Hydro's metamorphosis continues

Moira Baird
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Energy Looks to hire oil and gas manager as focus broadens

Newfoundland and Labrador Hydro is turning its attention to the oil and gas industry.

The first step is hiring a new oil and gas manager with plenty of hands-on experience - both technical and commercial - in that business.

It's all part of Hydro's ongoing metamorphosis into an energy company.

Hydro has placed want ads in papers in St. John's, Halifax and Calgary.

Want ads seeking an oil and gas manager mark the latest phase of Newfoundland and Labrador Hydros evolution into an energy company. Telegram file photo

Newfoundland and Labrador Hydro is turning its attention to the oil and gas industry.

The first step is hiring a new oil and gas manager with plenty of hands-on experience - both technical and commercial - in that business.

It's all part of Hydro's ongoing metamorphosis into an energy company.

Hydro has placed want ads in papers in St. John's, Halifax and Calgary.

"There's a lot of Newfoundlanders and Labradorians out there that have got a lot of experience in the oil business," said Ed Martin, president and CEO of Hydro.

"We're trying to target that kind of market."

The deadline for applications is March 30.

"We've had some applications. We've had some calls," said Martin. "We have to select the right person. If, in this round, that person doesn't emerge we'll take our time and find the right person."

The new manager will run one of the divisions that falls under business development led by Hydro vice-president Jim Keating, a former executive with Norsk Hydro Canada Oil and Gas.

The other two divisions in Keating's unit are: wind energy; and research, development and alternative energy which includes the wind-hydrogen-diesel project at Ramea.

Martin says the new oil and gas manager will do much of the legwork and lead the charge in that division.

"We need somebody with a technical background on reservoir engineering and geoscience."

That means about 10-15 years experience in what Martin calls the "sub-surface world" - the ground where the oil and gas reservoirs are found.

"That's an expertise we need to build here."

Hydro is also looking for a little negotiating expertise.

"We're also wanting this individual to be at the table, from a commercial perspective, working with us on the deals," said Martin. "That's what makes it attractive for somebody ... there's a few people who have the ability to do both."

In future negotiations, Hydro is looking for two key items:

Equity in producing oil and gas projects operating offshore or onshore.

An ownership stake in any transmission and distribution systems for the oil and gas that are developed.

Those negotiations wouldn't necessarily include major offshore developments, such as the Hebron project. Those talks were suspended almost one year ago by the oil companies when they failed to reach a deal with the provincial government on fiscal and local benefits.

Hydro would, however, continue to be consulted on talks led by the province.

"That's something that is coming under the government's purview," said Martin. "We would be available to be in support ... and I have been in the past - but the province drives those negotiations."

The Crown corporation is also looking for a few good oil and gas projects of its own, though Hydro isn't revealing what they are.

"It's commercially sensitive," said Martin.

It doesn't include jumping into exploration right away. Instead, the corporation is interested in projects that are a little more advanced.

"The further up the value chain you go, the further along you go, generally the less risk is there," said Martin.

"Generally, the value of assets goes up."

Martin also says Hydro is taking part in studies to develop natural gas resources off the coast of Newfoundland and Labrador.

One study, by Husky Energy and other oil companies, is examining ways to develop that gas and transport it to market.

The three main options under consideration are: a natural gas pipeline that brings the resource ashore; compressed natural gas (CNG) that ships straight to market; and liquefied natural gas (LNG) that also brings gas ashore for further processing.

The other study is examining ways to develop natural gas discoveries off the coast of Labrador that date back to 1970s and early '80s.

Once those studies are completed, Martin says the corporation will assess how it wants to participate in future.

"We're not jumping in without a lot of work.

"We'll take all the data - the same as any other oil company - we'll sit down, we'll analyse it and compare the risks and rewards, and we'll be making pretty prudent decisions."

mbaird@thetelegram.com

Organizations: Newfoundland and Labrador Hydro, Norsk Hydro Canada Oil, Husky Energy

Geographic location: St. John's, Halifax, Calgary Newfoundland and Labrador Hebron

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  • Newfoundlander-Away
    July 02, 2010 - 13:14

    I will be quite interested to see how this plays out. It may work out well but I have never seen Hydro indicate how or if their oil and gas division will be willing to take the risks that a regular oil company takes as a matter of course.

    Will Hydro EVER take a working interest in exploration? Even at a 10% interest their share of an average well would be 10 million. Will there be the will to sink that kind of money and live with zero return if a duster is drilled. ( and dusters have been the most common exploration result lately off Newfoundland)

    THe big oil companies take this risk constantly all over the world but they take it so often and in so many places that drilling wells with a 10-15% chance of commercial success works out in the long run.

    The story seems to suggest that Hydro will NOT be involved in the exploration side but will instead be interested in projects that are a little more advanced . If we are talking in Newfoundland waters, that means Hebron oil and a couple of potential natural gas developments. There are no other discoveries out there that are anywhere near commerciality.

    All I know is that it is difficult to see this new Hydro as being an energy company and it is even tougher to envision how an energy company is going to start up in one of the most expensive and hostile environments in the world.

    It is also interesting to me to note that Canada, Alberta and Nova Scotia have all created entities in the past to own oil and gas rights and act as an energy company but that all three subsequently rejected that model. Norway has continued government ownership in companies like Norsk Hydro and perhaps that is the model Williams wishes to emulate.

    While I hope for success in this I do have my doubts. Good luck to them though.

  • Newfoundlander-Away
    July 01, 2010 - 19:53

    I will be quite interested to see how this plays out. It may work out well but I have never seen Hydro indicate how or if their oil and gas division will be willing to take the risks that a regular oil company takes as a matter of course.

    Will Hydro EVER take a working interest in exploration? Even at a 10% interest their share of an average well would be 10 million. Will there be the will to sink that kind of money and live with zero return if a duster is drilled. ( and dusters have been the most common exploration result lately off Newfoundland)

    THe big oil companies take this risk constantly all over the world but they take it so often and in so many places that drilling wells with a 10-15% chance of commercial success works out in the long run.

    The story seems to suggest that Hydro will NOT be involved in the exploration side but will instead be interested in projects that are a little more advanced . If we are talking in Newfoundland waters, that means Hebron oil and a couple of potential natural gas developments. There are no other discoveries out there that are anywhere near commerciality.

    All I know is that it is difficult to see this new Hydro as being an energy company and it is even tougher to envision how an energy company is going to start up in one of the most expensive and hostile environments in the world.

    It is also interesting to me to note that Canada, Alberta and Nova Scotia have all created entities in the past to own oil and gas rights and act as an energy company but that all three subsequently rejected that model. Norway has continued government ownership in companies like Norsk Hydro and perhaps that is the model Williams wishes to emulate.

    While I hope for success in this I do have my doubts. Good luck to them though.