Originally published on LinkedIn: Newfoundland and Labrador's Current Megaprojects
Our province has experienced a generational shift from relying on fishing and forestry for our sustenance to offshore oil and gas. Innovation in the natural resources industry has led us from being a “have-not” province for most of our existence to being a “have” province virtually overnight, historically speaking. These dramatic economic shifts were marked by the 1992 cod moratorium in combination with the commissioning of Hibernia, which is experiencing its 20th anniversary since first oil. Oil and Gas is now the largest contributor to our GDP and constitutes 3 per cent of total employment.
Mining has a long history in Newfoundland and Labrador, as well as hydroelectric generation. Churchill Falls was completed in 1974 and will still produce more power than Muskrat Falls or Gull Island. Our seafood industry is valued at 1.2 billion and employs over 17,500 people. Forestry is still holding ground in NL despite the closure of several pulp and paper mills. It is valued at 286.5 million annually and employs over 5,000 people.
The one thing that all of these industries have in common is a reliance on our natural resources. Even though a shift has occurred as megaprojects come online such as the Long Harbour Nickel Processing Plant, the Lower Churchill Project, and Hebron, the natural resource industry still plays the feature role in our economy. This is a province that values itself on diversification, innovation, and an ability to continually adapt.
Notable Projects in Development
Alderon Iron Ore Corporation’s Kami Iron Ore Project in Western Labrador - An Updated Preliminary Economic Assessment and Economic Impact Assessment was completed in November 2017. Alderon is re-booting its Kami Project with a production rate of 7.8 megatons/year.
Iron Ore Company of Canada’s Wabush 3 Pit Development Expansion Project - A new source of ore will extend the life of the Carol Project by 12 years. Mining is expected to commence in July of 2018. The project had previously been put on hold but is under new leadership and seeing progress.
Husky Energy’s West White Rose Project - Husky, along with partners Suncor and Nalcor Energy, is proceeding with the West White Rose Project. It will be constructed at the Argentia Graving Dock at a cost of 2.2 billion. The concrete gravity structure and an integrated topsides facility will be built by the SNC Lavalin-Dragados-Pennecon General Partnership. The project is expected to produce first oil by 2022. Up to 700 people will be employed in Argentia during construction and the platform will require 250 people to operate. Hiring of trade labour will begin this year.
Hibernia Management and Development Company Ltd’s Hibernia South Extension - Hibernia has expanded to include two additional satellite areas which make up the Hibernia South Extension, which will extend production until at least 2040.
Nalcor Energy’s Lower Churchill Project (LCP)
Phase 1 of the LCP- the Muskrat Falls Project, which includes (1) an 824 megawatt hydroelectric generation facility, (2) the Labrador-Island Link that will transmit power from Muskrat Falls to Soldiers Pond, and (3) the Maritime Link, which will connect NL and NS.
Phase 2 of the LCP- Gull Island, which will include a 2250 megawatt hydroelectric generation facility and associated transmission to markets. Development of this project will start no earlier than 3 years after Muskrat Falls is sanctioned.
To give perspective, Churchill Falls has a 5,428 megawatt capacity, the third largest in North America; and the Bay D’Espoir hydroelectric generating facility, celebrating its 50th anniversary in 2017 since it was commissioned, has a capacity of 604 megawatts. The Bay D’Espoir, Granite Canal and Upper Salmon combined facilities provide 75 percent of the island’s power.
Newfoundland and Labrador’s total electrical generation potential is 18,000 megawatts but we only require 2000 megawatts to meet our own demand. We haven’t even begun to tap the potential of our other clean energy sources such as wind and tidal energy. These factors present tremendous export potential.
NL’s Four Producing Oil Fields
Statoil and Husky Energy’s exploratory work in the Flemish Pass Basin resulted in one of the largest discoveries in the world at that time. Both Husky and ExxonMobil are proposing long-term exploration programs for the Jeanne d’Arc and Flemish Pass areas. The province’s four producing oil fields are located in the Jeanne d’Arc Basin; most exploration has occurred here.
The resource assessment in the Flemish Pass indicated a resource potential of 12 billion barrels of oil and 113 trillion cubic feet of natural gas while the West Orphan Basin estimated a resource potential of 25.5 billion barrels of oil and 20.6 trillion cubic feet of gas. Husky’s program could result in up to 10 exploration wells and ExxonMobil’s could have up to 35 exploration and delineation wells. These programs demonstrate considerable commitment to the area.
Exploration continues in the Jeanne D’Arc Basin, Orphan Basin, Flemish Pass Basin and Laurentian Basin. Newfoundland has the facilities to complete large-scale fabrication projects. Hibernia was completed at the Bull Arm Fabrication site over 20 years ago, and Hebron was just completed there in 2017. Bull Arm’s site owner, Nalcor Energy, has issued requests for proposals for the future use of the site.
Hibernia Management and Development Company Ltd’s Hibernia Project - Hibernia was the first offshore oil project to be developed in this province. The oil field had original resource estimates of 520 million barrels of oil, reaching depletion by 2017. On December 21, 2016, it pumped its billionth barrel of oil. Cumulative production from 1997 to 2016 had a value of 68.1 billion.
Suncor Energy’s Terra Nova Project - Terra Nova was this province’s second discovery to reach production. It employs 749 people, 92.8 per cent of those are NL residents.
Husky Energy’s White Rose Project - The main White Rose oil field was discovered in 1984 with oil production commencing there in November of 2005. It has expanded to include North Amethyst, South White Rose Extension, and West White Rose. The project employs 1361 people, 91.4 per cent of which are local residents.
ExxonMobil’s Hebron Project - The Hebron Gravity Based Structure was towed out from the Bull Arm Fabrication site this past summer and produced first oil in November of 2017. Hebron was a 14 billion dollar project and one of the largest industrial projects ever undertaken in NL. The Hebron offshore oil field contains 700 million barrels of recoverable oil and is the province’s fourth producing oil field, alongside Hibernia, Terra Nova, and White Rose.
How Does NL Compare to the Rest of the Country?
According to the Federal Government’s 2017 Major Projects Inventory Report, as of June 2017 there were 471 Natural Resources projects in Canada valued at 684 billion. Natural Resources include the Energy, Minerals and Metals, and Forestry sectors. Oil and Gas represented 80 per cent of the total value of Energy projects in 2017 (143 projects valued at 478 billion); Electricity Generation and Transmission represented 19 per cent (197 projects valued at 197 billion). There were 53 oils sands projects valued at 168 billion in capital expenditure, 59 natural gas projects valued at 193 billion, and 101 mining projects valued at 80 billion.
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Clean energy and clean technology is a rapidly growing sector of the economy. British Columbia has the highest grossing Natural Resources industry and also has the most clean energy projects with 63 clean energy projects in 2017 valued at 25.2 billion. Ontario had 49 clean energy projects worth 33.3 billion in capital cost expenditures.
A total of 26 Natural Resources projects were under construction or planned in Newfoundland and Labrador in 2017, representing 39 billion in investment. The province has 1 clean energy project; the Lower Churchill Project, valued at 5 billion. It is impressive that our Natural Resources industry has an equivalent value to Quebec’s considering our population is 6 per cent of theirs.
All information contained within this report reflects the most newly available information obtained from the government of Newfoundland and Labrador or the Government of Canada unless otherwise stated.