At Nalcor Energy’s annual general meeting in St. John’s, president and CEO Stan Marshall said the project remains on the same schedule and budget, standing at an estimated $12.7 billion.
The Muskrat Falls Inquiry has heard from contractors about disputes over project costs and payments, with indication of additional expense under contract packages, but Marshall said nothing is moving the needle right now.
“I don’t feel it’s necessary to update this year. We’re still going on the numbers we gave you two years ago,” he told reporters Tuesday, adding there were different expenses considered when the last – and current – cost estimate was provided.
The construction project is now being described as 96 per cent complete, with the Labrador-Island Link at 99 per cent. Power was marked as flowing over that line in 2018, as detailed work continues to complete its commissioning and integration with the existing power system.
At Muskrat Falls, there was completion of the North Dam and a continuing push towards first power. First power is something people in the province have been told to expect before the end of 2019. At the ongoing public inquiry into the megaproject, it was suggested work would be slowed down at site if there was any rush to a symbolic power-up. Energized areas, Commissioner Richard LeBlanc has heard, are simply more time consuming to work in.
“There’s no technical definition of first power to begin with,” Marshall said for clarity, when asked about the “first power” milestone. He went on to say that there are lock-out procedures and other activities required to protect workers, and he is driving for power from the new hydroelectric generating station this year as planned.
“I think quite clearly here we’ve got to complete those units as quickly as we can,” he said.
There is an “integration risk” included in the corporation’s financial report, making it clear costs could still rise, if there are difficulties encountered in the work required beyond first power. That’s one of the corporation’s business risks, apart from any ongoing commercial disputes. This was the last AGM expected covering the original Nalcor Energy. The Crown corporation is being split under the Liberal government, with a new Oil and Gas Corporation Act through the House of Assembly and given Royal Assent on April 2. The legislation paves the way for the birth of the provincial oil and gas corporation - separated out from Nalcor altogether.
Financially, a holding company will remain inside Nalcor Energy offering the benefit of existing, provincial equity stakes in offshore oil projects. But the Bull Arm Fabrication division will be moved out into the new company, as will early exploration work including spending on offshore area testing (seismic being one example).
Nalcor Energy’s latest annual report covers financial results through 2018.
Nalcor Oil and Gas reported oil prices up from 2016 and 2017, while production was also up. There was added oil production in 2018, thanks to the Hebron offshore project.
Operating profit was reported at $191 million for 2018 ($123 million from the offshore, $68 million from electricity), with profit standing at $180 million.
Nalcor Energy’s total assets are at $18.8 billion, up from $18 billion at the end of 2017 and $14.1 billion in 2016. About 74 per cent of Nalcor assets are part of the Muskrat Falls Project (if including the Maritime Link), with income-producing assets at $4.8 billion.
Marshall said the focus continues to be on finishing the Muskrat Falls construction and bringing the electricity assets online.
“I’ve got one more year under my contract. I won’t be looking to extend it, or renew it, but I’ve told the premier that I will not leave things unfinished,” he said.
The current Nalcor Energy board of directors includes: Brendan Paddick (chair), John Green, Geoff Goodyear, Chris Hickman, Jack Hillyard, Mark Macleod, Brian Maynard, Debbie Molloy, David Oake, Edna Turpin and Marshall.