by Newfoundland Hydro with

the company, vis- B -vis

your office being involved in any way as to construction of a hydro line?

MR. E. BYRNE: Absolutely. That is Hydro's business. Hydro has done that

for other companies. A line that would be put down, whatever rate would be

negotiated, the company would pay for eventually over the life of the project,

the cost of putting that line down there, a full cost recovery on that, yes.

MR. PARSONS: Do you know if Hydro and the company have, indeed, worked

out an arrangement whereby Hydro will be putting a line in for -

MR. E. BYRNE: My sense is that they are close. I have not had an update

on it in the last couple of weeks, but I know that discussions have been ongoing

with Hydro.

I want to point to the reason why they are dealing with Hydro. They came to

see us. They were going to deal with Newfoundland Power. Newfoundland Power

said: Yes, we can put it down there but we want the money right away. They said

that could be prohibitive. I said: Well, why haven't you talked to Hydro? Why

not talk to the company? They are in this business as well. They have done these

sorts of projects before - which they have.

My understanding is, I think that is where they are headed in terms of a

power line, and that there is full cost recovery from Hydro's point of view,

which they must do according to their own legislation that they are governed by,

but I think the relationship is fairly positive, to the best of my knowledge.

I don't know if you want to add anything to that, Bruce.

MR. SAUNDERS: My understanding is that the discussions between Hydro and

Aur Resources have pretty well concluded. In fact, Hydro may have made

application by this time to the Public Utilities Board for an increase in their

capital budget to be able to accommodate that, and that is the process they have

to go through on all of these types of projects. The application would identify

the cost of the project, and how it will be recovered over the life of the

project. I think that has either happened or is about to happen.

MR. PARSONS: If you might educate me, how would the logistics of it work

in terms of: Where would Hydro get the power from - we are talking about

building the line - to service the site once the line is built? What is the

nature of their resources to do that?

MR. SAUNDERS: Yes, Hydro would have to run a line, there is no question

about that. The exact starting point of the line, I do not know. That is a

detail that I do not have right now. I think the line was going to cost in the

order of $5 million to $6 million, and that takes it from point A into the mine

site, wherever point A is. That is not an issue from Hydro's concern. The

issue is, just making sure they get full cost recovery of it.

MR. E. BYRNE: In terms of access to power (inaudible) mines, Nugget Pond

is just about concluded, so there is power from that. Is it just management

within the grid system. It is not a specific site that is going to be dedicated

specifically to Star Lake. The system does not work like that.

Hydro believes, based on their estimates, that they have the available power

within their existing power supply to be able to supply that company, and that,

in forecasting out, Hydro has advised government, as they do regularly, in terms

of when we are going to need additional power is somewhere beyond 2012 or 2013.

So they would begin planning probably some time this year for: What are our

power needs going to be post-2012, and what projects are we going to look at?

There are still projects left on the Island that they would look at.

MR. PARSONS: What about the roads going into that? Would that be a

government issue or would that be a company issue, to put the road in?

MR. E. BYRNE: That would be a company expense.

MR. PARSONS: To your knowledge, they have not asked government to build a

road for them or anything?

MR. E. BYRNE: No, they have not.

MR. REID: Are they still proposing to use the road from the site to the

West Coast?

MR. E. BYRNE: That is my understanding.

MR. REID: That is the existing road that is there now, is it?

MR. E. BYRNE: Yes.

CHAIR: Any further questions from the Committee?

MR. PARSONS: I am not sure, Minister, while I was out for a few moments,

if one of my colleagues might have asked you this question. If I am being

repetitive, by all means, just tell me.

MR. E. BYRNE: Okay.

MR. PARSONS: Concerning the wood supply issue for the Stephenville mill -

MR. E. BYRNE: You are being repetitive. Oh, for the Stephenville mill?

MR. PARSONS: For the Stephenville mill.

MR. E. BYRNE: Go ahead.

MR. PARSONS: I am just wondering, it has always been an issue: Should we

bring wood in from Labrador or not bring wood in? How that impacts upon the

Stephenville operation? How do you see things unfolding?

MR. E. BYRNE: All I can tell you is that the company, Abitibi, with

respect to Stephenville and wood supply, have said it is an issue they believe

they can manage, that it is manageable.

MR. PARSONS: It is my understanding, and I have limited information and

knowledge about the industry -

MR. E. BYRNE: That is what they told us.

MR. PARSONS: They are, as I understand it, one of the only, or the only,

mill operation in Canada that does not have its own indigenous wood supply

associated with it.

MR. E. BYRNE: No, Kruger are the same way. Kruger are offshore wood for

about the same amount as Abitibi-Stephenville in terms of their needs. Many

mills in the country are searching right now for wood supply. There are some

extra capacities that have become available in Atlantic Canada for a number of

reasons, not the least of which is that in New Brunswick a couple of mills have

shut down.

Unlike the rest of the country, we have a very unique situation because of

our long-term charter leases, that there are not a lot of private wood lots like

there would be in P.E.I., Nova Scotia, New Brunswick, Quebec, et cetera.

I can only tell you that Abitibi, in our initial discussions, said they

wanted priority access to every stick of timber in Labrador, wanted government

to give it to them, and priority access to the remaining Crown land timber on

the Island.

My response was absolute laughter in their face - as simple as that. I said:

It is not going to happen. If you think that government is going to do that, you

are absolutely, absolutely, mad. You don't understand or appreciate what the

current environment is. We won't even talk about it with you. That was the

response.

MR. PARSONS: I am amazed at your response, that they said that wood wasn't

a problem.

MR. E. BYRNE: That is not what I said.

MR. REID: That is what I though you said.

MR. E. BYRNE: They believe it is manageable, is what I said. That is

different than saying it is not a problem.

MR. PARSONS: Even saying it is manageable is a far cry from what the

officials of Abitibi have said in this Province for some time. I am pleased to

hear it now, mind you. I notice Mr. Masters is smiling as well, because I have

had occasion to be present at some occasions when that certainly was not the

tune that was sung by Abitibi.

MR. E. BYRNE: It wasn't the tune they were singing with us sixteen

months ago either.

Now, I think, to say that, let me add this to it. I think you are going to

see Abitibi, and potentially Kruger, if they want access to Crown timber,

whether it be on the Island but in particular in Labrador, that they are going

to have to develop the types of business relationships in Labrador that they

need to develop. Watching raw product in Labrador go out over the wharf is not

going to happen unless there is going to be benefit for people in Labrador.

We have indicated in the strongest possible way to Abitibi that government is

not going to interfere with that. You are going to have to go up and do that.

You are going to have to go up and build those relationships, and we are not

going to dictate it. It is just as simple as that.

MR. REID: They have been told that before.

MR. E. BYRNE: Pardon?

MR. REID: They have been told that before.

MR. E. BYRNE: Yes.

MR. PARSONS: Minister, where are we with natural gas? Where do you see us

going as a Province when it comes to natural gas development?

MR. E. BYRNE: Pretty exciting opportunities within the next decade, in my

view. Husky has been very aggressive. They are continuing to assess their

technical and engineering and the economic feasibility of developing the gas

associated with their field, which, I think, is the North (inaudible). Is that

what it is called?

OFFICIAL: The North White Rose.

MR. E. BYRNE: The North White Rose, sorry; a significant amount of

natural gas there. What is the tcf on that?

OFFICIAL: Over 2 trillion.

MR. E. BYRNE: That is right, over 2 trillion cubic feet of natural gas

just associated with White Rose, fairly significant. When you look at what is

occurring down in the Laurentian and the Laurentian Sub-Basin now with

ConocoPhillips and the HP continuing to do their seismic work, a pretty

significant opportunity there. Just off the Labrador Shelf, there is about 5

trillion cubic feet of natural gas, potentially, there, that we believe is

there.

I guess within the next decade is when you are going to see the natural gas

develop, the infrastructure required for it, delivery to market, whether it be

through LNG, CNG, the opportunity for natural gas conversion on the Island,

those are the things that we are assessing right now. I see a pretty bright

future for it, to be honest with you.

MR. PARSONS: Minister, just one final question from me. Have you been

approached by anyone concerning the possible privatization of the Bull Arm

facility?

MR. E. BYRNE: No, and, if we were, the answer would be no. It would be

the quickest meeting I would ever have, I think.

MR. PARSONS: Thank you.

CHAIR: Any further questions from the Committee?

MS JOHNSON: I just have a comment, Mr. Chair, if I could?

CHAIR: Ms Johnson.

MS JOHNSON: I feel I need to make a comment here.

Minister, I would like to say it sounds like there are a lot of exciting

times ahead, and a lot of opportunities in natural resources in terms of oil and

gas and agriculture. I know there is some work being looked at out my way in

terms of berries, in production for neutraceuticals. In terms of energy, wind

energy, it has a lot of positive implications, certainly, on the environment in

terms of greenhouse gases. I think we have a lot to look forward to in this

Province, but especially in rural Newfoundland and Labrador.

Keep up the good work.

MR. E. BYRNE: It is a good department to be with. There are great people

there, too.

CHAIR: Any further questions or comments?

There being none, I will ask the Clerk now to call the subheads.

CLERK: Subheads 1.1.01. through 6.1.02.

CHAIR: Shall subheads 1.1.01. to 6.1.02. carry?

All those in favour, aye'.

OFFICIALS: Aye.

CHAIR: All those against, nay'.

OFFICIAL: Nay.

CHAIR: Carried.

On motion, subheads 1.1.01. through 6.1.02. carried.

CHAIR: Shall the totals carry?

All those in favour, aye'.

OFFICIALS: Aye.

CHAIR: All those against, nay'.

OFFICIAL: Nay.

CHAIR: Carried.

On motion, totals carried.

CHAIR: Shall the 2005-2006 Estimates for the Department of Natural

Resources carry without amendment?

All those in favour, aye'.

OFFICIALS: Aye.

CHAIR: All those against, nay'.

OFFICIAL: Nay.

CHAIR: Carried.

On motion, Department of Natural Resources, total heads, carried without

amendment.

CHAIR: I would like to take the opportunity to thank Minister Byrne and

his officials from the Department of Natural Resources. I thank the Committee

members again, and the House of Assembly staff as well.

Before we leave, we have to adopt the minutes of our meeting that was held

last night, so I will ask for the motion now.

Moved by Mr. Hunter, seconded by Ms Johnson, that the minutes of our meeting

for the Department of Fisheries and Aquaculture be adopted as circulated.

All those in favour, aye'.

OFFICIALS: Aye.

CHAIR: All those against, nay'.

Motion carried.

On motion, minutes adopted as circulated.

CHAIR: A motion to adjourn?

So moved by Mr. O'Brien.

This meeting is now adjourned.

On motion, the Committee adjourned sine die .