Nalcor Energy’s second-quarter financial shows an increase in profit over the first half of 2018, but the trend isn’t expected to last.
Nalcor Energy CEO Stan Marshall and CFO Derrick Sturge presented the second-quarter results on Tuesday which also gave updates on the Muskrat Falls project as a whole.
The cost and schedule for the Muskrat Falls project remains unchanged from the June 2017 update, which gave a $12.7 billion expected cost. First power from Muskrat Falls is expected by the end of the year.
Nalcor reported a $119 million profit in the first six months of the year, up from $116 million in the first half of 2018. Lower energy supply costs in the first half of the year drove the overall increase, but once the 2017 rate application goes into effect, the overall annual profit is expected to decrease by the end of the year.
The profits for the second quarter specifically were $27 million, down from $37 million in the second quarter of 2018. More money was paid back to the province from the Oil and Gas division, paired with lower oil production led to the decrease, according to the report.
Marshall says he hasn’t quantified the impact on deferred revenue due to the Hibernia shutdown earlier this year.
With impoundment of the Muskrat Falls reservoir expected to continue until the end of the months, Nalcor took time to address concerns over the stability of the North Spur during its quarterly results.
"North Spur stabilization design is the result of more than 50 years of engineering investigations and design work. The design of these works has been based on a large and extensive analysis of data from these investigations,” reads the report.
“Further, in 2017 a Geotechnical Peer Review Panel concluded that the overall approach, concepts and methods used for checking the stability and integrity of the North Spur follow the current standards and state of the art practice.”
Methylmercury monitoring remains ongoing as the reservoir fills. Nalcor referenced the $30 million that was due to be spent on wetland capping instead being paid out to two of the three indigenous groups in the area.
Marshall says Nunatsiavut has yet to agree to take its $10-million share of the money from Nalcor. Nunatsiavut has stated it doesn’t want the money, and would rather see it go towards further methylmercury mitigation efforts at Muskrat Falls.
Progress towards establishing a new stand-alone “Oil Co” crown corporation is still ongoing, according to Marshall. He says he expects the crown corporation to be fully established by the end of the year, after the crown corporation was first announced as part of the 2018 provincial budget.
The Bull Arm fabrication sight will be part of the stand-alone corporation, once it is established.
Elsewhere, seismic testing in the provinces offshore continues, with a 2D survey of the Carson Basin just south of the Terra Nova field, as well as Laurentian basin, located south of the island in advance of the 2022 call for bids.
Seismic testing also began off the coast of Labrador, targeting areas of the Churchill River Delta.
