The Committee met at 5:11 p.m. in the House of Assembly.

CHAIR (Mr. Walsh): Order, please!

I would like to welcome Committee members to this Resource Estimates Committee. This evening we will be dealing with the Department of Mines and Energy. There are a couple of things to deal with first. I want to just lay out the format that we have been using in our Committee. Our tendency has been to ask the minister for any opening statements he might have. We have not stayed strictly to the Estimates, but we have stayed very close. We have allowed members, in particular our colleagues in the Opposition, to take as much time as they might require. Then, should government members be so inclined, they would be entitled to any questions they might want to have. So, we will do it somewhat freewheeling.

With that in mind, I will ask my colleagues in the House if they would introduce themselves. Then I will go to the minister, who can introduce his officials.

Wally, we will start with you for the record.

MR. ANDERSEN: Not a problem, Mr. Chairman.

Wally Andersen, MHA for Torngat Mountains.

MR. ROSS WISEMAN: Ross Wiseman, MHA for Trinity North.

MR. OTTENHEIMER: John Ottenheimer, MHA for St. John's East.

MR. T. TAYLOR: Trevor Taylor, MHA for The Straits & White Bay North.

MS JONES: Yvonne Jones, MHA for Cartwright-L'Anse au Clair

CHAIR: For the sake of Hansard, Minister, when the officials identify themselves, I would ask also, as their voices may not be as familiar to our folks in Hansard, should you be answering a question, I would ask that you identify yourself so that Hansard will know exactly who is speaking at that time.

Mr. Minister.

MR. MATTHEWS: Lloyd Matthews, Minister of Mines and Energy.

I will let the officials introduce themselves.

MR. MAYNARD: Brian Maynard, Deputy Minister of Mines and Energy.

MR. A. TAYLOR: Allister Taylor, Deputy Minister of Mines.

MR. SAUNDERS: Bruce Saunders, Assistant Deputy Minister of Energy.

MR. CROCKER: Ralph Crocker, Executive Assistant to Minister Matthews.

CHAIR: I would suggest also that most members in the House today would be fully aware that the minister is working on the last part of a vocal chord that is left. I am sure that the officials will be more than ready to pitch in today as well.

Minister, if you have an opening statement, then by all means go ahead.

MR. MATTHEWS: Thank you very much, Mr. Chairman.

I would normally attempt an opening statement, but I apologize for not being able to. That is the good news for all of you, but better news is that I have officials who can tell you everything you need to know.

With that, I am going to defer to my deputy as my spokesman today.

Thank you.

MR. MAYNARD: First, I thought I would provide the Committee members with an overview of the Department of Mines and Energy.

The Department of Mines and Energy promotes and facilitates the sustainable development of the Province's mineral and energy resources through its resource assessment and management and development activities. Through these activities, the department strives to develop the Province's mineral and energy resources in the overall best interest of the people of Newfoundland and Labrador.

As the minister, Minister Matthews is responsible for the supervision, control and direction of all matters relating to mines, minerals, quarries, quarry material and beaches, onshore and offshore petroleum resources, royalty matters, maintaining and developing electrical resources, and the administration of twelve specific acts.

The department is also responsible for the Newfoundland and Labrador Hydro Corporation and the Bull Arm Site Corporation, and shares responsibility with the federal minister of Natural Resources Canada, the hon. Ralph Goodale, for the Canada-Newfoundland Offshore Petroleum Board, or C-NOPB as it is commonly referred to. We believe that through the demonstrated leadership of the department, Newfoundland and Labrador will realize the full potential and benefit from its energy and mineral resources. Over the next couple of years, the department will face many exciting challenges that will advance our long-term goals.

Over the past five years, Mines and Energy has become one of the most well-known and publicized departments within government. The citizens of this Province recognize the growing potential of their natural resource base and demand that Newfoundland and Labrador receive maximum benefits from the development of the various energy and mineral projects in the Province.

Our mining and energy sectors are currently worth $1.35 billion, representing 14 per cent of the provincial gross domestic product. These sectors also generate approximately 5,600 annual person years of direct employment, with indirect employment estimated at 9,200 person years. The people of the Province realize the importance of these industries and want to see further mineral and energy developments.

With respect to oil and gas, we have witnessed many developments that have exemplified the value of our natural resources. Hibernia, the first and largest Canadian offshore oilfield, is currently producing about 140,000 barrels a day and has approval to increase production to 180,000 barrels a day. Terra Nova, the Province's second oil project, is scheduled for production later this year, bringing further benefits to the people. Last year, the project employed an average of 1,900 people. We anticipate that the White Rose project will be sanctioned later this year with a target of first oil in 2004. We are also optimistic that the Hebron-Ben Nevis proponents will proceed with our fourth major oil development project shortly.

In the recent budget, $300,000 was announced to develop and implement a natural gas strategy for this Province. This will permit us to facilitate the development of natural gas sooner rather than later, and in a manner that maximizes the benefits that the Province will receive.

We have had twenty-three significant offshore oil and gas discoveries, as well as one discovery in our western Newfoundland onshore area. Since the first exploration expenditures occurred in 1966, over $13 billion has been spent in exploration, delineation, and development in our offshore area. Significant discoveries have led to some $2.1 billion barrels of oil, 9 trillion cubic feet of natural gas, and over 400 million barrels of natural gas liquids being discovered.

Industry has committed to spending some $680 million in exploration expenditures over the next five years, which could and should result in even further discoveries. With the future oil production coming on stream from Terra Nova and hopefully White Rose, we will be producing more than one-third of Canada's conventional light crude oil within the next five years.

With respect to electricity, our electrical power industry is also promising exciting developments. Granite Canal wind power and co-generation projects are just a few new initiatives being undertaken by Newfoundland and Labrador Hydro that will see increased energy capacity for the Province. The Lower Churchill project, with an estimated capital investment of approximately $4 billion in Labrador and production capacity of approximately 2,000 megawatts, could also be a major development. This renewable energy development has the potential to contribute significantly to the provincial economy during both the development and production phases.

Turning to the mines and minerals section, our mineral sector is just as exciting. This Province now produces over a dozen mineral commodities including iron ore, gold, dolomite, limestone, gypsum, peat, dimension stone, and sand and gravel. Western Labrador produces approximately 55 per cent of Canada's iron ore products. Currently underway in Central Newfoundland, there is exploration work being conducted on the Duck Pond zinc, copper, lead, gold and silver deposit near Millertown.

The department is actively promoting the establishment of a silica smelter in Labrador West. This initiative has the potential of creating upwards of 130 jobs. As well, the recently announced $19.3 million epoch rock facility in Argentia is a very promising development in our evolving dimension stone industry. We will also soon begin negotiations with Inco on development of the rich Voisey's Bay deposit in Labrador.

As you can see, our mineral and energy resources are vital to the economy of Newfoundland and Labrador. Within five years, 2,000 new, direct mining and petroleum sector jobs could be created. Associated net spinoffs could double indirect jobs from these sectors. New projects will be developed. Current projects will mature. We, as a Province, will grow with our industries. Strength in our economy will come with this growth.

Every new project, however, presents a new challenge, and our department must be there to address these challenges. It is the department's job to ensure that these growing sectors are developed efficiently, responsibly, and in the overall best interests of the people of the Province.

The total gross budget for the Department of Mines and Energy for 2001-2002 is $23 million. This is an increase of $5.3 million over the 2000-2001 budget. The realignment of the major projects benefit group, consisting of the Bull Arm Site Corporation and the Voisey's Bay Secretariat, from the former Department of Industry Trade and Technology, accounts for some $600,000 of this increase; $3 million in additional funds was also allocated for the reclamation of the former Hope Brook gold mine; $230,000 has been allocated for the implementation and monitoring of the new mining act, which was introduced last year; $300,000 has been allocated for the development and implementation of the natural gas strategy, as I previously mentioned; $528,000 in additional funding has been allocated for the Canada-Newfoundland Offshore Petroleum Board, to address the significant increase in activity that we are seeing in the offshore; $250,000 has been allocated to fund the soon-to-be-formed petroleum price regulation commission, and I understand that bill will be introduced shortly. These increases represent some of the growing activities and responsibilities that the department has to control.

Mr. Chairman, the Department of Mines and Energy has responsibility for many activities that are diverse in nature. The department's policies are designed to meet the requirements of our industry client groups, as well as provide for the efficient and effective management of the Province's mineral and energy resources.

The department is a small department, with a total approved staff complement of 116 permanent positions, of which 105 are assigned to our two branches, Mines and Energy. Our Mines Branch is responsible for the department's mineral resource management program. This branch is divided into three divisions. These include: Geological Survey, the Mineral Lands Division, and the Mineral Development Division. The Geological Survey is responsible for mapping and describing the geological formations of the Province in order to identify and record the mineral occurrences and the mineral potential in the various regions. The provision of this data is a fundamental service provided by all jurisdictions in Canada, and is one of the key ways that Newfoundland and Labrador remains competitive in trying to attract national and international investment dollars.

The Mineral Lands Division is responsible for the administration of the Province's mineral land and tenure system, regulating mineral exploration activity, managing quarry material resources, and preserving drill cores from exploration drilling activity undertaken by the private sector.

The Mineral Development Division is responsible for the implementation of the regulatory requirements of the new mining act, which includes the development, operation and termination phases of mining operations. This division also oversees and administers the mineral exploration program that provides funding to provincial prospectors and junior companies, junior exploration companies that wish to start new exploration programs, and dimension stone companies that wish to establish new operations within the Province.

Our Energy Branch is also a very vital part of petroleum and energy resource development in Newfoundland and Labrador. This branch is responsible for the petroleum resource management and electricity industry development programs within the Province. The branch is divided into four divisions: Petroleum Resource Development; Petroleum Projects Monitoring; Electricity Industry Development; and Policy and Strategic Planning.

The Petroleum Resource Development Division promotes, regulates and facilitates the identification, exploration, development and management of our provincial petroleum resources.

The Petroleum Projects Monitoring Division is responsible for the promotion, monitoring and implementation of relevant petroleum sector policies and the maximization of provincial fiscal benefits.

The Electricity Industry Development Division strives to ensure fair and reasonable rates to provincial consumers, fair benefits through the development of public controlled electricity resources, and that rates support provincial goals for economic development.

The Policy and Strategic Planning Division develops, coordinates, evaluates and facilitates energy's policy, strategic planning and program frameworks for energy resource development and management.

Mr. Chairman, as the Committee can see, the Department of Mines and Energy is responsible for many challenging and technical aspects of our mineral and energy resource sectors.

In conclusion, I would like to restate that the Department of Mines and Energy is a growing department that is essential to ensuring that the mineral and energy resources of this Province are developed in a responsible manner and in the overall best interests of the people of the Province. As more projects are discovered and developed, we will see the department expand even further. I am hopeful that we will see many more projects developed in the near future and we will continue to witness this department's growth.

Thank you very much, Mr. Chairman.

That is my opening statement. We would be happy to take any questions that you may have on the detailed Estimates.

CHAIR: Thank you very much, Brian.

I ask the Clerk to move 1.1.01.

CLERK: Sub-vote 1.1.01.

CHAIR: So moved.

John.

MR. OTTENHEIMER: Thank you, Mr. Chairman.

I thank the minister and his officials for being here this evening. Mr. Maynard, if it is okay, maybe if you could forward me a copy of your introductory comment. It was quite thorough and would be of interest to me.

MR. MAYNARD: Sure.

MR. OTTENHEIMER: Maybe, with the minister's consent, we could have a copy of that particular statement.

I have a few questions with respect to the Estimates in particular and then a few general comments and a few general questions that I would like to pose afterwards.

First of all, on page 142 of the Estimates, under heading 1.2.02., Major Projects Benefits Office, I wonder, Mr. Minister, or one of your officials, if you could share with us exactly - I can certainly guess what the answer is but I would like to know with perhaps greater certainty - what projects are administered under the Major Projects Benefits Office as is described.

MR. MAYNARD: That account covers two basic activities. One is the former Voisey's Bay Secretariat, responsible for discussions and trying to advance that file, as well as the Bull Arm Site Corporation which is responsible for the administration and maintenance of the Bull Arm site.

MR. OTTENHEIMER: It is limited to those two, is it?

MR. MAYNARD: It is.

MR. OTTENHEIMER: Okay.

Under those headings under .01 Salaries, we see a slight increase from the revised figure of 2000-2001 where salaries are now showing at $439,200. I am just wondering exactly what the increase is a result of.

MR. MAYNARD: The increase is additional staff members for the Voisey's Bay negotiating team for the upcoming year. I think it is an analyst and some support staff.

MR. OTTENHEIMER: Is that also a result of the transfer?

MR. MAYNARD: That is a result of the transfer, yes.

MR. OTTENHEIMER: We see under .05 Professional Services, under the same heading, again a revised figure last year of $3,000, although it was budgeted at $94,000, but this year actually the estimate is showing $94,000.

MR. MAYNARD: That reflects the reduced activity associated with that file during the previous year.

MR. OTTENHEIMER: Under Professional Services, can you be a bit more specific in why we are seeing $94,000 being estimated for this year?

MR. MAYNARD: That would reflect what we expect to require in outside expert legal advice from mining consultants and industry consultants. We are hopeful that there will be some increased activity on the file in the upcoming year.

MR. OTTENHEIMER: These professional services, is that restricted to our Province or does the department go outside the Province in seeking professional services?

MR. MAYNARD: It is just professional services. There are no legal services included in that. We do go outside. We have several national and international experts engaged.

MR. OTTENHEIMER: Again, can you be more specific in terms of the nature of the work or the services that they would provide?

MR. A. TAYLOR: The consulting work that the Voisey's Bay secretariat has utilized before dealt with a review by two consultants of the capital and operating costs that were being proposed by the company, as well as two engineering firms looking at some of the technologies that were being presented by the companies. That is the type of thing that we see using these funds for in this particular fiscal year.

MR. OTTENHEIMER: So the government seeks their services and provides their conclusions to government exclusively, that is the purpose of this?

MR. A. TAYLOR: Yes.

MR. OTTENHEIMER: If I could - again, before we get into some more general area - turn to Mineral Development on page 144, heading 2.1.03.06, under Purchased Services, obviously we see a significant increase from the revised and budgeted figure of last year to this year's estimates of some $7.5 million. I wonder if maybe one of your officials, Mr. Minister, could give us an explanation of that?

MR. MAYNARD: That activity is associated with the reclamation of the Hope Brook site. Last year we did not spend what we had originally estimated on Hope Brook. We engaged consultants to provide a detailed reclamation plan, and that took a little longer than we had anticipated. We had hoped to have been in and cleaning up that site at this point in time. What you are seeing is a carryover of that funding to the upcoming fiscal year where we should be ready to fully commence the reclamation and get a substantial portion of it completed this year.

MR. OTTENHEIMER: The anticipated would be completed by the end of this fiscal year?

MR. MAYNARD: No, it is roughly eighteen to twenty-four months.

WITNESS: Thirty months.

MR. MAYNARD Well, there is roughly eighteen to twenty-four months of site work and then we are anticipating ongoing monitoring to ensure that the work has been conducted accordingly in an appropriate manner. So there will be some ongoing monitoring up to a thirty month period.

MR. OTTENHEIMER: On page 145, under Policy and Strategic Planning, heading 3.1.01.10, Grants and Subsidies; I know the amount is $85,700, exactly what does that involve?

MR. MAYNARD: That involves grants for the National Climate Change process which is the National Implementation Strategy engaged in all the provinces and the federal government developing the Kyoto response mechanism. As well, there is $3,000 for smog and acid rain issues, again associated with climate change. In addition, there are some funds for a membership in the Canadian Energy Research Institute of $25,000. That is an institute of academic, industry and government organizations that does energy research on energy policy issues. As well, there is some funding of approximately $48,000 for the Energy Council which is an international research institute, basically North American, that again engages in policy issues, debate and discussion.

MR. OTTENHEIMER: How are these groups or associations selected?

MR. MAYNARD: That is basically a balance between how much money you have to put into an institution, because they require a sponsorship or a membership fee. You try to target your money to get the best value. The Energy Council, and SERI in particular, were identified as very good vehicles for advancing the Province's issues on an international and a national front. A big part of what we do is promotion and things like that. The Energy Council, in particular, is made up of energy legislators in South America, North America, various jurisdictions that have oil and gas, electricity issues and things like that. I do not know if that directly answers your question.

MR. OTTENHEIMER: There is obviously a great deal of discretion, I would think, within the department in dealing with these grants and subsidies pursuant to that subsection?

MR. MAYNARD: Well, no. When the submission was made to Treasury Board these were specifically identified as - what we saw as an opportunity to get a significant amount of value for the money. The Treasury Board process being what it is, it is certainly a high level scrutiny.

MR. OTTENHEIMER: The next heading under Petroleum Resource Development, again we see in Professional Services, 3.1.02.05, an increase of approximately - well from last year's budget figure of $210,700, to this year's estimated figure of $310,700. Can you please provide some detail of the nature of these services that are required?

MR. MAYNARD: Petroleum Resource Development is mainly engaged in promotion of the Province's offshore and onshore oil and gas resources. The increase in funding of $100,000 is directly attributable to the focus on natural gas, and trying to facilitate early development of natural gas. The remainder is used to engage people, outside consultants, to cover areas of expertise that we do not have within the department to address, whether it is a promotional item or an evaluation of an existing discovery, or a potential discovery. We use a fair amount of it to promote the offshore resources to new players. We are constantly trying to attract new players into the industry, into our local industry particularly. Exploration is the key to long-term success and we do what we can to encourage additional exploration. So, a lot of this is focused on trying to encourage (inaudible).

MR. OTTENHEIMER: Is there any overlap at all with this particular office and the work of the C-NOPB? Is there any overlap? Are they two separate entities or is there a varying of information?

MR. MAYNARD: They are two separate entities with considerable sharing. It is a very close knit working relationship, but the C-NOPB has no authority nor responsibility for promotion itself. It is purely the regulator of the offshore activity and as such, there is an obvious conflict of interest situation where the regulator is also out as the promoter. We, the department, take on the promotion aspect. The Offshore Petroleum Board is more the regulatory agent. We have a very close working relationship between the two of them.

MR. OTTENHEIMER: If I could just talk briefly about the C-NOPB, it is the next heading on page 146. When do you anticipate hearings with respect to White Rose? I know it has been in the media now for some while. I believe the minister, if I am not mistaken - perhaps it may have been before Christmas, Mr. Minister, when there was some indication that hearings would be proceeding in the not-to-distant future. Can you give us some indication from correspondence or information that you have received from C-NOPB, when the actual hearings will take place with respect to the mode of development of White Rose?

MR. MAYNARD: The commissioner has been appointed and has received the documents from the C-NOPB which starts at the clock. He now has - that started two weeks ago, Bruce?

MR. SAUNDERS: Two weeks ago.

MR. MAYNARD: He now has a ninety day time frame. He puts the documents out for public comment and input, and after that ninety day period he will go to the public hearing process which will take another ninety days.

MR. OTTENHEIMER: So he selects a date after this ninety day period?

MR. MAYNARD: The public hearings will start after ninety days. The nature and duration of the public hearings will depend on how much input he receives during this public comment process. People now have the ability to provide comments, questions, requests for clarification to the commissioner at this point, or to indicate that they would appreciate an opportunity for a more public -

MR. OTTENHEIMER: What role will the Province play in the hearing process?

MR. MAYNARD: The Province will play an observer role during that process.

MR. OTTENHEIMER: Not a participatory role in anyway?

MR. MAYNARD: It depends on the nature of the intervention or the nature of how the process is unfolding. We have an ability to provide our comments to the commissioner, but we will attend all the public hearing sessions and if there are comments, questions or points of clarification that are requested that are outside the Offshore Petroleum Board or the commissioner's mandate, we will be there to provide clarification on those types of issues and that type of role. Really, this is stand back and watch because this is the public review process and it is appropriate for the public to be making comment at this stage.

MR. OTTENHEIMER: Will the Province be making a submission as such?

MR. MAYNARD: At this stage, there is no anticipation of making a submission.

MR. OTTENHEIMER: Is it possible that the Province will -

MR. MAYNARD: We have the ability to make a submission.

MR. OTTENHEIMER: Pardon me?

MR. MAYNARD: Yes, we could submit.

MR. OTTENHEIMER: Has a position been developed by the Province?

MR. MAYNARD: A position with respect to?

MR. OTTENHEIMER: Motive development?

MR. MAYNARD: No, not formally.

WITNESS: That's what the hearings are all about.

MR. MAYNARD: Yes.

MR. SAUNDERS: If I could add to what Brian just said; the process is such that you will go through the public review process. The commissioner will then file a report with the C-NOPB. The C-NOPB then takes a decision with respect to approval or rejection of the development plan application which includes motive development. That decision then comes forward to the respective ministers, the federal Minister of Energy and the provincial Minister of Energy, for his decision on it. So for the Province to be participating in the process and then taking a decision at the end of the process, puts us in bit of an awkward position. You let the process unfold with respect to the public hearings, the board taking its decision, and that decision then coming forward to the minister for final decision. The minister has an opportunity to make a final decision on the development application, including the motive development, at the end of the process.

MR. OTTENHEIMER: But nevertheless, the Province presumably reserves the right to participate more fully if it so chooses, despite the fact that it plays a key role in the ultimate decision that is being made in concert with the federal government?

MR. MAYNARD: Yes, the process does allow that. I think what Bruce is pointing out is that there would be a reluctance to get involved in the process. I think it is more appropriate for the commissioner to take the public comment, provide that in his report to the board for their consideration, and allow the process. I think it would be an extraordinary circumstance where the Province would see to get involved during the public hearing process in, I guess, a directive way or in a directive manner.

MR. OTTENHEIMER: If I could just shift to another one or two areas, then I will let my colleagues continue. Is that okay, Mr. Chairman?

CHAIR: Carry on.

MR. OTTENHEIMER: I know recently you were fairly involved, Mr. Maynard, as deputy minister in the hearings that took place in New Brunswick on the Laurentian Sub-basin and, of course, this ongoing dispute with the Province of Nova Scotia. It is my understanding that a decision may be expected relatively soon, and what I am not sure of is what happens from there. If, in fact, the decision supports our Province - the preliminary decision that is supportive of our Province - then the process could continue well into the future with a further hearing stage, further questions being asked, and a further determination obviously having to be made. What I am not sure of though is if, in fact, the decision goes against our Province, does that then limit the time frame that we are dealing with in terms of ongoing determination of any further decision?

MR. MAYNARD: You have a very good understanding of the process. The first phase, which we have just recently concluded the oral hearings, was focused on one issue and one issue only, and that was Nova Scotia's assertion that the matter had been resolved by agreement; that the line that they show in their accord act had been resolved by agreement of the Premiers in 1964. The panel was only to determine whether there was an agreement that was binding on the parties from 1964. Should the panel find in the Province's favour that there was no agreement - and that time frame is mid-May, they are to determine that by the middle of May - if they find that there had been no prior agreement on the location line, they will then sit down and draw a new line in accordance with the principles of international maritime boundary delimitation. Should they find that there was an agreement, the matter is resolved pursuant to that arbitration panel and the line is the line, the Nova Scotia line. The only recourse that the Province would have at that stage would be judicial review.

MR. OTTENHEIMER: A judicial review at the federal court level?

MR. MAYNARD: Yes.

MR. OTTENHEIMER: The Terms of Reference, as I recall when the panel was put in place, did give some indication that - I guess from an administrative or procedural point of view - this finding would be final. Is that correct?

MR. MAYNARD: Yes. So it would have to be a point of law or a - I am not a lawyer - but it would have to be an error in a point of law.

MR. OTTENHEIMER: Obviously, this preliminary decision is of the greatest significance to this Province? It is a win-lose situation, ultimately, isn't it?

MR. MAYNARD: Well, we have never accepted that the line was determined by agreement in 1964. In 1964 there was considerable discussion on - the whole 1964 submission was about offshore ownership rights, and that was the primary focus. Boundaries were secondary to that primary objective. Furthermore, in 1964 the focus was really on the territorial seas, which was out to twelve-mile limits at that time. Within those parametres, those lines are - I will be honest with you - fairly good, but outside the line the only reference in 1964 was: proceeding southeasterly. Nova Scotia took southeasterly to mean due southeast and drew a line on the 135 degree azimuth right straight out to the edge of the international waters. That never showed up in any shape, form, or manner, until it showed up in a Nova Scotia court. What we have said, our objective is to have a line drawn by a fair and impartial tribunal as opposed to have Nova Scotia unilaterally declare a line. If the panel finds that line is in accordance with international maritime boundary law, we have just asked for that certainty to be determined. We do not believe that we could ever accept the situation where Nova Scotia had the unfettered right to set a line that was binding on both of us. We are primarily asking for certainty; certainty determined by a fair and independent tribunal. Our win is that we had somebody, a fair referee, decide the issue. We were being characterized as, this was a massive land grab and things like that. This was not what it was. We are just asking for a -

MR. OTTENHEIMER: This preliminary decision is critical.

MR. MAYNARD: It is critical, no question about it. I am confident.

MR. OTTENHEIMER: You feel confident about it?

MR. MAYNARD: I am.

MR. OTTENHEIMER: Good.

Minister, recently you have been quoted in the media as stating that very soon there will be a negotiation team put in place with respect to ongoing Voisey's Bay discussions. What I am wondering is, how close are we to finalizing our negotiating team? Could you share with us - if in fact the decision has been made - exactly the nature of the team and when in fact you anticipate the team to continue in the discussions with respect to the Province and the company?

MR. MATTHEWS: I have already announced that our team - sorry, John.

MR. MAYNARD: I think what the minister is trying to say is that he has already given me the job.

CHAIR: Could we say attempting to say, rather than trying to say?

MR. MAYNARD: Attempting to say. The minister has asked me to lead those negotiations. Allister Taylor, my ADM of Mines, obviously is going to be a critical component of that team. It is our intention to - right now I am obviously being brought up to speed. I was involved on the edges of the negotiations before. We are looking at some issues, meeting with some of our consultants to ensure that we have the mechanism in place to address the issues. We are hopeful that some time within the next month or month-and-a-half we will be in a position to sit down with Inco and to engage.

MR. OTTENHEIMER: Presumably, the team will include other individuals, namely perhaps consultants or other professionals, legal advisors, that type of thing? Has that been determined yet or is that still in process?

MR. MAYNARD: I guess the direct face-to-face team will be: Allister; myself; Terry Paddon, who is the ADM of Finance; Gary Norris, who is the Deputy Minister of Intergovernmental Affairs; and Charles Bown, who is with the Voisey's Bay Secretariate, came over. That will be the face-to-face, but of course behind that team there will be considerable consulting assistants and things like that. Most of that will be a re-engagement of people that we previously had under contract and things like that. That is the process that we are going through now, getting the initial team and the support structure in place.

MR. OTTENHEIMER: When do you anticipate that - you indicated approximately a month?

MR. MAYNARD: A month or a month-and-a-half, I think, would be our intention to sit down and commence the face-to-face.

MR. OTTENHEIMER: My last question, and I guess it is perhaps more so for one of the other gentlemen, is with respect to Lower Churchill talks. Again, with so many pressing issues publicly, Minister, you can appreciate the fact that Voisey's Bay, which, of course, was a major public issue some two or three weeks ago, has been replaced by other issues of public concern. I am just curious as to where we are in terms of either new discussions, ongoing discussions, or if, in fact, there are any discussions presently with respect to the development of the Lower Churchill, vis-à-vis the Province of Quebec.

MR. MAYNARD: I have to take that one too.

The most recent contact was about a month ago with Hydro-Quebec. We are in the process of evaluating both a proposal from Hydro-Quebec as well as some configurations or concepts at our own level. The Lower Churchill file has been very difficult and complex. It is not a simple issue to deal with. It is a tremendous project, but it has tremendous challenges.

Right now we are in a go-slow, take-your-time, ensure that we have identified all the potential risks - and this project is not without considerable risk - and identifying strategies to mitigate those various risks with the intention of developing a project wholly owned by Newfoundland and Labrador. That is a $4 billion project. You can appreciate having to borrow some $4 billion on the capital market, and 70 per cent of this, roughly, would be project financing, non-recourse to the Province, but the equity portion is still recourse to the Province. With that level of risk and that level of financial exposure, we are taking things very, very cautiously. It is ongoing and we are giving it the best push we can.

MR. OTTENHEIMER: Thank you, Mr. Chairman.

CHAIR: Trevor.

MR. TAYLOR: I was going to ask a question but it seems rather small now, after listening to the Lower Churchill, offshore oil, and everything like that. I was interested a bit in your comment on wind generation, wind, hydro power - not hydro, obviously, but electricity generation - in your opening remarks. I was just curious as to what might be the status of the - I don't know if I should say proposed - potential development out in the Bay de Verde area.

MR. MAYNARD: I am going to let Bruce make a few comments.

Right now, government directed Labrador Hydro to issue a request for proposals for a wind project. There were requests for proposals. The proposals have been received, they are currently under evaluation, and we are hopeful that within a matter of days we will be prepared to announce a study on wind potential, basically a feasibility study. This feasibility study is intended to result in the gathering of data over the next twelve months, hopefully leading to a wind power project of between five and twenty-five megawatts. Wind is something that we are very interested in, in the department, the potential for wind power. It has come a long way, as a technology, in the last twenty to twenty-five years. It is the greenest of powers, in the context of environmental changes, Kyoto issues, greenhouse gases and things like that, plus our own situation at Holyrood. We generate a significant amount of carbon dioxide at Holyrood and some of our others. We are focused on that and would like to see something happen with it. We are hopeful that this study will lead us to a demonstration wind power project.

CHAIR: The Chair thanks the minister and his officials. I am absolutely sure that whether it is wind or anything else, this Province would, without a doubt, receive the maximum benefits and government, I am sure, will as well.

Mr. Andersen, do you want to comment before I move the Estimates?

MR. ANDERSEN: Mr. Chair, I just want it duly noted that I did have some questions that I would ask directly of the minister; but, knowing the situation that his voice is in, I will be very considerate and force no pressure on him. I will ask my questions at a later date.

CHAIR: The Chair appreciates that decision as well by our colleague, Wally.

MR. MATTHEWS: Thank you, Wally.

On motion, subheads 1.1.01. through 3.1.05., carried.

On motion, Department of Mines Energy, total heads, carried.

CHAIR: Thank you again.

On motion, the Committee adjourned.