There was a word repeated over and over at the provincial government’s press conference Monday on its new oil and gas corporation: focus.
“We wanted to make sure that we had the attention and focus on the oil and gas industry,” Natural Resources Minister Siobhan Coady said while walking through what she sees as the benefits of a standalone, provincial oil and gas corporation.
The minister said the company is reporting directly to government and that closer communication will be of practical benefit, as the province chases commitments for 100 new exploration wells offshore by 2030.
She said there is also a cost savings — generally estimated in the millions of dollars — in having the new company sharing payroll, IT and other administrative supports with the provincial government.
It was important to have Crown corporation Nalcor Energy “focus on its core business,” she said, being the sale and supply of electrical energy.
Under the new Oil and Gas Corporation Act, Nalcor Energy will retain the existing equity interests in Hebron (the province has a 4.9 per cent stake there), the Hibernia Southern Extension (10 per cent) and the West White Rose expansion (5 per cent) on its books.
Meanwhile, the new, standalone, oil company will be responsible for seismic and exploration activity, and future equity stakes (including under an agreement on the Equinor-led Bay du Nord project). The Bull Arm Fabrication site will be managed as a subsidiary of the new corporation, moving from being a subsidiary of Nalcor Energy.
The oil company will be essentially responsible for the promotion and support of the province’s future in oil and gas, including encouraging new research and development.
It has yet to be named.
“For me, it’s about having a focus on an industry that is critical to the economy of our province. And having that sole focus on ensuring the future development of oil and gas I think is a very positive move,” said Noia CEO Charlene Johnson, speaking to reporters.
Paul Barnes, with the Canadian Association of Petroleum Producers in Atlantic Canada, was asked if the industry considered the change from the old Nalcor Oil and Gas necessary.
“I don’t think this is necessary, but certainly it will be helpful and as I’ve mentioned (offering) a little bit more focus to our side of the industry as opposed to the hydroelectricity side, where the oil and gas division was within a larger entity,” he said.
The Oil and Gas Corporation Act dictates the creation of the new company, what it will be responsible for and how it will be managed. The Act is now before the House of Assembly.
If it passes as written, the new oil and gas corporation will have a seven to 11-member board of directors, to be established through the Independent Appointments Commission. A certain number of “independent members” – being people who are not already an employee or officer of the corporation, or a Crown corporation — are required.
The subsidiary responsible for Bull Arm will have a five to seven-member board of directors.
While the CEO for the new oil and gas corporation and the subsidiary company responsible for Bull Arm can be the same, the other members of the board of directors must be different. Terms are for up to five years.
The appointments process has not yet begun and the government is expected to appoint an interim board, once the Act is passed, while the appointments process is being completed.
Coady has said the province’s oil and gas company will work within existing budgets, with no significant costs required to get the new company started.
EARLIER STORY
With the last provincial budget, the Government of Newfoundland and Labrador announced it would be creating a new oil and gas corporation, separate from Nalcor Energy. Nearly a year later, the first details of that new business are being released.
A new Oil and Gas Corporation Act is being introduced at the House of Assembly, dictating the creation of the company, what it will be responsible for and how it will be managed.
The company — yet to be named — will also not mark an end to oil and gas under the Nalcor Energy banner. Nalcor Energy will retain existing equity interests in Hebron (the province has a 4.9 per cent stake there), the Hibernia Southern Extension (10 per cent) and the West White Rose expansion (5 per cent).
The new company will be responsible for seismic and exploration activity, and future equity stakes (including under an agreement on the Equinor-led Bay du Nord project).
The Bull Arm Fabrication site will be managed as a subsidiary of the new corporation, moving from being a subsidiary of Nalcor Energy.
The new company will be essentially responsible for the promotion and support of the province’s oil and gas industry, including encouraging new research and development.
The new oil and gas corporation will have a seven to 11-member board of directors, established through the Independent Appointments Commission. A certain number of “independent members” – being people who are not already an employee or officer of the corporation, or a Crown corporation — are required.
The subsidiary responsible for Bull Arm will have a five to seven-member board of directors, again with independent members required.
While the CEO for the new oil and gas corporation and the subsidiary company responsible for Bull Arm can be the same, the other members of the board of directors must be different.
Terms are for up to five years.
The appointments process has yet to begin.
A news conference is being held in St. John’s at C-CORE, with Natural Resources Minister Siobhan Coady. The Telegram will provide an update following the press conference.
Twitter: @TeleFitz
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