Lots to think about in Natural Resources

James McLeod
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Jerome Kennedy takes the reins of one of N.L.’s busiest departments

Jerome Kennedy — Submitted photo

Jerome Kennedy has to set priorities as he gets up to speed. There’s just too much going on in the province’s natural resources sector.

Since he was appointed to the portfolio Friday, he’s had a meeting with a top official in the forestry branch of the department, but Kennedy didn’t even bother to ask about the Grand Falls-Windsor mill expropriated from AbitibiBowater.

Forestry, he said, will have to wait.

“My first few days I’m trying to address the issues that are urgent or require immediate attention,” he said. “The urgency will be in familiarizing myself with the department as a whole, then of course, Muskrat Falls is an issue that I have to obtain much more detail about, and then getting a better understanding of the oil and gas and mineral industries — especially where this is mining week.”

Kennedy has to hit the ground running, picking up from his predecessor — Shawn Skinner — who was defeated in the Oct. 11 provincial election.

There’s a lot to be done.

By the end of the month, the province needs to finalize details of the $6.2-billion Muskrat Falls hydroelectric deal.

Kennedy said most of those details will be worked out between provincial utility Nalcor and Emera, its Nova Scotia counterpart and partner in the hydro development.

“There will be some legal agreements put in place that will deal with everything from governance matters to operation and maintenance agreements to joint-development agreements, supply and delivery of power and issues like that,” Kennedy said. “I won’t be as involved

in those discussions because that’s between Nalcor and Emera, although I’ll certainly be briefed on them and updated.”

On the Muskrat Falls file, Kennedy will also have to sort out a review being done by the Public Utilities Board (PUB) into whether the hydro dam is the lowest-cost option for Newfoundland’s electricity needs.

The process was supposed to be finished by the end of December, but it’s been put on hold, because the PUB says it hasn’t received enough information from Nalcor.

Kennedy said he’ll give the PUB as much of an extension as is necessary to get the job done.

“They will certainly be given whatever time they need to do the job. We want this done right, and it’s important that they have the time to do it,” he said.

As things move towards a final debate in the House of Assembly on Muskrat Falls in the spring — and then a sanctioning decision by cabinet — Kennedy has other files to worry about.

The provincial government relies on offshore oil revenue for roughly a third of the provincial budget, and production is declining in the offshore.

As a former finance minister, Kennedy said he knows what’s at stake.

“Those non-renewable resources have to be utilized to build our infrastructure that we require in the province, such as schools and hospitals and rinks and roads,” he said. “The only way to keep the money flowing when you’re dealing with non-renewable resources is to find new non-renewable resources.”

Only a few days into the job, Kennedy is still getting briefed on the specifics of how to get that done exactly, but speaking to the Telegram, he was full of numbers to emphasize how important the natural resources sector is.

Oil revenue represents roughly $2 billion per year to the provincial coffers over the past several years.

Mining companies are forecasting $15 billion worth of capital investment in Labrador West alone. The Hebron offshore oil project represents another $7 billion in capital expenditures in the province.

“Last year the mineral shipments in this province had a value of $4.7 billion, with approximately 6,000 men and women employed in the industry,” Kennedy said. “The forecast value of exploration expenditures in 2011 is $155 million.

“We can never underestimate the significance of mining to our economy.”

As for the mill in Grand-Falls Windsor, which the government accidentally expropriated, Kennedy said he’ll get to that eventually.

“The forestry is certainly a very significant part of our economy, and not one to be underestimated,” he said. “That’s one that I will be reading more about as I move along.”


Twitter: TelegramJames

Organizations: Public Utilities Board, House of Assembly on Muskrat Falls

Geographic location: Nova Scotia, Newfoundland, Labrador West Hebron Grand-Falls Windsor

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Recent comments

  • fred penner
    November 02, 2011 - 17:25

    The reason solar power will not work should be obvious....we don't get that much sun. Wind requires a bit more of an explanation. The reason has to do with the "stability" (constant voltage and constant frequency) of the power system. The short answer is that the island power system is too small to incorporate more that about 80 to 100 MW of wind generation without becomming unstable. Consider that the electricity that is generated from the hydro and thermal plants is produced from a constant potential energy - falling water or combustible fluid (oil) but the velocity of wind is variable. If too much wind is synchronized to the power system, the constancy of the voltage and frequency will be compromised. That means that your motors will no longer run at rated speed and will be damaged, your electronics will fail, etc.

  • W BAgg
    November 02, 2011 - 15:53

    Hey Johnny .....................natural gas ........................cheap

  • Scott Free
    November 02, 2011 - 15:11

    Me thinks Jerome is pondering naming Shawn Skinner to the sleepy CNLOPB. I'd mull it over a bit more too, minister. And, John Smith, come clean; are you Danny, or is saddest wannabee?

  • Maurice E. Adams
    November 02, 2011 - 14:17

    Starting in year 2004 to year 2010 ACTUAL total island load (GWh) went down from 8,637 GWh to 7,608 GWh (for an average NEGATIVE growth each year of about 2% per year). ++++++++ So, even though Nalcor had the benefit of those ACTUAL numbers, the load forecast Nalcor continues to use for the 10 year periods commencing in the years 2005, 2006, 2007, 2008, 2009 averaged respectively INCREASED yearly loads of 1.1%, 1.1%, 1.3%, 1.2%, 1.3% and 1.6% per year. ++++++++ So, even while the FACTS show 2% average yearly NEGATIVE growth for that 5 year period from 2004 to 2010, Nalcor continued to ‘forecast’ average yearly increases ranging from 1.1% to 1.6% per year. +++++++ Make no wonder they forecast an increase in demand, and say we need “new energy” by 2015. Is that the kind of “reliable” forecasting on which to base a $6 billion project?

    • fred penner
      November 02, 2011 - 17:12

      Perhaps you should base your point of view on a longer timeframe.

    • Keep in Mind
      November 03, 2011 - 08:10

      People should note that the time period you are talking about, which is incredibly short, includes the recession. For reasons like this no one knowledgeable in forecasting relies solely on historical data. The historical data is best suited for establishing a base year energy consumption rate. I think it is more interesting to look at their assumptions for estimating the volume of increase in demand.

  • John Smith
    November 02, 2011 - 14:00

    @ Maggy...like I said Maggy...what other alternatives? All I want are the other alternatives. When I hear what the other alternatives are, then I can debate them. I previously stated why wind will not work here, I stated why solar will not work here, I stated why tidal will not work here, I stated why nuclear will not work here, I stated why daming every little river on the island will not work here.....so I would like to hear the alternatives,the whole world is waiting with baited breath for Mauroice to tell us what this great alternative is. I know I would like to hear it. Our bills just went up three or four months ago by 7 per cent, they will rise by at least that much next summer due to the rate adjusment formula. I don't want my bills increasing by 7 to 10 percent every year forever. So, that's why I feel that a hydro dam, with a link to the mainland is our best possible bet. When we have the link to the mainland then, and only then can we begin to think of alternatives, we can explore wind and solar and whatever else, because we can draw on a never ending, green, renewable source of energy. Educate yourself Maggy b'y for god's sake.

  • Gerard
    November 02, 2011 - 12:52

    The Abitibi mill in GFW was allowed to shut down for one reason, so that the gov could get control of the hydro plants which produce 100 plus mgwatts. There were 700 fulltime job losses at payrates equal to Alberta. Premier Williams, at the time, announced it was better to see the backs of Abitibi's head, rather then try and help them survive and save a RENEWABLE industry, which NL have so few. When he dealt with the closing of Stephenvilles mill, he offered over 150 million to help it survive.That mill had no on island wood supply to run it and it had to buy all the electricity it needed, and at a time when our oil revenues were barely coming in, our premier offered to help with the tune of 150 million. When GrandFalls mill was in trouble, a mill that was almost 100 percent self efficeint with hydro power, and had a vast supply of quality timber{fibre}. Premier Williams told the town and workers that it was better to allow the mill to close and for Abitibi to get out of province., and that is exactly what happened, Central lost hundreds of forestry jobs and Nalcor received 100 mgwatts of free neverending hydro power. And now the new resources minister Kennedy snubs his nose at GrandFAlls-Windsor and Central and tells them that eventually he will have a look at their situation, meanwhile the gov basically guarenteed the survival of the papermill in CornerBrook at any cost. Hydro plants create jobs only while being built, oil supplies and minerals run out, fisheries are gone, just what will people do for a living in NL in the future. Retire or work of the gov teet , I guess..

  • Maggy Carter
    November 02, 2011 - 12:13

    @John Smith – We get it that you see yourself as NALCOR’s head cheerleader for the Telegram’s comment section. But if you insist on posting so frequently on a single subject, perhaps should learn a little more about it. Rather than respond to Maurice Adam’s intelligent comment on today’s story, for example, you merely repeat your mantra that Muskrat is good and anyone opposed to it is bad. Denigrating the poster with silly references to ‘mice in a cage’ hardly advances the calibre of debate. Rather than address his point, you simply demand proof of a better option. In addition to the number of surprisingly detailed suggestions regarding other possible solutions, posters in this forum have also repeatedly challenged the demand assumptions used by NALCOR to justify the need for this much power in the first place. But Adams’ point goes beyond that: it underscores the incongruity of the province’s claim that NALCOR has proposed the least cost solution despite the fact that the crown corporation was given an exemption from regulations that would have legally required it to do so. There is seldom any shortage of cheerleaders for projects that will put money in a lot of pockets in the short term (witness Churchill Falls); what we need are people who have the intelligence, insight and sense of public responsibility to warn taxpayers when such massive government investments are at risk of taking large amounts of money out of our pockets, and those of our children, for many years to come.

  • John Smith
    November 02, 2011 - 09:30

    So maurice, what, in your opinion would be the lowest cost option? I would love to hear it. We know that both solar and wind are out, because we would need a connection to a mainland power grid to make that financially viable. So what is left?Nuclear? Mice running in cages? Small dams all over the place on the few free rivers we have left on the island? I would love to hear what you, as the obvious expert you are in energy generation, think is the lowest cost, viable source.

    • Stick with the facts
      November 02, 2011 - 10:48

      ''Solar and wind power are out because we would need a connection to a mainland power grid to make that financially viable.'' What's the source of that fairy tale? A 6 billion dollar project is not the lowest cost, Government has asked for the 'least cost option' meaning the least cost to produce 1 kw/h of electricity, regardless if it is used or not. Building Muskrat Falls to meet a small increase in demad is like buying a diary farm because you need milk for your cereal in the morning. Sure, the cost to produce a liter of milk is very cheap and you won't be able to get it cheaper elsewhere, but if you can't sell the milk that you don't need, the entire cost of the farm still must be paid. It's no different

    November 02, 2011 - 08:17

    The muskrat Falls development is a good project for this province. Let's get it started ASAP.

  • Michelle
    November 02, 2011 - 08:08

    Its such a shame that Forestry will have to wait.. especially when it is so important. But here is a thought for Mrs. Dunderdale - it seems that her Natural Resources Minister has a lot on his plate. Is the Dept to big for one person? Why not have a Minister of Oil and Energy (Ie Kennedy to take care of Oil and Muskrat etc) and then a Minister of Forestry and Industry (to have a focus on such industries). Steve Kent and Tom Osborne both deserve cabinet posts more than some of the cronies who got them. A Forestry ministry would suit either perfectly (especially Kent - wasn't he the parliamentary secretary in forestry!)

    • Roland Winters
      November 02, 2011 - 11:35

      Michelle is absolutely "RIGHT ON". The forest industry in this province has been neglected and not recognized as an intrical part of rural NL. Right now, the industry is hurting for two main reasons; poor returns on the Lumber Market, and no utilization of the "By-Products" such as bark, sawdust, etc. Government can play a key role by getting Public buildings OFF oil and start burning Wood Pellets or "Hog Fuel" The forest industry, through the representation from the Newfoundland and Labrador Lumber Producers Association, has approached the Department of Narural resources on many fronts, asking that Forestry and Agrifoods be separated in it's own department, with it's OWN minister.

    • Rollie Summers
      November 03, 2011 - 07:57

      What makes you think agriculture wants to go with Forestry it probably wants to stay with Natural resources.

  • Maurice E. Adams
    November 02, 2011 - 07:47

    It is section 3 (b) (iii) of the Electrical Power Control Act that requires Nalcor and the PUB to ensure that ratepayers get their electricity at the "lowest possible cost". +++++++ and if Mr. Kennedy wants to ensure that this thing is done right, then he should lift the exemption that the PUB says the government has given Nalcor and NL Hydro from that section of the act. +++++++ It is disingenuous at best to say that you want this thing done right, and at the same time take away the legal obligation of Nalcor to do it right (lowest cost), and alos take away the powers of the PUB to ensure it is done right. ++++++++ Possible lowest cost options have been excluded by Nalcor so that the PUB is permitted under its terms of reference to assess only the two options selected by Nalcor, and these two options must be assessed over a time frame that clearly favours one option over the other.

  • griffin
    November 02, 2011 - 07:03

    Jerome Kennedy has to take a look at very serious situation with the WAY the NLBTC go about their hiring practices.Right now they are having total disregaurd of the EIS for the long harbour project as per THE STUDY AREA. The local people of Chapel Arm and surrounding areas including Long Harbour are getting robbed of jobs in all areas of trades including laboures more so than anything. I know for a fact the NLBTC will bring a guy out of retirment so he can get his stamps for unemployment before they hire a apprentice.IN labrador when they built voiseys bay the govrnment had a adjacenty clause in place hiring on that site went as follows INNU,LABRADORIANS AND THEN THE NLBTC and it will be the same for Muskrat Falls.why not an Ajacenty Clause for NF