Resource Committee — Department of Mines and Energy with the minister the hon — 27 April 1994

1994-04-27

Newfoundland and Labrador — Committees

April 27,

1994 RESOURCE

ESTIMATES COMMITTEE

Pursuant to Standing Order 87, Percy Barrett, M.H.A.

(Bellevue) substitutes for Bud Hulan, M.H.A. (St. George'

s) and Lynn Verge,

M.H.A. (Humber East) substitutes for Edward Byrne, M.H.A. (Kilbride).

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

MR. CHAIRMAN (Penney): Order, please!

Welcome to our third meeting of the Resource

Estimates Committee. This morning we will be reviewing the estimates of the

Department of Mines and Energy with the minister the hon. Dr. Rex Gibbons.

I'd first like to introduce the members of our

committee, my name is Melvin Penney, I'm the Member for Lewisporte and I'll be

acting as Chairman for the meetings today. On my immediate left is Mr. Rick

Woodford, the Member for Humber Valley who is the Vice-Chairman of the Resource

Estimates Committee. On my left is Mr. Beaton Tulk, the Member for Fogo and Mr.

Paul Shelley, the Member for Baie Verte - White Bay. Other members of the

committee will be along shortly I'm sure.

I would like to welcome to the committee procedures

this morning Mr. Mark Vaughan-Jackson representing The Evening Telegram .

I don't know about the other sectors of the estimates committees but this is the

first time we've had the media present at any of the estimates procedures of the

resource committee and I'm glad to see a representative of The Evening

Telegram here today.

For those of you who are not absolutely familiar

with proceedings, this committee is an extension of the House of Assembly. The

rules that apply to the House of Assembly apply here today, except that it's a

somewhat relaxed procedure. The dress code is not enforced, coffee may be

brought into the Chamber if you wish, the Pages would accommodate you and of

course as we're familiar with members being addressed by the names of the

district that they represent, that does not apply today. Members may be referred

to by their names and if you wish, even by first names.

The procedure that we have agreed to follow with

the Resource Estimates Committee and a procedure that's been quite effective for

us, is that we will allow the minister twenty minutes to make his opening

comments and then we'll allow the Vice-Chairman or his designate twenty minutes

in which to reply. That will be followed by ten minutes per member for

questions. Rather than giving him ten minutes to ask a series of questions - and

expecting the minister to remember the questions and to give appropriate replies

- we've asked that it be done in a procedure very similar to what we use in

Question Period in the House of Assembly. That there be an ongoing dialogue

between both the questioner and the minister, the questions be brief and the

answers be likewise. That has worked quite well for us.

I would remind members of the committee that they

are not permitted to ask questions of the ministers officials but any official

that's here can, on the request of the minister, answer the questions but the

answers are then restricted to fact and they are not at all to answer relating

to policy.

Having said that, Mr. Minister, if you would now

introduce your officials and once you have done that if you would immediately

proceed then to give your opening statement. Mr. Minister.

DR. GIBBONS: Thank you, Mr. Chairman and

committee members. I have four officials with me today, on my immediate right is

my Deputy Minister Clyde Granter; on his right is the Assistant Deputy for

petroleum resources, Martin Sheppard; on his right is the Director of

Administration and Budgets for the department, Kevin Whelan; on my immediate

left is the Assistant Deputy Minister for Mines and Energy, Paul Dean. These

officials will help me to answer any of the detailed questions today that you

may put to us.

I do have a statement to make. I'd like to run

through that first to tell you all a little about what we do in the department

and would hope that this statement may help stimulate some questions relative to

the money that we spend in the department and we'll justify our expenditures of

it.

I am pleased today to present to this committee the

budget estimates of the Department of Mines and Energy for the fiscal year,

1994-95. The net expenditures in this coming year is projected at $12.6 million

which is approximately the same as the revised budget figure of the last fiscal

year. The Department of Mines and Energy is responsible for managing the

Provinces' mineral resources and energy resources in a manner that will ensure

that their contributions to the economic well-being of the people of the

Province is maximized and the department is responsible for increasing and

improving the body of knowledge on the Province's mineral and energy resources;

and encouraging the orderly exploration and development of these resources.

The department is also responsible for formulating

mineral and energy policy and providing advice to government on associated

matters, including matters involving onshore and offshore oil and gas, energy

efficiency, conservation and the development of alternative energy resources,

and to ensure the achievement of these goals, the department operates under four

main program areas. We have a geological survey, we have a mineral resource

management branch, a petroleum and energy resources branch and a petroleum and

energy economic branch. The provincial portion of the budget of the

Canada-Newfoundland Offshore Petroleum Board is also included in my department's

estimates, and for this coming year it is $2,071,900, part of that $12,600,000.

Mr. Chairman, I will turn to the Geological Survey

and tell you a little bit about what that survey does and has done in the past

and plans to do in the future.

One of the main activities of the department again

this year will be geo-scientific survey work with the objective of providing

basic geological data for the mineral exploration industry. Geological mapping

has been completed for about 50 per cent of the Province; other elements of the

data base are at roughly similar stages of completion with more completion on

the Island part of the Province than the larger, geographic area of Labrador.

Such information is a major factor in attracting explorationists to the Province

and in the discovery of new mineral deposits.

The program this year will consist of about

thirty-eight projects, that's our present number, most of which are now in the

report preparation and the map preparation phase following four years of field

work over the last four years under the Canada-Newfoundland Mineral Development

Agreement primarily. Only seven projects this year will have a field component.

Last year, as an example, with numerous field surveys, we had over thirty summer

students working. This year, as I understand it, we only have two summer

students working in the geological survey because our Canada-Newfoundland

Mineral Development Agreement has come to an end.

One of the projects this summer that will continue

to be in the field is in Northern Labrador where, in the last year or so there

has been some potential to scout for diamonds so we are continuing an

exploration program in Northern Labrador for diamonds this summer. The total

cost for the geoscience program is reduced to $3.4 million due to the reduced

field program and due to the end of that mineral agreement. However, I am happy

to report that negotiations with the federal government are currently underway

toward a new MDA or more correctly, an extension of the current MDA, and this

has already been announced publicly by the federal minister for Newfoundland,

Mr. Tobin, and we are working out the details now at the officials level and

hope to be bringing something to the provincial Cabinet in the next few weeks

that will, maybe, get us back into field work again this summer to some degree,

but we haven't concluded that yet.

We turn to the Mineral Resource Management Branch.

This branch is responsible for administering the Province's mineral land tenure

system and for regulating all mining developments and operations. This includes

the administration of the mineral land tenure legislation, for example, the

Mineral Act, and Raw Materials Act and jointly with the Department of Finance;

the branch administers mineral holdings impost Act. The branch is also

responsible for implementation of the regulatory framework and required to

control the development, operation and termination of mining operations. This

includes systematic monitoring of ongoing operations and developmental

activities and a pursuit of related opportunities in the mineral sector.

This branch is allocated $2,280,900 this year of

which $471,900 form part of mineral development agreement programs that are a

carry over from last year and, $500,000 in this branch are allocated for the

Mineral Exploration Assistance Program which we launched about a year ago in

June of '93, to cost share some advanced prospects to encourage developments of

some projects.

I would like to say a few words about the mineral

industry and what's happening in the mineral industry in the Province right now.

We have gone through a rather low time in the last few years, and we did hit

rock bottom in 1992. Last year, 1993, we came back from that. We were below $700

million in 1992 in value. Last year we came back to $732 million. We increased

by about 3 per cent in value. For this year, 1994, we are estimating a value of

$790 million, a further increase above 1993 of about 8 per cent, so we're seeing

considerable increase and improvement in the mineral sector.

The mineral sector produces about a dozen

commodities, including iron ore, gold - these are the two major ones - some

copper, asbestos, gypsum, pyrophyllite, slate, limestone, dolomite, stone, sand,

gravel, cement, and peat.

Shipment of non-metals such as asbestos and gypsum,

and structural materials such as cement and stone, accounted for $35 million,

approximately, last year, and metals, primarily iron ore and gold, accounted for

the rest.

The value of iron ore shipments decreased slightly

in 1993 because of lower prices, but only slightly; however, we still produce

approximately 55 per cent of Canada's iron ore products, and estimate that this

year, 1994, we will see shipments of about 20 million tons, an increase of about

2 million over last year.

The Hope Brook gold mine, which was very

successfully reactivated by Royal Oak Mines in 1992, about a year-and-a-half

ago, expects to produce 120,000 ounces of gold in 1994, making it one of the

largest gold mines in Canada. Last year, 1993, it produced a little over 96,000

ounces, so again this reflects some of the increasing value this year. The price

of gold has also increased over last year.

The mining industry is a major contributor to the

Province's economy. It accounts for over $500 million in export sales annually,

and contributes about $100 million to the treasury of the Province in various

taxes. It is also an important market for business opportunities in various

goods and services and, as an employer, the mining industry contributed a

payroll of about $180 million last year. If you consider that only about 3,000 -

or slightly over 3,000 - people work directly in the industry, the payroll is in

the $55,000 to $60,000 range on average per permanent employee in the mining

industry, which is quite substantial compared to some other sectors in the

Province.

The outlook for 1994, I've already given some

indications of it, we are now forecasting up to about an 8 per cent increase in

value chiefly because of an extra 2 million tons of iron ore, but also about

20,000 ounces more of gold. Also, mineral exploration is expected to improve. In

1993 the value - the final number that we got in - was about $8.5 million to $9

million, and we're presently forecasting about $15 million for 1994, and there

is an upside potential to that. It could even go a little bit higher than that.

There are a number of important events in the

mining sector to watch for this year as we move through the year. This year, I

believe, we should get the final decision on Nova Gold in Baie Verte. As I look

across at Mr. Shelley, I say we both hope so. We've been waiting for a year or

so, and I believe this is the year that we will get that decision.

There are also two additional gold deposits in that

region, one called Nugget Pond, over in the Snooks Arm area, and one called

Hammer Down in the Springdale area, and both of these are proposing to go

underground this year, with underground exploration and development. If this

work is successful, both of these, I believe, will becomes mines within the next

couple of years.

Also this year there will be no summer shutdown in

the iron ore sector. Last year IOC had, I believe, five weeks, the year before

last, eight weeks. This year they are having zero weeks, they are having no

shutdown. Not only that, in the last month or so they have started to recall

staff who have been laid off for a number of years. I think they're recalling

100 or so people this year.

In the second half of the year there will also be

further developments in the emerging dimension stone industry, and increased

production from operations that got started in 1992 and 1993.

Unfortunately, everything's not good. The Flat Bay

gypsum mine will close. Currently it's operated by Domtar, but that company has

told us that they are scheduling close down by about October of 1994. They will

produce some more this year, primarily for shipment to Corner Brook for gyproc

production but they have obtained a market in another Province and are going to

get out of the mining business themselves. However, we believe that in the

longer term we can find some other operators that may be interested in looking

at the gypsum resources of that region, the Flat Bay region, and we're going to

vigorously market these resources.

I'll now switch to the petroleum side. The

petroleum and energy resources branch is allocated $3.9 million in this years

budget. The branch is responsible for formulating policy and providing advice to

government on all matters arising out of the Canada-Newfoundland Atlantic Accord

Implementation Act for Newfoundland, also the Petroleum and Natural Gas Act and

the development of subordinate legislation and regulations related to these

acts. This branch liaises significantly with the federal government and with the

offshore board as well as with the oil and gas industry. It monitors and

interprets industry activity and provides assessment of decisions taken by the

board for government. The branch also provides a wide range of technical

expertise with a focus on petroleum, energy efficiencies, alternative energy,

social impact and community relations. The branch also is responsible for

policies and programs promoting the efficient use of energy in all sectors of

the economy.

Relative to the petroleum section, I want to say a

few things about what's happening in that sector, particularly in the onshore

sector because we've had some exciting things go on in the last year or two in

Western Newfoundland. Onshore petroleum exploration in Western Newfoundland has

continued to gain momentum during the last year. We started with an initial

request for bids a couple of years ago. We had a second one that closed last

May, less than a year ago, which resulted in an extra six licenses issued for

about 190,000 hectares and exploration commitments of about $5.7 million and

that money is getting spent.

Labrador Mining and Exploration Company, which took

two licenses in the Parsons Pond area last year, continued to do seismic surveys

in that area, adding to the work they had done on earlier licenses. Vinland

Petroleum required two permits in the Deer Lake basin and has spent some time

doing some work on the potential in the Deer Lake basin. They made an

interesting report to me a couple of months ago on their activities. They're

very enthused and they're promoting potential internationally and attended an

international oil and gas show in the United States a few months ago promoting

that.

Canadian Roxanna Resources; a new player, they

haven't been in Western Newfoundland before or in Newfoundland before to my

knowledge, acquired a permit in the Flat Bay area, south of Stephenville. They

haven't even started their exploration program and I'm hoping to see some action

from them this year. Most encouragingly though, Hunt Oil last year bid $5.1

million to get the on land permit to the Port au Port Peninsula. Since then they

have done an extensive seismic survey, they completed the survey around the end

of March - I'm not sure of the exact date but around the end of March - 87

kilometres last fall through the winter. They have identified targets and they

are seriously considering a possible well later this summer. They indicated in a

public meeting in the Port au Port area a few weeks ago that there was a 70 per

cent chance that they would drill a well that would be about 12,000 - 15,000

feet deep, a conventional vertical well on a structure, on the Port au Port. I'm

hoping that they will carry through with that and I'm looking forward to it.

Marathon Petroleum has an offshore permit in Bay

St. George. They've also completed seismic work in the bay, as well as

air-magnetic surveys in the bay in cooperation with onshore. They've identified

structures and have proposed to directionally drill a well from the onshore near

the draw into a structure in the near offshore. This particular well that

they've suggested would be about a mile deep. I think they said 5,550 feet

directionally drilled. They are presently trying to find a drilling rig that

they could bring to the Province to do that work. They have an application

before the offshore board for a permit to drill as well as an application to us

because they are drilling from on land.

It is very encouraging to have these companies

actively exploring in the Province and we can only wish them well. This is the

first time we have had this type of activity proposed based on seismically

discovered geological structures. In the past, most of the drilling that was

done was based on surficial geology and oil seeps and you could call it rank

wildcats and most of that was very shallow drilling. This time you have a little

more to go on, they are still wildcats but at least they have well-identified

structural, geological targets. I will switch now to a little bit that the

petroleum side does on the regulatory aspects of petroleum.

Global competition for petroleum investment capital

coupled with low, crude oil prices over the last few months has led to a

dramatic swing in activity and not just the last few months but the last few

years the prices have tended downwards but particularly in the last year, the

prices have been the lowest they have been in many, many years, and companies

are looking for, I guess the most prosperous place to put their money in terms

of where they are likely to have discoveries and where they can get quick return

they are looking all over the world, so we have to compete with the world in our

frontier areas.

We are trying to enhance our competitiveness in

this regard so that companies will come to this Province. Increasing

competitiveness is also a priority of other provincial and federal authorities

and we are working with the federal government and with Nova Scotia in

particular, for the Atlantic region in reviewing all regulations regarding oil

and gas legislation and the rights issuance process. We are also comparing our

situation with the situation for example in the North Sea; around the North Sea,

Norway, the United Kingdom and elsewhere. I expect to receive some

recommendations within the next few months from the work that is being done by

the joint federal/provincial committee. A number of things have been done in the

past, for example removing the 50 per cent Canadian ownership federally, a year

or so ago and we think that helps. We have also extended licences from seven to

nine years and we think that helps but we have to look at everything else as

well.

On the energy efficiency and alternative energy

side, back in 1991, I put an advisory committee in place to look at all aspects

of energy use in the Province and that committee which is made up of people from

the producer sector, the user sector, the utility and distributor sector, as

well as the federal government, looked at it and put together what they call

the: 10-Year strategic plan for energy efficiency and alternative energy. In

1992, that plan was approved by the provincial government and included in the

Province's Strategic Economic Plan, with the objectives primarily of a 20 per

cent improvement in efficiency and energy use and a 50 per cent increase in the

use of alternative energy sources.

These measures contained in the plan are designed

to meet these objectives by stimulating economically, viable energy options. A

recent progress report on the first two years of the plan shows that

twenty-three measures have been implemented by the government, by the utilities

and by other participants since we started, so we are making progress. Actual

expenditures have totalled $3.7 million, with the main provincial contribution

being the staff of one particular division in the department. The resulting

investment as a result of this money has totalled $10.8 million. Of particular

interest is a reduction of energy costs in government-funded institutions. There

have been a number of energy performance contracts for example, where, the

private sector paid the bills and are getting paid out of the energy savings so

it is not costing us anything, and several other such projects are underway

right now.

Also, jointly with the federal government and a

company called Superior Propane, a pilot project is underway to sponsor a

transfer to the use of propane fuel as a transportation fuel. Our participation

here was to reduce the tax on propane from 15.7 cents per litre to 7 cents a

litre and we are having some effect; about 120 vehicles are now converted and we

are aiming for 2,000 vehicles in Newfoundland within the next four to five

years. On Monday, April 25th, two days ago, I informed this House about the

signing of a four-year Letter of Co-operation on energy efficiency and

alternative energy with Canada, with my federal counterpart, Miss McLellan.

This agreement provides for an orderly planning and

control of co-operative initiatives to boost energy efficiency and the use of

local alternative energy resources and it follows from Action 95 of the

Strategic Economic Plan.

In addition this year, and in this Budget, we have

funding for an integrated energy resource plan for the Province. This plan is to

be prepared in co-operation with the energy industry and the Public Utilities

Board with advice from that advisory committee, and it is a recommendation of

the advisory committee coming out of its planning over the last two years. The

intent of the plan is to establish a process that would lead in this Province to

the least cost-mix for future supply and demand options.

I want to say a few words about the Offshore

Development Fund. The Canada Offshore Development Fund, a $300 million fund that

was put in place when this Province started towards the development of the

offshore. To date twenty-five projects have been approved and the total

commitment to now is $279.4 million and the balance in the fund is only about

$20 million which is very little. I do not know if there are any new projects

coming forward but certainly we need to keep a few dollars in the fund in case

something particularly important comes forward.

On the offshore I probably should say a few words

about what is happening with Hibernia. I know it has been in the news quite a

lot but I want to emphasize some of the positives of what has been happening in

this Province relative to Hibernia. I want to say a little bit about

expenditures. Up to March 31, the end of last month, expenditures on the project

have totalled $2.17 billion with 70 per cent of that money in Canada and 39 per

cent of that money in Newfoundland, so $390 million out of every billion in the

last few years has been spent in Newfoundland.

As we look forward for the next three years we are

looking at at least $1 billion a year until Hibernia floats out to sea, three

years at $1 billion a year, and again assuming the same amount we are looking at

again about $400 million per year being spent in this Province on Hibernia.

One of the positive things about this is the number

of people directly employed. At the end of March there were 4,017 people working

in this Province and 3306 working at Bull Arm, 519 in St. John's, and 192 in

Marystown and some others internationally, but over 4000 in this Province. A

year ago the number was less than half that. We are reaching towards the peak

and this summer we expect to reach the peak, but when you look at Marystown

there are now around 200 and looking down the road a year, by this time next

year I believe Marystown should be pushing 400 to 500, maybe close to 500 people

on the Hibernia project. At Bull Arm 3300 should be become 3500 this summer, and

I expect it to go higher than 3500. I do not know what the top will be but it

will continue to grow.

On March 31 an office in Montreal that had 183

people working in it closed and these people, most of them, transferred to this

Province, so approximately 200 people came down from Montreal and started

working here the first week of April. We are at least 4200 right now in this

Province and still growing, a lot of direct dollars going into our economy.

The super module being built at Bull Arm has passed

the 50 per cent mark. They had a ceremony a few weeks ago when the passed the 50

per cent mark. They have done great work and the people working on it have

received great praise because not only is the quality good but the productivity

is good and they are ahead of the Koreans who are building two super modules and

they are ahead of the Italians who are building two super modules.

MR. CHAIRMAN: Order, please!

I remind the minister that he has gone over his

allocated time of twenty minutes, but if the committee is prepared to give him

leave we will allow him to continue.

DR. GIBBONS: If you could give me two minutes

then we can wrap it up? I will not go to the end of the notes I have here.

MR. CHAIRMAN: Mr. Minister, proceed.

DR. GIBBONS: The other thing I want to mention

about Hibernia concerns Marystown. Even though we were disappointed earlier on

in the year and did not get one of the contracts we were working hard to get we

did finally get contracts for drilling derricks, and the driller's pipe rack,

modules 71, 72, and 73, and we also got contracts to build two supply boats, so

in total right now we believe the amount of work at Marystown is about equal to

what we expected to get with the earlier contract we bid on and did not get.

Another thing we have worked on considerably in the

last year is in the royalty area, the economic section. We spent a considerable

amount of time on royalties and recently, a few weeks ago we approved a royalty

regime for the onshore sector of the Province and are presently continuing some

work to get one for the offshore sector, a generic royalty system, and we hope

to finish that in the next few weeks.

I will stop there, Mr. Chairman, and let the

vice-chair have it.

MR. CHAIRMAN: Thank you, Mr. Minister.

Before we proceed any further, I would ask if I

could have a motion to adopt the minutes as distributed, the minutes of the

previous two estimate committee meetings, April 19 and April 20, dealing with

the estimates of the Department of Industry, Trade and Technology, and the

Department of Tourism and Culture.

On motion, minutes adopted as circulated.

MR. CHAIRMAN: I would like to take advantage of

the opportunity now to welcome another couple of members of our committee, Mr.

Don Whelan, the Member for Harbour Main, and Mr. Percy Barrett, the Member for

Bellevue, who will be filling in this morning for Dr. Bud Hulan, the Member for

St. George's. I would also like to recognize this morning Mr. Glenn Tobin, the

Member for Burin - Placentia West.

One point that I omitted when I was going through

my opening remarks is to remind officials that if they speak in reply to

questions we would ask them to first of all introduce themselves, and secondly

to lean into the microphones. In the Legislative Chamber here we're used to

standing to speak, and the microphones are placed accordingly. Today you will be

speaking from a sitting position, so we will ask you to lean into the

microphone, and for the benefit of the people doing the recording that you would

introduce yourself so that it can be properly noted in Hansard.

Having said that, I will now turn it over to Mr.

Woodford.

MR. WOODFORD: Thank you, Mr. Chairman.

The minister, in his remarks in his opening

statement, one of the statements he made, and one of the comments he made, was

pertaining to the onshore oil exploration and activity on the West Coast of the

Province.

You mentioned Hunt Oil in the Port au Port area,

and you mentioned Parson's Pond, I think, Labrador Petroleum, is it?

AN HON. MEMBER: Labrador Mining and

Exploration.

MR. WOODFORD: Labrador Mining and Exploration.

AN HON. MEMBER: A subsidiary of Norcen Energy.

MR. WOODFORD: In the Parson's Pond area. He

also mentioned in the Deer Lake area there was some activity especially as it

pertains to Vinland Petroleum.

Could the minister elaborate on that particular

area and tell me what has been done in the past year there, and what are the

plans for the upcoming year?

DR. GIBBONS: Yes, Mr. Chairman, Vice-Chairman,

Vinland is a local, Newfoundland based company that has obtained I believe it's

three permits in total - two in that area and one in the Northern Peninsula

area, I believe it is - and they did a survey of all the available literature as

well as some field work this summer, and they looked at the possibility that

they might try to do a seismic line across the basin this year. They have not

done any seismic to date. It would start to get into significant dollars to do

seismic, but the geological model that they showed me was very interesting

looking, and they seemed to be very enthused about it, and they were hoping to

be able to do a seismic profile across the basin as their next step.

I think they are working on the possibility of

trying to arrange that in the future. I haven't heard anything from them now in

about two months, I believe, but they made a presentation to me in my office and

showed us what they had done, and they put together a nice picture of the

geology of the basin and what they consider to be the potential of the basin.

The rocks are of the right age that there is

potential for oil and gas, but we have no known sources, although I think there

might have been some gas puffs in the past - are you aware of that - from some

of the drillings, from the shell drillings from gas pumps, but there is

potential there with the rocks of this particular age that they could have some

gas and oil. It doesn't have the same historical work that we know about in

Parson's Pond or Shoal Point on the Port au Port, but it has some potential and

they're promoting it.

MR. WOODFORD: You also mentioned that you have

agreed, and came up with a royalty scheme for the onshore development, because I

think that one of the concerns that Hunt Oil had in the Port au Port area for a

few months was the royalty scheme, and whether they - I don't know whether they

- maybe it was just rumour, whether they are going to keep on drilling or make a

decision to drill a well this summer. So you've mentioned that you got a royalty

scheme, is that scheme favourable to the companies and have they agreed so far

with it?

DR. GIBBONS: We've reviewed it with the

companies and it's approximately like a scheme that's in place for Canada Lands

by the federal government but a little less onerous then that particular scheme

because we are, in a sense, a virgin area where there's no production going on.

We have reviewed it with the companies and it appears that it's acceptable to

Hunt Oil. It's very comparable actually to a proposal that they made to us when

they were looking at what the potential number should be. There's some

variations in structure but in terms of the take by the industry, by the

government from the industry is about the same as what they saw as appropriate.

MR. WOODFORD: I understand that there's an

environmental assessment being done now that pertains to the Tiara Marble

Company on the Goose Arm Road, the dimensional stone whichever, could the

minister give me a run down or his officials on the status of that particular

development now?

DR. GIBBONS: Yes, well I know that we helped

sponsor some drilling on that particular development last fall under our mineral

exploration incentive program. As a matter of fact we contributed $38,125

towards a joint project where we go up 50/50 on the drilling, up to $80,000. So

they did a project that was twice that I guess and I know that they had to get

approval from environment to even get that drilling to go ahead. Now I'm not

sure exactly what the status is of the other environmental work there but

they've got a huge marble deposit that has a variety of colours in a number of

spots. What I should do is ask Paul Dean, the Assistant Deputy, who is most

familiar with that and maybe Paul can give a more detailed report.

MR. DEAN: The drilling that was done last fall

by Tiara identified the best type of marble and the marble that would be most

acceptable in the marketplace, the colour and texture. There's a variety of

marble types there, as we know. So the next stage is to remove some commercial

blocks. In order to do that on a commercial basis the Department of Environment

and Lands has asked for an environmental preview report. My understanding is

that the terms of reference for that report have been finalized or near to being

finalized - the terms of reference included public hearings at the Legion in

Deer Lake. I don't think the preview report, as such, is very far along and

until that report is completed and the public hearings are taking place then the

quarrying cannot proceed. Hopefully that will happen in 1994.

MR. WOODFORD: Could the minister or his

officials give me a so called status report on the Glover Island activity as it

pertains to the exploration for gold?

DR. GIBBONS: Yes, Mr. Vice-Chairman, there was

drilling on Glover Island as well last year. As a matter of fact there were two

different drilling projects on the island, two different zones. We again

cost-shared one up to $80,000, the maximum under our exploration incentive

program with the company, again a Newfoundland based company, and that was the

Lunch Pond zone on Glover Island and we cost-shared Kettle Pond drilling as well

for a total of $16,317 for us. I don't know exactly where it sits today and what

they plan to do in 1994 but again I would ask Mr. Dean if he could give us some

more details on what he knows about their plans for 1994.

MR. DEAN: Thank you, Minister. Some of the

drilling that took place in 1993 was successful. There's a lot of gold on the

southern end of Glover Island but to date, I guess I could say in

summary that a

large enough body of sufficient grade hasn't been outlined by exploration. So

it's our view in the department that more exploration is required. Most of the

exploration that's been done there to date has been encouraging but the grades

have been relatively low versus some of the deposits on the Baie Verte Peninsula

for instance

MR. WOODFORD: Minister, I can't help but take

notice that this morning there are no officials available or present from

Newfoundland Hydro. Every other year that I have been involved in the estimates

there have been officials available from Newfoundland Hydro to either assist the

minister or whatever, for informational purposes, whichever. In any case, the

report from Newfoundland Hydro from last year, is there any indication when that

will be available?

DR. GIBBONS: Yes, I know that. Mr. Vice-Chair,

I have to tell you that in my memory I don't think there was anyone with us from

Newfoundland Hydro last year. I know in some earlier years they were with us

because there were line items in the budget related to Hydro in terms of

subsidies that the government was paying to Hydro, but last year there was no

one from Hydro with us, and this year there is no line item in my budget dealing

with Hydro. We no longer pay any subsidies to Hydro. They're not present in the

budget, but the annual report from Hydro is a different matter. The statutory

requirement of Hydro is that that report be available to me, that I receive it

by April 30, so I shall receive a copy. They have never failed yet to deliver

the annual report, provided to me by the statutory date, April 30, which day is

what, Friday of this week?

AN HON. MEMBER: Saturday.

DR. GIBBONS: Within fifteen days after that, I

believe, I am required to table it in the House of Assembly, so in the next

couple of weeks I would expect that the published report will be available.

I have been told that the report is at the printer

right now being printed, and we're waiting on completion of the printer. As soon

as it comes back from the printer then the one for tabling in the House will be

available, but I will receive the statutory copy no later than April 30. The law

requires that they give it to me by that day.

MR. WOODFORD: Minister, approximately a year

ago - and you can clarify that for me; I don't know the exact date, but I think

it was approximately a year ago - you said, I think it was in last spring's

session, before we ended in June month, that the privatization of Hydro was not

viable at that time. Correct me if I'm wrong. Why would there be a difference in

the privatization of Hydro not being viable last spring and would be in the

fall, a few months after? Can the minister explain that statement?

DR. GIBBONS: Mr. Vice-Chair, I don't remember

ever saying that privatization was not viable. I don't remember ever saying the

privatization of Hydro was not viable. I don't know where that comment is...

What has changed, we had not made any decision on

the privatization of Hydro a year ago, and I think we have been over and over

that in the last few months, but we've been assessing it and we made the

decision two months ago that we were going to proceed with it, but only after a

lot of analysis and finally a decision by the government.

A year ago I would not have known whether it was

viable or not in terms of an analysis that was done, because at that time we had

not completed any analysis. This is April. It was January a year ago that we

started the second assessment of the proposal from Light and Power to buy some

components of Hydro, in particular the 15 per cent of distribution assets now

owned by Hydro, including the rural diesel areas, and some transmission related

to it. We started that analysis in January, the second time around. We had done

it, as everybody knows, back in 1989 relevant to a report from Fortis to buy

some components, but we had not done a great detailed analysis of Hydro for

privatization. We have done that in the last twelve months or so.

MR. WOODFORD: Can the minister tell me whether

- I heard early last fall there were some rumours, nothing official, just some

talk around, that Newfoundland Hydro was thinking about - there was a

possibility of them going for a rate increase. Now I haven't heard anything

since and, like I said, there might not have been anything to it, but would

there be anything the minister could tell me that would indicate, whether they

are privatized or not, that Newfoundland Hydro would have to go for a rate

increase in any case, in the past year?

DR. GIBBONS: Mr. Vice-Chairman, the last time

that Hydro was in, again I don't know the exact dates but it was in 1992 I

believe that Hydro was in to the Public Utilities Board for a rate hearing and

at that time the Public Utilities Board ruled and gave a report, effectively

gave them no increase, effectively left them with fixed rates. It was at that

time that we, as a government, made a decision that we were not going to allow

even a recommendation of the PUB to carry forward relative to some recommended

increases in rural diesel areas and said that we were going to have a policy

hearing on rural diesel rates. That one did get called last year although it did

not get held because it got tangled up in a sense with the timing of the Hydro

privatization assessment. Hydro said a year ago that they were not going to look

for any increases for 1994, I think I said that in the House and they did not

look for any increases for 1994. What we are now saying is that Hydro would

expect to go to the Public Utilities Board in the fall of 1994 for new rates for

1995 subject to privatization. It would be a rate hearing in the fall of 1994

for next year but they decided they did not need to go in in 1993 for a rate

increase for 1994.

MR. WOODFORD: So what the minister is saying,

whether Newfoundland Hydro is privatized or not, that they would be going to the

PUB in 1994 for a rate increase?

DR. GIBBONS: No, I am not really saying that. I

am saying subject to privatization - they certainly said since we have been

dealing with privatization in the last few months - they certainly said that

they would be going to the Public Utilities Board in the fall of 1994 for a

review of rates for 1995 for a privatized Hydro and I don't think we have made

any comment on what they would or would not do if it were not privatized, I have

not discussed that. I have not said anything publicly on it either.

MR. WOODFORD: Wouldn't it be obvious that if

you went for a rate increase for a privatized Hydro based on what the minister

and the government has made available now, that surely god they would be going

for one, if they are not -

DR. GIBBONS: They probably would as well, again

that would be subject to the company making that decision. Then the PUB ruling,

they could rule like they did in 1992 saying: sorry you get nothing or they

could give them something depending on what is being asked for but the last time

they went in in 1992 they did not get an increase. They were allowed to keep - I

believe, if I understand it right - the same base rates.

MR. WOODFORD: Has the minister or his

officials, been approached or know whether Newfoundland Light are planning to go

for an increase this year?

DR. GIBBONS: I have not heard anything on it.

Again, last year they decided not to go in for a rate increase for 1994 and I

have not heard any comments from that company as to whether or not they would be

going in 1994 for 1995 but normally these companies have been going in about

every couple of years. That has been the normal practice, every few years they

would be going into the board and getting a review of rates and review of costs.

MR. WOODFORD: A few years ago - I just forget

what Budget it was now, I believe it was Budget 1991 - there was a statement on

mini-hydro sites in the Province, up to 15 megawatts and so on and there was a

lot of activity over the last couple of years by small companies around the

Province and outside the Province as it pertains to mini-hydro sites and hydro

developments in areas of the Province. In fact, there were a number of

submissions given to Newfoundland Hydro at the time and I think they called for

a total megawattage of some fifty. I think there was a total of 50 megawatts

called in small hydro sites, so there were a number submitted to Newfoundland

Hydro, I know that and there were some adjustments made as it pertains to the

tender at that time because of the local preference policy, that had to be

recalled and I think that deadline was last August. Has there been any activity

or, why hasn't there been any activity since that? Would that have anything to

do with this proposal to privatize or what, because there has been absolutely

nothing on it since last August?

DR. GIBBONS: No. I can bring the hon. member up

to date on that. Vice-Chair, you and I, both recall when the amendment was put

through this Legislature to allow up to fifty megawatts to be done by private

developers and Hydro put out the proposal call looking for, in a sense, the

first time around looking for expressions of interest and they received

expressions of interest on over thirty sites; and then, the second time around

which was last year, they said: okay, now let's get serious and let's get the

detailed, specific proposals in with the quality of power that could be

produced, and proposed rate at which that company could develop that quality of

power.

Initially, that was supposed to be decided on, as

you said, mid-summer last year, last July-August, but things had been changing

in the last two years in terms of our energy demand on the Island; our growth in

demand had decreased because, primarily of our recession so instead of needing

these sites to be available by 1996-'97, which was what we thought two years

ago, the date kept getting pushed later, and now, the sites don't need to be on

stream until 1998-1999, because our energy demand has flattened considerably,

and has not grown so steeply as it was growing when the initial proposal call

went out.

The initial proposal call said up to fifty

megawatts. The final response that came in last year had, I think, eleven

projects totalling something over 100 megawatts. Hydro reviewed these proposals

and they selected four, that totalled thirty-eight megawatts. They didn't select

fifty because the call only said up to fifty and if they had selected one more

it would have put it over fifty and the next one in line I think would have

driven it to about fifty-three or so, but they took the four projects that bid

the lowest four prices and were all technically acceptable.

The companies that did not win were informed in

December. There were seven companies that bid, were informed in December: we are

sorry, you are off the short list, we have done our evaluation, we have

short-listed four, the rest of you are gone. The four that were short-listed are

then reflected in the privatization legislation. They are reflected in that

legislation saying that Hydro could purchase up to thirty-eight megawatts of

small hydro from these sources without requiring PUB approval to buy these

thirty-eight megawatts of power.

Because they are part way through the process, it

is a legitimate process done through public proposal call, following the rules

of the Province, and what Hydro was told, the four that are on the short-list is

that, we will tell you by June, whether we need your power in 1998-'99 or not.

We are presently reviewing our demand forecast - and they do this every six

months approximately - our demand forecast, right now we are thinking we will be

needing in 1998-'99 and we are going to tell you by June, so within the next

month or so, these companies will be informed and if it is yes, then we will see

them start to get on with their field work and get into the construction in the

next year or so to have power available by 1998. If that power is then developed

and available by 1998, that power would take us through to at least the year

2000, maybe 2001, depending on our growth rate at the time, maybe 2002 even.

MR. WOODFORD: Could the minister tell me the

names of the four companies that were short-listed?

DR. GIBBONS: Abitibi-Price and Star Lake is one

of them; a company in your district -

MR. WOODFORD: Algonquin?

DR. GIBBONS: - Rattling Brook is it?

MR. WOODFORD: Rattling Brook, Algonquin Power

out of -

DR. GIBBONS: Rattling Brook, I can't remember

the name of the company but it is about a four to seven megawatt project and

there is one on North West Brook, another on South West Brook in the Trinity Bay

area, so these are the four that are on the short-list. I don't remember the

exact names of the companies but these are the four areas and one of them is

your area.

MR. WOODFORD: So the Abitibi-Price one must be

a fairly big one, is it?

DR. GIBBONS: No, it is a fifteen megawatt.

Nothing is bigger than fifteen and I think we have two fifteens in this total

plus a seven and a four, but the total is thirty-eight, and they will get their

decision by June but they are on the short-list as the winners, subject to

getting a decision in June that the power should be available by 1998.

If the demand shows the power is not needed by

1998, they may have to be told: We're sorry; we don't need your power until

another year later, because they should not put the cost of any new power into

the grid, because the rate payers will have to pay, until it's needed, so this

is why the company is being cautious about it and saying: We only start buying

when we need.

MR. WOODFORD: One final short question, Mr.

Minister. What would be the excess megawattage in the Province now?

DR. GIBBONS: There isn't a big excess as such.

MR. WOODFORD: It's just the demand is not

there.

DR. GIBBONS: That's right; the growth is not

there. What Hydro tries to do is have enough to meet the demand plus a cushion,

so they always try to maintain that cushion, and I don't remember exactly what

the number is, but they try to maintain that cushion.

Even in 1998-'99 you wouldn't be down to the two

things meeting. There's still that cushion there, but they always have to keep

the cushion because when you hit the cold periods in January, February and March

you reach certain peak levels and you have to be able to handle those peak

levels. So they have energy demands and power demands differently.

MR. CHAIRMAN: Thank you, Mr. Minister. Mr.

Tulk.

MR. TULK: I have a couple of questions for the

minister on the peat industry in the Province. The minister will recall that

last year there was an international conference in Corner Brook on this very

industry. I think it's safe to say that the peat industry in Newfoundland right

now is in its infancy; at least it's not in an embryo stage or something. That

conference was a very good conference. It is one of the best that I have

attended in the forty years that I have been alive, but I am not aware that

there is -

AN HON. MEMBER: (Inaudible).

MR. TULK: Forty years, that's right.

AN HON. MEMBER: (Inaudible).

MR. TULK: My grey is premature.

I am not aware that that much has happened in the

Province since, or what has been the follow-up. I would like for the minister to

elaborate on that somewhat, and perhaps outline to us in what particular areas

of the Province that the economic possibilities are, and just what he foresees

happening in the very near future for that kind of thing.

DR. GIBBONS: Thank you, Mr. Tulk.

There is no question that this Province has some

huge peat resources and, as a geologist myself, my familiarity with that

resource goes back to when I was a student geologist. The first year that I was

a student geologist thirty years ago, out on a field survey for this

Newfoundland government, there was another field party out there doing a peat

survey, and I remember the book they put out in 1968 on the peat resources of

this Province. They are huge. They are still there, for the most part, and we

haven't had a lot of development.

We, as a department, participated, and as a

government, and some other agencies of government, participated in organizing

that particular conference last fall. We have always tried to promote the growth

of the industry.

I think what is unfortunate about the peat industry

is it's a low value industry for the most part, but we have had some progress.

For example, there is a high point peat company in central Newfoundland that has

had some great success with peat as an oil absorbent, because that is a high

value type end product, and they are manufacturing it and shipping it around the

world. Most of their markets for peat are down around the Caribbean, primarily

tied in with oil clean-up and some things like that, but they are exporting it

to Texas, they are exporting into Argentina, Venezuela - I think Argentina -

anyway, most of the product that is produced goes to export, and that is where

they are getting the high value for this product.

The horticultural area of peat seems to be a low

value, and we haven't made much progress in that, and we still want to promote

it, and there is also some discussion, consideration still, of peat for energy.

A lot has been in the news, of course, about the proposal at Stephenville to

have a peat burning facility there, but at this stage it hasn't been approved.

We have several permits out in our department on peat bogs for development; some

are in the operating stage and some that are just there, I think, looking for an

opportunity and I wish we could move faster.

MR. TULK: Mr. Chairman, I presume we have ten

minutes to go back and forth?

MR. CHAIRMAN: (Inaudible).

MR. TULK: Mr. Chairman, the Stephenville

project, I think it is the Stanton Group.

Those people were at that conference last year, and

I wonder if the minister could elaborate on that and tell us just what the

status is on that project without of course, endangering the project itself,

and, if any comment he makes publicly, will endanger that project, then of

course, I can understand he would not want to make it; but I wonder if he could

fill us in on the status of that project, just where it is and what are the

problems being encountered with it, because it seems to me that, that is a major

project for that area.

It is highly labour intensive and will employ a

great many people as well as add to our, I suppose, probably a surplus of

electricity in the Province, but it will certainly add to the amount of

electricity that we have in the Province and will probably lead to technological

spin off in the peat industry. I wonder if he would like to comment on all those

things about the Stanton project in Stephenville.

DR. GIBBONS: Well again, Mr. Chairman, I don't

want to get into great details on it but it is a project to burn peat, that will

be one of the fuel sources and a generator at the Abitibi mill in Stephenville.

This type of generation was not included in the proposal call that Hydro made a

couple of years ago; they were looking for small hydro as the sources, and the

Stephenville proponents have been saying that they should be considered too and

they are still talking about ways that that might be possible, but I am not sure

if there are ways in the short time, but I guess the initial message is, as I

said a few minutes ago to the Vice-Chairman, if Hydro takes the four small hydro

projects totalling thirty-eight megawatts for '98-'99 supply, then, there is not

going to be a need for any new supply to go into the grid until 2000, 2001 or

whatever the year is depending on our demand growth, so I think Stanton and the

Abitibi people at Stephenville are looking at other possible options to try to

have their project considered earlier and I don't know what will happen to that.

MR. TULK: Yes. There is one other question,

minister: Is this project with Stanton, are they requiring any public money, or

are we just looking at private money? Has there been any public money put into

that, or any assistance from government in other words I guess, is what I am

saying, at either federal or provincial level and to what extent or, are we

talking about private money and just how much are they prepared to invest in

that project themselves?

DR. GIBBONS: I think for the most part, most of

these small energy projects that I have talked about including Stanton and the

small hydro, are presently using private money. Some of them may have had access

to some money from, maybe ACOA, in doing their assessments initially, but

certainly after selection of the project whichever it should be, it would be all

private money, it would not be government's money, it would be outside money.

MR. TULK: Okay. It could turn to another aspect

though. When we talk about what is happening with the peat industry in

Stephenville, I think we are talking about the fuel side of things, however that

fuel is converted, and in this case I think it will be converted into

electricity, but we are talking about the fuel side of the peat industry. There

is the other side as the minister mentioned and that is the horticultural

industry, peat industry that is possible.

There was a great deal of interest in that

conference last fall. There were people from Ireland, people from Germany,

people from all over the world actually at that conference, who expressed some

interest. Has there been any developments in those fields from, let's say,

foreign countries, expressing any interest in coming here and getting into the

horticultural peat industry at all or, are we still where we were before the

conference, because I say to the minister, I think it is a shame if there is no

follow-up to that conference. I think it's a shame, because I think there's

great potential particularly, I might say to the minister, in my own area, in

the Gander to, shall we say, Lumsden area, in the Bonavista North area where we

were told, I think, at that conference, or led to believe, that of the

inventories that have been done of horticultural peat, the peat in, shall we

say, the Bonavista North and Gander area is probably the highest quality of

horticultural peat that you could find in Newfoundland, and certainly has the

greatest amount. I am not sure about the quality, but I think it has probably

the greatest amount.

Could the minister comment on that whole area to

say what is happening? Is anything happening, or is this another conference that

was just held and that will be the final end of it? Because it was a great

conference and it's a crime if somebody doesn't follow up and try to get those

people interested in this thing.

DR. GIBBONS: Certainly, Mr. Chair, our

intention is to continue to follow up wherever there is an economic possibility

and, as Mr. Tulk said, we do have great resources on the peat side, but the

problem seems to come down to the economics of taking this type of resource and

getting it out for export, and a number of companies have looked at different

options to do that so that it could be done in an economic way.

We unfortunately have a problem with the cost of

transportation if we're trying to take low value product a long distance, and a

lot of competition on it, unless you're dealing with a high value product like

the stuff at High Point where they're dealing with advanced products, Oclinsorb

(?). The value doesn't seem to be there unless you find some way to take it out

in bulk, and that's still being looked at, so there are still those who want to

do that, and we want to encourage it, and I want them to find a way to do it,

but transportation costs seem to be our biggest negative factor. There's no

problem with the resource. We are not bound by the quantity and quality of the

resource; there's plenty.

MR. TULK: Thank you.

Just one other question, Minister: How big a

problem - you might want to get one of your officials to answer; no, the

minister is probably an expert in this as well - is the weather conditions in

Newfoundland, because peat demands a fair amount of dry weather, I believe. I'm

not an expert. How big a problem is weather itself in Newfoundland in terms of

the drying of peat and turning it into either a fuel or a horticultural product?

DR. GIBBONS: Mr. Chairman, I'm not an expert in

that either.

MR. TULK: Aren't you?

DR. GIBBONS: No, not on the weather.

MR. TULK: I thought you were.

DR. GIBBONS: I have been told -

MR. TULK: You're too modest.

DR. GIBBONS: I have been told that our weather

is one of our problems, that we have so much rainy weather that we are limited

in terms of the number of drying days - or drying hours, even - that are

available to get peat available for energy or otherwise. That is one of our

problems. I don't know if Paul Dean or Martin Sheppard might want to add to

that.

MR. SHEPPARD: Just to confirm what the minister

says in terms of the drainage problems we have, there has been some work done

into a procedure for draining the bogs, called mole (inaudible) -

MR. TULK: I saw it last year, yes.

MR. SHEPPARD: - which is a specific technique

that seems to get rid of the moisture better than conventional techniques but,

as you say, the drying season is very limited in Newfoundland, and that is one

of the severe constraints that we are faced with in terms of peat development,

either for horticultural purposes or as a fuel.

MR. CHAIRMAN: Okay, we will go to Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman.

I have a few questions to start with relating to

the mining, just one specifically to the estimates, on page 157, 2.1.06. That

has to do with the MDAII, of course, the Canada-Newfoundland Cooperation

Agreement. That is the whole reason for the increase from $682,300 in total, to

$92,100?

DR. GIBBONS: Okay, page number is 157.

MR. SHELLEY: I realize that that has ended, the

Canada-Newfoundland Corporation Agreement, the mineral development. That $92,100

that is there now for the estimates, is that the same amount that was there

while the agreement was in place?

DR. GIBBONS: No.

MR. SHELLEY: For the provincial allocation?

DR. GIBBONS: No, this is some carry-over money

to help with some reports and to get some maps done because anything that is

approved by March 31 and not spent, can be carried over into this fiscal year.

So that is some carry-over money under the agreement and you can imagine that

people who have been working on reports and maps and doing field work for the

last four years have a lot of reports to do, maps to complete, so there is some

carry over this year for them to complete that work.

MR. SHELLEY: Okay, that is the carry-over - the

question I guess basically is that there is no money from the provincial this

year that has gone into that?

DR. GIBBONS: Yes, but if you look at a

different page, on the next page you will see Mineral Resource Management -

MDAII, here is where we have approved some carry-over money in that particular

category. On the field survey side, Geological survey side, the field work was

finished as of last year. So now it's just a matter of reports and maps that

(inaudible) but if you look at that next page, you can see that we still have a

fairly significant amount being carried over this year under the agreement and

you see some big numbers there. For example, under Grants and Subsidies, under

Mineral Resource Management, you see $175,500, that is for the prospectors

grants and training programs. We have a course that is starting next month, May

28, for example where in the fourth year we do the prospectors training program

at Stephenville. This year we are going to have forty prospectors grants, in

previous years we had given out twenty-five a year, this year we had enough

money to carry over, in the final carry-over year of the agreement, that we can

give out forty grants. So we are still trying to stimulate that sector.

MR. SHELLEY: Okay, well that is a good answer

because that was the question I was leading up to and that's the courses for

this year and if it rolled into this particular part.

DR. GIBBONS: Yes, that is covered because we

approved it and carried the money into the Budget.

MR. SHELLEY: Are you saying Stephenville, those

courses -

DR. GIBBONS: We have held them every year in

the Stephenville Community College because it has some excellent facilities. It

is an excellent base because it is only a short distance from various types of

geology and mining opportunities that people can study.

MR. SHELLEY: And of course to tie this all

together with geological survey - I think I read in your book that there are

something like 96 per cent, 96.5 per cent actually, have their provinces

available for mineral exploration and of course exploration will take place - of

course a big incentive is to have good work done in geological surveys and that

is the whole reason behind all of this, right? That is what I was leading up to

just then in the estimates.

Okay, some more specifics now and a lot of it

happens to be in my district so I guess I have to ask them from that

perspective. The first one I will mention - and it has not been talked about

very much lately but I would just like to have an update on it - is C-Core and

what they were doing at the bay there in Baie Verte? I think there was some

scuba diving, some dragging going on there and some problems with the fishery

for a little while but I think that is cleared up?

DR. GIBBONS: Paul will probably be able to give

me an update on it but you are right, C-Core did some contract work for us in

the Near Shore area because we wanted to work on the Near Shore where we know

there are gold prospects. So we wanted to do a little bit of surveying and they

found some interesting gold numbers in the Ming's Bight area, around Baie Verte.

They wanted to do some dredging to see if it could be economically done but from

the test sampling that they had done, they had some very interesting numbers. I

don't recall the details, I have not talked to anyone recently, so maybe Paul

Dean could -

MR. SHELLEY: That is what I was wondering, if

it is to be continued.

MR. DEAN: Thank you, minister. Within the bay

of Baie Verte itself, there are several small placer gold deposits. C-Core

identified one at Deer Cove and they wanted to do a test marine mining project

on that site. They consulted with local fishermen's committees in the region and

the fishermen felt that there would be a conflict, there would be a potential

disruption of fish habitant with this. So they said: no, we are not in favour of

this.

There were a couple of other sites, one in Gander

Bay and another site near Pine Cove within Baie Verte, which appeared to be more

acceptable. So some test work was done at Gander Bay site by C-Core last year

and my understanding is that C-Core is proposing to do some further work at the

Pine Cove site in Baie Verte in 1994 and 1995.

MR. SHELLEY: There is no conflict with the

fishermen at the Pine Cove site though, is there?

MR. DEAN: None that I am aware of.

MR. SHELLEY: I thought that when you consulted

with the fishermen on the first site, wasn't that resolved after? Didn't they

agree that it wouldn't disrupt the habitat?

MR. DEAN: If there was a resolution, Mr.

Shelly, I am not aware of that.

MR. SHELLEY: Okay, because I haven't heard

anything about this particular one since, and I don't know where it's been

going. That is why I thought I would bring it up today. Is there any outlook for

this summer of them continuing in the Pine Cove area?

MR. DEAN: Yes, there is a plan to do some

further test work in the Pine Cove area, and then move forward somewhere in the

Province, likely Baie Verte again, with a full scale test mining in 1995. That's

the plan. C-Core, I don't think have the funding in hand yet to proceed with

that. They're still applying to research organizations for funding for the test

mining.

MR. SHELLEY: Thank you.

Just a quick update and, I guess, a few comments on

Pine Cove. As the minister said earlier, we're all hopeful of that. Of course

like everybody the media ask you every day, especially locally, my local people,

what's happening with Pine Cove?

As far as I understand it, and I would see if the

minister would elaborate on it, is basically they have some positive reports

back from ACOA which they were looking for assistance to get started with the

new system that they call the (inaudible) (?) of course, and environmentally I

think everything is pretty sound. Is it basically that the problem lies with

Pine Cove itself now, and its own cash flow? Is that where the problem lies

right now, and that is why we are held up?

DR. GIBBONS: We have all been waiting for a

final decision on financing. This particular project has been approved through

the environmental assessment process, and there are no hold-ups on that side,

and everything now is financing. They have been dealing with their banks. They

have been dealing with ACOA relative to guarantees, and frankly I expected it

all to get approved last year some time, and now I am hoping that it will all

get approved before you and I are in Baie Verte at the mining conference on June

17. I certainly hope that this year when we go there we can say that it's done

and it's under way.

We, in our department, have done a rather detailed

assessment of this particular prospect as well, looking at all of the drill hole

results, all of the numbers on the analysis, and we like this prospect, we feel

comfortable with the tonnage and grade, and we would like to see it move

forward.

MR. SHELLEY: The next one I will jump on is in

the same area, of course, as the Nugget Pond. I would just like for you, if you

could, from your professional view, or one of your officials, is the phases now

that this is going through. Is this right in saying that basically what the

Nugget Pond people are going to do this summer is sort of a combination of

mining and exploration, because they're actually doing bulk samples; is that

right? Then, if I am right there, what are the next phases before it actually

turns into full-fledged mining?

DR. GIBBONS: You're right. Have they said

publicly how many dollars?

MR. SHELLEY: Seven million, yes.

DR. GIBBONS: They have said publicly it's $7

million, yes. They would like to spend about $7 million in the next ten months

on going underground and testing this prospect underground. They have to build

an access road to the site. They have received approval from environment for

that access road, and I assume they are getting ready to build it. They are

waiting for approval from environment on the underground development work, and

it's going to be some time this week, if not today.

MR. SHELLEY: I think it was the 25th, wasn't

it, of this month, that they were supposed to give the final.

DR. GIBBONS: It's pending any day. I don't

think it happened yesterday, but it's pending this week as to what will be

required by the environment department. If nothing significant is required, they

should get their release some time this week and then they can move on towards

planning the underground development work, and by going underground they are

going to, as you said, do some bulk sampling underground. They have been testing

the quality of the ore, and again the soundness of the rock for underground

mining, and if all of this turns out to be positive then I think very quickly in

the next year or so it can become a mine. I am not sure. Maybe Paul Dean can

speak more specifically on that, because he has been dealing with them very

closely. I will ask Paul to speak on it.

PAUL DEAN: If the exploration project as

proposed at Nugget Pond proceeds this year then by, say, February of 1995 when

it should be complete there should be extensive underground development done on

the deposit. The ramp, for instance, should be basically to the bottom of the

ore pond, so mining could proceed relatively rapidly after that.

It will require further environmental assessment.

In other words, the mining project itself is a separate registration under the

Environmental Assessment Act, and that registration would have to describe in

fair detail the nature of the mining and the milling, and I think that's an

important point there, that the company has to decide what size mill, what

format of mill, and what final product is going to be produced on the site. So

there will have to be a further environmental assessment on the production phase

itself, and the timing of a production decision will rest on, I guess, the

timing of that environmental assessment process and how fast the company can get

through.

MR. SHELLEY: I guess it's fair to say, too,

that just on those two sites, Pine Cove and Nugget Pond, that the surrounding

areas also have some major findings and that actually these mines, if they get

started, could be the catalyst to start some other sites to be developed. Is

that right?

DR. GIBBONS: There are a number of prospects on

that peninsula, and I think annually for several years about 25 per cent of the

mineral claims held in this whole Province have been on the Baie Verte

Peninsula. It is one of the most prospective areas you have geologically in the

Province.

As you say, with one development proceeding it

would stimulate more exploration activity in that area and you could get more,

especially if you get that gold milling complex centred in the middle of that.

MR. SHELLEY: You lead right into the next

question, I guess, because we're all on the same wavelength here, but the next

one leading up to that, of course -

MR. CHAIRMAN: Order, please!

Mr. Shelley, as you are asking this, I remind you

that this will be your last question of this

section of your time.

MR. SHELLEY: Okay, I will get time to come back

hopefully, but the central milling aspect that has been mentioned out there, and

with relation to the Rambler properties, can you just elaborate on what the

potential is for that, and how you see that working?

DR. GIBBONS: I don't know what might happen to

that.

MR. SHELLEY: Is that the best alternative?

DR. GIBBONS: The group that has ownership of

that particular property right now, the best stimulation for an operating gold

mill is an operating gold mine, so if you have a mine operating with a modern

mill in place, then that's the best option, I think, for a central complex,

rather than going out and developing a complex totally separately.

At the Rambler site we do have the tailings which

have significant gold in them, and if there were some appropriate rehabilitation

of the mill there you could put the tailings back through and then you could

bring other things to that site as well, but first you need someone to move

forward, and the one that's closest to moving forward is Pine Cove, and Nugget

Pond second.

MR. SHELLEY: Thank you very much.

MR. CHAIRMAN: Mr. Whelan.

MR. WHELAN: Thank you, Mr. Chairman.

Mr. Minister, I have a special interest in the head

of Conception Bay. There are some sites in there - some old excavation sites -

and I noticed in the estimates here that you have regional mapping which

provides geological maps and reports on all areas of the Province. I believe the

old sites, however, inspectors at that time were interested in copper and zinc.

Has there been any recent exploration or any recent study done into that

particular area?

DR. GIBBONS: As you said, Mr. Whelan, we do

have maps of most of the Province. We have a huge one of this particular part of

the Avalon that was put out a couple of years ago, and we have some maps for

your area, but I don't think we put out one specifically in the top of

Conception Bay, the head of Conception Bay. There has been interesting gold in

that region from what we call the Holyrood granite and the Holyrood belt that

goes right down through the Avalon. There have been mineral claims staked in

search of gold, associated with the pyrophyllite mine that's out there at

Manuels, that same geological belt.

Since I am not on top of the details of that, maybe

I will ask Paul to tell us a little bit more about what he knows about what is

going on there.

MR. DEAN: Yes, Mr. Whelan, there are regional

geological maps available for basically the entire Avalon Peninsula. It's fairly

well known geologically. The department doesn't get into doing really detailed

geological maps and geological assessments. In most cases we leave that to the

private sector, to mineral exploration.

In the case of the Conception Bay area there is

renewed interest primarily for gold at the present time, and some of the old

prospects, for instance around Turks Gut, have been staked by local prospectors,

and they are evaluating and sampling some of these old prospects for gold at the

present time, and we have been encouraging them and providing them with

geological support information in that assessment.

MR. WHELAN: Thank you.

Mr. Minister, several years ago there were

officials from government, I believe, and officials from some oil companies, who

approached one or two municipalities in the head of Conception Bay, had

meetings, and the meetings concerned the possible construction of an offshore

supply base some time in the not too distant future. Has there been anything

ongoing? Has that been called off, or is there something still in the works on

that? I haven't heard anything about it for a year or two, so it's sort of -

DR. GIBBONS: Mr. Whelan, there certainly hasn't

been much discussion of the offshore supply base. One of the decisions that the

Hibernia management company will have to make, I guess in the next few years, is

what port they will use as a supply base for Hibernia, whether they will use St.

John's or some other site. Whether there's a need to develop a new port I don't

know; I doubt it, but I certainly agree there was a lot of action on the

possibility of a number of big port developments a few years ago. Right now

there is a small amount of activity in the offshore. I am not sure that anyone

needs to move vigorously on that.

Hibernia, for example, is talking about three

supply boats. It's not a lot of port activity with three supply boats. They will

have to have a lay down area as well, and I don't know if it will be St. John's,

Bay Bulls or some other site around, but they have to make a decision. Maybe my

deputy minister will have more on that.

MR. WHELAN: I think this may have been in

anticipation of some development other than Hibernia.

MR. GRANTER: I think it may have been connected

with the concept that was being promoted by one company for the construction of

a concrete floating production rig. They did look at one particular site in the

head of Conception Bay. That was about three or four years ago at least, as I

recall it, but to my knowledge there has been no further activity on that. They

were promoting a concrete floater as a possible production system for Terra Nova

and other oil fields offshore.

On the supply base side, quite a long time ago

there were a large number of areas identified as having the potential for

development for that purpose. You may be aware that there were land freezes and

so on put in place at that time.

MR. WHELAN: I believe they are still in effect.

MR. GRANTER: Yes, if not all of them, certainly

some of them are still in effect. That was premised, I think, on the expectation

that there would be a lot more exploration activity offshore than has actually

materialized.

MR. WHELAN: Thank you.

You have a

section here dealing with alternate

energy sources. I was wondering if you could probably elaborate on the number of

alternate sources that you were talking about there. I was wondering if there

was any consideration given to wind energy, considering the fact that I believe

most of Hawaii is powered by wind energy. I know in California there are

actually farms of wind generators. When you compare the two places, I would

assume that we get at least as much wind as Hawaii or California, and I was

wondering if there has been any consideration given to that type of energy, or

is there anyone in the Province now who may be involved with research into that

type of resource?

DR. GIBBONS: Mr. Whelan, in the past

Newfoundland Light and Power has been involved with wind energy research. They

have had wind turbines tested. I think they had one on Bell Island for a number

of years. As you said, there are places in the world where there are some wind

turbines and this could be an answer for some of our remote sites if the

technology can evolve and could be put in a place where you never expect to get

on the grid but do have high wind regime. It deserves continued research is my

view on it.

MR. CHAIRMAN: Is it the wish of the committee

that we recess for five or ten minutes? Normally that is what we would do at

this stage of the proceedings. In view of the fact that the government caucus

room is being occupied with a caucus meeting right now we do not really have the

luxury of being able to invite the minister and his officials back there for a

cup of coffee, but if it is the wish of the committee that we take a five or ten

minute break just to stretch our legs the chair will accommodate that.

MR. TULK: Mr. Chairman, it is usual, as you

say, for the committee to break and I have a couple of things that I intended to

take care of in this break as it is the normal thing to do.

MR. CHAIRMAN: Yes, the chair recognizes it is

the normal thing to do.

MR. TULK: The government caucus room is not

free but there are other places in the building where people can go if they want

to pick up a cup of coffee. I am sure the Opposition might invite somebody if

they wanted a cup of coffee. Mr. Chairman, I would like to see the committee

take a break because there are a couple of things I have to take care of.

AN HON. MEMBER: It is the general practice.

MR. CHAIRMAN: We will let the committee decide

that.

Carried.

We will resume at 10.48 a.m.

Recess

MR. CHAIRMAN: Order, please!

It is now 10:50 a.m. and we will resume deliberations

of the Resource Estimates Committee.

The Chair would like to officially recognize Ms. Lynn

Verge the Member for Humber East as replacing Mr. Ed. Byrne the Member for

Kilbride for the purpose of this meeting this morning. I will now turn the

questioning to Ms. Verge.

MS. VERGE: Thank you, Chair.

I would like to ask the minister questions about

Hydro. Earlier this morning in answering questions put by the Vice-Chair of the

Committee, the Member for Humber Valley, the minister said that a year ago when

the estimates committee last met government had not completed an analysis of

Hydro privatization, but in the past twelve months or so `we have done that'. I

would like to ask several questions about the analysis that government has done.

First of all, what were the terms of reference for the

analysis? What exactly was analyzed? Secondly, who did the analysis? Did the

firms or people carrying out the analysis stand to profit from Hydro

privatization, or was there any party which analyzed Hydro in a truly arms

length position, in a truly objective position? Number four, what assumptions

were made in the analysis? For example, what assumptions were made about

interest rates? Interest rates have been changing lately and that may be a

significant alteration from assumptions made when an analysis was done sometime

within the past twelve months. What assumptions were made about a change in the

debt equity ratio? Currently the Crown owned Hydro quite properly has a very

high debt equity ratio since the interest requirement on debt is always

considerably lower than that on equity. What assumptions were made about tax

breaks, federal or provincial, that would be provided for a privatized Hydro?

What assumptions were made about subsidies that would be provided to a

privatized Hydro, what assumptions were made about arrangements for a privatized

Hydro having water rights? The next question: was the analysis or analyses in

written form, is there a written document setting out an analysis and, what does

that document contain, and will the minister make it public? I will pause here

to allow the minister to answer those questions about the analysis of Hydro

privatization.

DR. GIBBONS: Chair, Vice-Chair, I would first like

to make the comment that I know this can be a wide-ranging debate and it

generally is a wide-ranging debate, but we came here this morning to debate the

estimates before us and there is no line item in the estimates of the Department

of Mines and Energy that either gives money to Hydro or receives money from

Hydro, and I think anyone can look at the book and see that; and as I said in

the very early response to the Vice-Chair of the committee when he noted that no

one from Hydro was with me today, and that he thought they were with me last

year and we corrected him. They were not with me last year for the same reason

that they are not with me this year because they are not part of these

estimates, and we would just as soon debate the estimates of the Department of

Mines and Energy, where we spend our money and how we justify spending our

money, but I would not mind making some comments on some of the questions.

MR. TULK: On a point of order, Mr. Chairman.

MR. CHAIRMAN: Mr. Tulk, on a point of order.

MR. TULK: Before we move to do that, it is one

thing for the minister to want to make comments but it is another thing for him

to be in order to make comments. I would like to know if it is in order to

discuss Hydro in this estimates committee; I would also like to know if the

minister is going to make those comments and is he making them by leave of the

committee.

MS. VERGE: To that point of order, Chair.

MR. CHAIRMAN: Ms. Verge, to that point of order.

MS. VERGE: There are many precedents for this

particular estimates committee asking the Minister of Mines and Energy about

Hydro. It happened earlier this morning but more importantly, all our budget

estimates committees typically have wide-ranging discussion about general

policy, as well as the specifics of estimates figures. I am Vice-Chair of the

Social Services Estimates Committee and so far, this year, we have examined the

estimates of three departments and in all our hearings, we ask wide-ranging

questions to the applicable ministers and they were the Ministers of Health,

Justice and Environment and Lands about general policy, so it is clear,

according to the precedence of this committee and the other committees that

questions about Hydro are perfectly in order for the Minister of Mines and

Energy.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: To that point of order, I would just say

to the hon. Member for Humber East, that while she may allow in her committees,

things to be wide-ranging - and we can do it here by leave - that does not

necessarily make it right that you debate anything that you want. How

wide-ranging will you get, will you debate the state of the fishery, with the

Minister of Mines and Energy? Will you debate the state of forestry here with

the Minister of Mines and Energy or, do we do those things by leave?

These committees are not designed to be a

free-for-all, they are not designed to be wide-open affairs, they are governed

by the rules that govern the Legislature and anything that we do, other than

that, is done only because the committee, and I say the committee, wants to do

it, not because the chairman of a particular committee, the social services

committee believes that if she is doing it in her committee, therefore it should

be done here, that is not a good point of order, a good point for the lady to

make.

I don't know. If we are going to operate these

committees and operate them right, then we operate them according to rules, and

what I have asked the Chairman to do, is to establish for us, if indeed we

should discuss Hydro under this, and as the minister says, it is not in the

estimates, we are in an Estimates committee. There is no mention of Hydro in

those Estimates committees. I'm not trying to block the hon. lady. She will get

lots of time to debate. She has had lots of time to debate in the Legislature.

But is it - just how wide-ranging can the debate be? I would ask the Chairman to

make a ruling on it. Then if the minister wants to make some comments by leave,

well the Committee - I might, I might not, as a member of this Committee, be

willing to give that leave. That is how this Legislature operates. It doesn't

operate according to the whims of the Member for Humber East or my whims or

anybody else's. It operates according to set rules.

MR. CHAIRMAN: Are there any other submissions on

that point of order?

MR. WOODFORD: To that point of order, Mr.

Chairman.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: The fact that the minister is

responsible for mines and energy - "energy" is the broad word here. What does

energy encompass? The first page of the Estimates on energy says: "The

Department of Mines and Energy is responsible for the management of the

Province's mineral and energy resources...." It goes on to say: "The Department

is responsible for formulating policy and providing advice to Government on all

matters associated with onshore and offshore oil and gas,..." and so on, and get

down to the other one, "...conversion from conventional energy resources to

specific alternate energy resources. The Newfoundland and Labrador Hydro

Corporation supplies and distributes electrical energy in the Province."

The Newfoundland and Labrador Hydro Corporation is

even mentioned in the first page of the Mines and Energy Estimates, and

furthermore, part of the minister's salary which encompasses 1.1.01 of Executive

and Support Services, the minister is getting paid for having the right, the

responsibility, of looking after the Crown corporation Newfoundland Hydro. Is

the Minister of Finance not able to answer for the Newfoundland Liquor

Corporation? Is the Minister of Municipal and Provincial Affairs not able to

answer for the Newfoundland and Labrador Housing Corporation?

I would say, Mr. Chairman, there is no point of order.

The minister has already said that he would answer some of the questions. Then

why not get on with it?

MR. TULK: There is a point of order. I'm asking

the Chair for a ruling so that we have something established. I don't

particularly care which way you rule.

MR. CHAIRMAN: In the five years that this member

has been a member of the House of Assembly and has sat on estimates committees

precedent has suggested and has dictated that questions are permitted from the

Committee on policy. That is the reason we have not permitted Committee members

to question any of the officials who are here today. Only the minister is

permitted to be questioned on policy. I would also suggest that the minister is

under no obligation to answer any of the questions that are asked of him.

If members are not satisfied with the response that

they get from the minister then it can be brought to the House of Assembly. Our

Standing Orders state quite clearly that any disorder in this Committee can be

censured by the House upon receipt of the report. Any member who is not

satisfied with the way that the proceedings are carried out here can in fact

report back to the House of Assembly.

I would ask members though if they could to restrict

themselves to the items that are here in the Estimates, but members are

permitted to ask questions on policy as we always have done. I would remind the

minister that he can answer as thoroughly as he wishes. If his answer is not

acceptable to the Committee members then they can take the issue up in the House

of Assembly.

Ms. Verge.

MS. VERGE: Chair, I asked several questions and I

would like the minister to answer them.

MR. TULK: Mr. Chairman, on a further point of

order. Is the Member for Humber East a voting member of this Committee?

MR. CHAIRMAN: Yes, the Member for Humber East is a

duly acknowledged voting member of this Committee.

MR. TULK: What has changed since 9:00 this

morning, sir? I have in my possession here a note that I wrote to you, Mr.

Chairman: who are voting members this morning? It says: Tulk, Whelan, Barrett,

Shelley and Byrne if he comes. That is signed by you.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Order, please!

Since that time there has been a notice duly signed by

the Government House Leader and filed with the Clerk stating that the Member for

Humber East, Lynn Verge, will replace the Member for Kilbride, Ed Byrne, at the

meeting of the Resource Committee to be held on April 27 at 9:00 a.m. in the

Confederation Building. That one is dated April 27 and filed with the Clerk.

MR. TULK: When was that filed, Mr. Chairman?

MR. CHAIRMAN: That was filed since the proceedings

began.

MR. TULK: I would ask, if there is not some

precedent in this House - and I would ask if you do not find somewhere in

Hansard when those committees were established, I believe it was in 1982 - I am

wrong on that I guess, but when they were established - I am not wrong I don't

think on this, when they were established, I think you might find somewhere in

Hansard, that twenty-four hours notice was required. You will certainly find in

Beauchesne, that unless there is a list of substitutes given by the party whips

that there is twenty-four hours notice required to change the membership of a

committee. I think, as I said again, you will find - and I ask you, why wouldn't

you let the Member for Humber East go ahead this morning? I ask you, for future

clarification, if we could have the Clerk check that out, if she doesn't know

already and see if there is not indeed some period of time that you have to give

notice because otherwise, willy-nilly, we could walk out, the four of us here

now and have four more people sitting here five minutes time.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Order, please!

MR. TULK: I don't care what my colleague did. I'm

just asking that this Committee be kept in some order of decorum. Decorum is not

only shouting back and forth across the House, it is to how you operate your

business as well.

MR. CHAIRMAN: The Chair is prepared to rule on

that point of order but are there any other submissions prior to the Chairs

ruling?

MR. TULK: Is there a period of time required?

MR. CHAIRMAN: The Chair has reviewed the Standing

Orders of the House of Assembly and it states: any member of the House who is

not a member of a standing committee may, unless the House or the committee

concerned otherwise orders, take

part in the public proceedings of the committee

but they may not vote or move any motion nor shall they be part of any quorum.

It also goes as far as to say: changes in the membership of any committee may be

affected by a notice, signed by the Government House Leader to that effect being

filed with the Clerk. It is my ruling that the notice to which I have referred,

meets the requirements of Order 87 of the Standing Orders. If any hon. member is

not satisfied with that, I remind him again that he has the option of taking it

to the House of Assembly.

MR. TULK: I am not talking about taking it to the

House, I am asking the Chairman if he would check and see when those committees

were set up, if it was not indeed said, at that point in time, that we should

give twenty-four hours notice to the Clerk. I am asking you to check that.

MR. CHAIRMAN: Very well, I will ask the Clerk if

she would check on that and report back to the Chairman of the Committee. Until

such time as we have been notified of some precedent otherwise, I will have to

rule in accordance to the way the Standing Orders read.

MR. TULK: I understand that.

MR. CHAIRMAN: Ms Verge.

MS. VERGE: Mr. Chairman, I am waiting for answers

from the minister. I have asked several questions about the analyses he claims

the government did within the past twelve months about Hydro privatization.

MR. CHAIRMAN: I will remind the minister that the

ruling of the Chair is that the minister may or may not answer any of the

questions addressed to him and it is up to the members of the Committee, if they

are dissatisfied, to take it to the floor of the House.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Well that question, I will give the

minister time to respond.

DR. GIBBONS: Mr. Chair, I will make the comment

that I made earlier, that we have a lot of good things that we can talk about in

the budget estimates in the Department of Mines and Energy that have not been

addressed. We would like to continue to discuss these things that we are doing,

to spend the government's money and the people's money.

There is a line item in the budget of the Executive

Council which would provide the hon. member opposite with an opportunity to ask

questions about expenditures that we are making on that and I think she is well

familiar with that particular item. The Minister of Finance, who is responsible

for Executive Council, deposited a document a few days ago detailing some

expenditures that had been made. Maybe she should put it to the minister who is

responsible for that line item but there are a number of things that she has

raised here, a number of things that she keeps raising in the House of Assembly

and elsewhere and - on water rights for example, we have had debate on water

rights, ad nauseam since March 3 -

MS. VERGE: I asked about the analysis -

DR. GIBBONS: - and I started at the bottom -

MS. VERGE: - the terms of reference, who did the

analysis -

MR. CHAIRMAN: Order, please!

MS. VERGE: - whether they were in a conflict of

interest position, what assumption did -

MR. CHAIRMAN: Order, please!

MS. VERGE: - they make about interest rates, debt

equity ratio, tax breaks, subsidies, water -

MR. CHAIRMAN: Order, please!

The Member for Humber East has asked the questions, I

will now allow the minister the time to respond.

MS. VERGE: (Inaudible).

DR. GIBBONS: Mr. Chairman, I wrote down a number

of the subjects that the hon. member mentioned and I started at the bottom and

was going to work upwards and probably cover some of them in the time available.

MS. VERGE: I asked if the minister would table the

analysis. If it exists.

DR. GIBBONS: I'm not going to table an analysis

for the hon. member. No, not at this time, but there may be an appropriate time

to table anything that we would consider appropriate to table. I'm not tabling

anything today.

MS. VERGE: Is there an analysis -

MR. CHAIRMAN: Order, please!

DR. GIBBONS: And -

MR. CHAIRMAN: Order, please!

The Member for Humber East has had her allocation of

time. I am going to go to another member of the Committee who has not yet asked

any questions of the minister if the minister is finished with his reply.

DR. GIBBONS: I will stop there instead of having

this continuous debate on Hydro which we can have at any time.

MR. CHAIRMAN: Mr. Barrett.

MR. WOODFORD: Point of order, Mr. Chairman.

MR. CHAIRMAN: Point of order.

MR. WOODFORD: The Member for Humber East started

asking her questions at 10:51 a.m. She concluded at 10:53 a.m. There was a point

of order then. It wasn't finished till 11:05 a.m. Now the minister had two

minutes to answer the question. There is absolutely no opportunity for the

minister to answer. He didn't say yes and he didn't say no. He started to answer

some of the questions, but now because of the time being taken up in points of

order her time is gone. As far as I'm concerned, Mr. Chairman, it is

intentional, furthermore.

MR. CHAIRMAN: Mr. Tulk.

MR. TULK: Mr. Chairman, to that point of order.

MR. CHAIRMAN: (Inaudible) point of order.

MR. TULK: There obviously is no point of order.

The Member for Humber Valley, the vice-chair, knows better. Or he shouldn't be

sitting where he is.

MR. WOODFORD: But I don't know that.

MR. TULK: The truth of the matter is that he has

no right to question the ruling of the Chairman any more than anybody else here.

He is now questioning your ruling that indeed the time was up. Secondly, he

knows full well, just as well as I do, that if the minister chooses to he could

say to the Member for Humber East: I will take the question under advisement,

and that is it.

MR. WOODFORD: He didn't do that.

MR. TULK: He didn't do that, but he answered it.

He stopped his answer where he felt he should stop it. There is no point of

order, Mr. Chairman. He is only using his own member's time, or somebody else's.

MR. CHAIRMAN: Order, please!

It is the well-established procedure of the House -

MR. WOODFORD: (Inaudible) bullying tactics, that's

all.

MR. CHAIRMAN: Order, please!

It is the well-established practice of the House of

Assembly that any time used in points of order and debating points of order

comes out of the time that the member has for debate or for questioning. It is

the ruling of the Chair that that is the same procedure that we will use here

today. Once we have finished with Mr. Barret's time and we go to some other

member, then we will go back to Ms. Verge as often as she wishes. We will

continue to go back to Ms. Verge and give her the time to ask the questions she

wishes. At this time the Chair recognizes Mr. Barrett.

MR. BARRETT: Thank you, Mr. Chairman. I want to

make a few comments and I want to ask the minister a few questions. Of course,

representing a district I guess that is considered by some to be the golden

isthmus or the oil capital of Newfoundland and Labrador I guess most of my

questions will be directed in the area of the oil refinery and the Hibernia or

the Bull Arm development.

I've been aware for some time that there is a group

that has been interested in the purchasing of the oil refinery in Come By

Chance, Vitol. I don't know that the minister can make public how close are we

to that deal being finalized. As we all know, the oil refinery is very important

to the economy of the area. It employs roughly about 400, over 400, permanent

employees. Next week I guess there will be another 300 to 400 people called in

for seasonal work in terms of the shutdown. Actually, the whole oil refinery

there has more impact on the local area than the billion dollar development of

Bull Arm - in terms of the actual economic spin-off from the oil refinery it is

more important than the Bull Arm activity. Because of the collective agreements

it doesn't have very much impact on the local area, so I would like to ask the

minister: How close is Vitol to actual purchasing of the refinery?

DR. GIBBONS: Mr. Chairman, they are continuing to

make progress towards that. They have been negotiating with the current owners

now for over a year, and the last time we talked to them they were still

seriously interested and making progress. They could not put an exact time on

it, but I think they expect to do it in 1994, and I hope that is correct. I hope

it happens in 1994. We continuously stay in contact with those companies.

MR. BARRETT: I guess the other question is: Is

everything that needed to be done by government being done in terms of

facilitating the sale and the process being done in terms of the environmental

conditions and all these sorts of things?

DR. GIBBONS: I can't remember the exact word that

was used on it now, but we reached an agreement on an environmental document on

the operation of the refinery, and that is satisfactory to all sides, so there

is no hang-up there.

There are some issues that they have not yet resolved

that are not - I don't think any of them are provincially based - not associated

with us, between the companies and elsewhere. They are still working on those

issues, so let's hope it gets done in 1994 because Vitol is a major

multi-national company that trades oil and petroleum products around the world,

and I think will guarantee a long future for Come By Chance oil refinery.

MR. BARRETT: Okay. I guess about a year or so ago

there was a company that was interested in using the burn-off from the stack of

the refinery to generate electricity. I know that I had some discussions with

the company at the time and they seemed to be very enthusiastic about starting

that. Can the minister tell me, or is he aware, what has been happening with

that company?

DR. GIBBONS: Mr. Chairman, they have registered

the project with environment, but I don't believe they have taken any action on

the project. It's a co-generation project. They were talking about approximately

sixty megawatts time, but that number is variable. It seems like a good project

because you are using a product through the refinery to produce fuel. The

problem right now, though, is that it would have to be new electricity going

into the grid and there is no demand.

The proposal call that is in process is the one we

talked about earlier today. That would be the small hydro proposal. I don't know

where this one would sit. It's behind the small hydro proposal, like we talked

about the Stanton proposal for Abitibi earlier. It's one of the proposals that

would compete with the Stanton proposal or others for the next source of supply.

I did say earlier that we are not constrained

provincially in terms of sources of supply for electricity in the near term.

This is one type of project, Stanton is another type, small hydro is another

type, and there are others that are possible.

MR. BARRETT: How much time do I have left, Mr.

Chairman?

MR. CHAIRMAN: You have five minutes, Mr. Barrett.

MR. BARRETT: Recently I heard that with regard to

the Bull Arm development, with the increase in the work force during the summer

- I think it's going up to 3,500 - that accommodations are not available to

accommodate the increased work force, that there are not enough accommodations

at the site. I wonder if the minister is aware of this. Is there any backup

arrangements being made to accommodate the extra work force?

DR. GIBBONS: I am aware that they only have about

3,000 beds at the site. They used to have 2,995. I am not sure if that is the

exact number right now. As the number grows there could be a little bit of a

problem on site in terms of the number of beds.

I have been told that the company is looking at how

the beds can be used most efficiently. They are evaluating that, and whether or

not they might have to get some more bed facilities on the site temporarily or

otherwise. I don't believe any final decision has been made. Some have talked

about the possibility that they might have to consider sort of like a hotel; you

are there for your shift but then you are gone. When you look at the profile of

how the beds are used on a daily basis, there are times of the week when it is

not as crowded, depending on how the shift work operates. They are looking at

all the various options for that and I believe they will have no problem

addressing it because we are getting close to the peak even though we are not

there, and they should not have any problem.

MR. BARRETT: Right now for example, there are

people on the site who are being accommodated who are from other areas of

Newfoundland and are in the catering and housekeeping units which is very

unskilled labour, and to alleviate that they could look more at hiring local

people in terms of the increase in their catering and housekeeping.

DR. GIBBONS: Well hiring on the site as you know

is regulated through the union contract, and anything that would happen on that

would have to be done with the full co-operation of the unions involved.

MR. BARRETT: But since there are no people in that

particular union they could concentrate and alleviate the problem rather than -

we all know that the - or at least from the reports - that the whole project

itself has gone over budget and if we have to bring in extra emergency

facilities and accommodations, which means that it is going to add more to the

cost in terms of a management plan, it makes more sense to hire local people to

do some of this, sort of, not very skilled labour.

DR. GIBBONS: You may well be right but as I said,

I am aware that the company is looking at its options for when it may have a

problem, looking at the various options - to see what they do. We are not too

far from what we would say to be peak employment in terms of numbers.

MR. BARRETT: Okay. Those are all the questions I

have, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Barrett. Mr. Shelley.

MR. SHELLEY: Thank you, Mr. Chairman. I will at

this time defer my time to my colleague for Humber East. She may continue with

her questions.

MS. VERGE: Chair, I have questions for the

minister. The minister is accompanied here this morning by the senior officials

of his department, the Department of Mines and Energy, and I would like to ask

the minister whether any of those officials or any of the other-

MR. CHAIRMAN: Order, please!

Mr. Tulk, on a point of order.

MR. TULK: They will use all the cute tricks that

they like, to try to get the Member for Humber East to get on her pet peeve,

Newfoundland Hydro.

Now, Mr. Chairman, when did you ever see somebody in

this House, recognized by the Chair, and without the consent of the Chair, defer

to another member? I mean, the truth of the matter is, once you are recognized

and you sit down you have lost your turn, unless by leave you are allowed to

defer to someone else. Mr. Chairman, if you want to go ahead and do that, fine,

but I say to you, that nobody stands in any place and defers to somebody else.

If we do, then we will have three or four members and I could defer to the

member for -

AN HON. MEMBER: Pre-arranged.

MR. TULK: Pre-arranged, Mr. Chairman, totally

pre-arranged. It is an abuse of this committee. She is not satisfied to wait her

turn.

MR. CHAIRMAN: Mr. Shelley, to that point of order?

MR. SHELLEY: Mr. Chairman, I find it so

hypocritical. I don't know which way to describe it. They are talking about the

abuse of this, I mean very simply, what I have seen here - and I have not been

here years as the hon. member here - but I can tell you that, we usually had a

chance, we usually co-operate pretty good in these committees and we have done

so so far, even with the hon. member present, but it was quite obvious that the

hon. Member for Humber East had some questions; she asked the questions and as a

matter of fact the minister was co-operative and said he was going to make some

comments on it but since then we have seen the abuse of points of order to cut

into that time and not give that opportunity, and because I thought she was

mistreated by the member on his points of order, and took advantage of them in

his tactics to delay those answers, I felt that the only thing that I could do

was yield my time to the Member for Humber East so that she could ask the

questions and the minister could continue to be co-operative in saying that he

was going to make some comments.

MR. TULK: Mr. Chairman, to that point of order,

let me say to the hon. gentleman -

MR. CHAIRMAN: Mr. Tulk, to that point of order.

MR. TULK: - that I would not mistreat the hon.

Member for Humber East in any way, shape or form. She has every privilege as

every other member of this House, of this committee.

AN HON. MEMBER: But no more.

MR. TULK: But no more and, Mr. Chairman, we cannot

have a situation where somebody is going to use the recognition that is given to

a member of this House by the Chair to say: I defer to somebody else. You cannot

pass on your time to somebody else. Either you use it yourself or you do not use

it and then the Chair recognizes somebody else.

Mr. Chairman, those are straightforward rules that

we've observed since the first House in this Province was built, before we were

a province, I say to the hon. gentleman. He hasn't been here as long as I have.

But when he has he will perhaps have a far better appreciation of the rules of

this Legislature. You can't go passing on your time.

MR. CHAIRMAN: Are there any other submissions to

that point of order? Because the Chair has heard sufficient submissions to rule.

MR. WOODFORD: To that point of order, Mr.

Chairman.

MR. CHAIRMAN: Mr. Woodford.

MR. WOODFORD: The Committee is I suppose in charge

of its own destiny and its own affairs. Precedence has been set in the past, and

as recently as we met last week or so in the Estimates this year, deferring to

another member for different reasons. You can defer, give them five or ten

minutes, then they have to go on at other things. We've done that, and we've

done that in this particular Committee this year. If it is not in Standing

Orders, Mr. Chairman, precedence would dictate that there is nothing wrong with

what we are doing this morning. I would just like for the Chairman to take this

into consideration before he makes his....

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: The Chair has heard sufficient

submissions. Do you feel under an obligation to provide another?

MR. TULK: Mr. Chairman, the Member for Baie Verte

- White Bay just says that: I did this last week in Committee. Sure. He is able

to do it as long as the Committee provides the leave and says: Yes, fine, you go

ahead and do it. Unless that is the case then it can be stopped at any point in

time. When you see an abuse come up, which this obviously is, get the Member for

Humber East in front of the podium and on her soapbox, then that is an abuse!

That has to be stopped!

MR. CHAIRMAN: Very well, Mr. Tulk. The Chair is

prepared to rule.

As the Chair of this particular Committee for the past

three years there has been sufficient precedent to establish that this is an

accepted procedure within this Committee, and as has been stated, and as is

confirmed by the Standing Orders, this Committee is the master of its own

affairs.

When Mr. Shelley said that he deferred then the Chair

did in fact recognize Ms. Verge and will now turn the questioning over to Ms.

Verge.

MS. VERGE: Thank you, Chairperson. It is perfectly

obvious that the Minister of Mines and Energy is uncomfortable having me

question him about Hydro and it is obvious that he has arranged for his

colleague, the Member for Fogo, to run interference for him. I am going to

continue to ask questions about Hydro because this is the minister responsible

for Hydro. Whether or not the Premier lets him have any say in Hydro is

questionable, but nevertheless the minister has nominal responsibility for

Hydro. The government has before the Legislature and the people of the Province

an extremely critical proposal to privatize Hydro which would be an irreversible

divestiture which would lead to great harm to our economy.

The minister earlier this morning told the Member for

Humber Valley that within the past twelve months the government had a detailed

analysis done of Hydro privatization, and I would like to ask the minister

again: What were the terms of reference for the analysis or analyses that were

done?

DR. GIBBONS: Mr. Chair?

MR. CHAIRMAN: Mr. Minister.

DR. GIBBONS: I think government has addressed that

particular question numerous times over the last months. I will go back and give

some history and some dates and (inaudible) -

MS. VERGE: Chairperson, I only have a few minutes

and I -

DR. GIBBONS: Last January -

MR. CHAIRMAN: Order, please!

MS. VERGE: - asked a precise question and I would

like a precise answer.

DR. GIBBONS: (Inaudible).

MR. CHAIRMAN: Order, please! Order, please!

MS. VERGE: I would like to know what are the terms

of reference.

MR. CHAIRMAN: Order, please! Order, please!

When the Chair calls order I would appreciate it if

the members would be silent.

We will now give time for the minister to reply.

DR. GIBBONS: Last January -

MR. TULK: Point of order, please.

MR. CHAIRMAN: Point of order, Mr. Tulk.

MR. TULK: The hon. Member for Humber East asked a

question of the minister. Then halfway through the answer, because she doesn't

like what he is saying, because he is not confessing to her, she wants to

interrupt him and interject again. I would ask the Chair to protect the minister

from the savage onslaught of the Member for Humber East and see that order is

maintained in this committee, otherwise she will take it on her back and do

whatever she wants to do with it. It is bad enough that she is allowed to usurp

the rules of this House and speak out of turn, let alone Mr. Chairman, have her

interrupting people and have her badgering the minister and any other witnesses

that might be around. I ask the Chair to protect the Minister.

MR. CHAIRMAN: The Chair has already asked -

MR. TULK: Name her.

MR. CHAIRMAN: Well, in this particular case

everybody is being named in those committee proceedings, Mr. Tulk. I ask Ms.

Verge to give the minister sufficient time to respond to her question before she

asks another.

Mr. Minister.

DR. GIBBONS: The hon. member asked about our

analysis for Hydro, and I tried to start by saying that we did start some

analysis about a year ago, a year or so ago. I think I have said it publicly,

and others have said it publicly, that after we started to discuss privatization

potential we did have a proposal from the Fortis Corporation, from Newfoundland

Light and Power, Fortis Corporation, to buy part of Hydro and we referred that

report to Hydro.

I think it was in January of last year that the Hydro

board got ScotiaMcLeod and RBC Dominion Securities to do an analysis of that

proposal that came to us from Fortis, and it was suggested at that time that in

addition to just analyzing that proposal to buy parts of the Hydro Corporation

that they should look a little wider than that, and that they should ask them to

analyze Hydro as it is today, the status quo, and that they should ask those

companies to analyze Hydro's other electrical options, other structures for the

electrical industry in this Province.

It was agreed that they would analyze the possibility

of a merger and the possibility of a stand alone privatization, and that work

was done. ScotiaMcLeod and RBC Dominion Securities were the ones that did it.

They did it in great detail and over last summer government looked at the

results of the analysis in consultation with the people who had done the work

and we made a decision in August, I think it was August 5, Cabinet made a

decision that we would talk to Fortis about the possibility of a merger if they

were interested, and if they were interest in the privatization of the merged

company.

The recommendation from the people who did the

analysis was that we should not sell bits and pieces as Fortis was trying to

buy, as such, but that it would be interesting to look at other prospects,

particularly the merger and stand alone privatization, and that is why they

looked at that. ScotiaMcLeod and RBC Dominion Securities are the ones that Hydro

obtained and asked to do the detailed assessment, and do it thoroughly.

The member is well aware that in the spring, I think

it was in June, I cannot remember the exact date, we referred that report that

came from these analysts to the five person committee that reviewed the

information and also reported to Cabinet on their views of the report from

ScotiaMcLeod and RBC Dominion Securities, and it was based on information from

everybody, and advice from everybody, that Cabinet finally made the decision, on

August 5, that we would consider privatization of a merged industry, but it was

not until after goin

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1994-04-27
Type	committee
Volume / chapter	committees_standingcommittees_resource_ga42session2_1994-04-27_rc-me_.htm
Language	en
Format	html
Source	PROVINCIAL
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