Nalcor Energy: What does the future hold?

Nalcor Energy is a crown corporation owned by the people of Newfoundland and Labrador. The Nalcor base of business expands into a broad range of energy sectors that are guided by a long-term energy plan. This energy plan is a futuristic and forward-thinking plan created by the Government of Newfoundland and Labrador.  

Did the Nalcor long-term energy plan predict the price of oil today and can it work under the current circumstances and government?
What’s needed to ensure we have a sustainable new energy future?
Who are the right team members for Nalcor Energy and the Nalcor Energy board?
These are some of the pressing questions of the day.

Leading the development of the province’s energy resources Nalcor is focused on environmentally-responsible and sustainable growth. Embracing energy propositions, the Nalcor portfolio of projects includes Hydro, Churchill Falls, Oil & Gas, Lower Churchill Falls, Bull Arm Fabrication Facility, Energy Marketing and other energy operations. Essentially Nalcor oversees everything energy that is in the public domain.

Being Informed

Being educated and informed about the companies that represent us in the province of Newfoundland and Labrador provides a foundation for advancing us forward. It is each citizen’s personal responsibility to get his or her knowledge, facts, ideas, and opinions together and make informed choices about our energy destiny. With 25 years in the energy sector, publishing The Oil and Gas Magazine, and traveling and living in energy cities the world over, the experience collected supports  solution-oriented, thought-provoking points to address the considerations of the day. I hope you find useful information here that supports the building of your energy perspective.

Nalcor Energy 2015 Performance Summary

In 2015, Nalcor revenue increased by $2.7 million from 2014 to $592.5 million, with a profit of $20.3 million. Nonetheless, this represents a profit decrease of $24.8 million over 2014. This is indicative of the economic challenges of the time. Why did this profit decrease? The major factors cited were a decrease in oil production, lower commodity prices and higher operating costs. Profit would have been even lower but there was an increase in profit generated by Churchill Falls in 2015. Could Nalcor operating costs be lower with megaprojects such as the Muskrat Falls project? The answer is most probably yes.

Nalcor capital expenditures were $2.0 billion in 2015, which is a 49.0% increase over the same period in 2014. Having said that, the total assets of Nalcor continue to grow to $11.6 billion as at September 30, 2015. This is an increase of $1.0 billion over December 31, 2014. When you look at this total Nalcor performance picture, given the scrutiny that the media has put Ed Martin and the Nalcor team through, you quickly realize why Ed Martin and the Nalcor board have resigned. Is this the way we want it to go?

Given that they have resigned, and given that Nalcor is a crown corporation owned by the people of Newfoundland and Labrador, what should the Nalcor Energy team and board look like? The considerations include the new government and a new and very tough economic climate for oil and gas. Should it change with the new government and new challenges? Or should experienced people be left in place? These are the questions of the day.

Here’s what we know for sure. Competence, leadership, business fortitude, visionary leadership and a strong team make companies work – It’s not the company, it’s the people. So who are the right people to steer Nalcor through tough economic times and into a prosperous future?

Stan Marshall, new CEO of Nalcor Energy

Today, April 21, 2016, Premier Dwight Ball, with Siobhan Coady, Minister of Natural Resources, announced that Stanley Marshall has been named the new CEO of Nalcor Energy. “We are pleased that Mr. Marshall has accepted the position of CEO of Nalcor Energy. Throughout his extensive career, including 35 years with Fortis, Stan Marshall has led multi-billion dollar organizations and large-scale projects throughout the world. We are fortunate he has agreed to lead the province’s energy corporation”, said Premier Ball.

A provincially strategic move for the province, Stan Marshall’s career with Fortis has spanned 35 years, leading the organization as President and CEO of Fortis for more than 18 years. Mr. Marshall joined Newfoundland Power Inc. in 1979. He is a retired member in good standing of the Law Society of Newfoundland and Labrador and is a Registered Professional Engineer in the Province of Newfoundland and Labrador. Mr. Marshall holds a Bachelor of Applied Science Degree in Chemical Engineering from the University of Waterloo and Bachelor of Law from Dalhousie University.  All of these credentials will support the energy future plans of the province of Newfoundland and Labrador.  Stan Marshalls credentials fit the bill.

“Mr. Marshall brings a wealth of experience and knowledge. His accomplishments in developing Fortis into Canada’s largest gas and electrical distribution utility, are well known and celebrated. He grew the corporation’s total assets from less than $1.0 billion in 1996 to $18.6 billion. His leadership and expertise will help develop Nalcor, including the Muskrat Falls Project, for the benefit of the people of the province”, explains Siobhan Coady, Minister of Natural Resources. 

Mr. Marshall joined Premier Ball and Minister Coady at today’s announcement. With specific reference to the Muskrat Falls Project, Mr. Marshall has a mandate from the Government of Newfoundland and Labrador to ensure this project gets back on track. 

Who should be on the Nalcor team?

Who should be on the Nalcor board? The Nalcor Board could consist of at least 12 highly qualified people in different realms of energy. Competence should range from differing energy sectors such as Hydro, Oil & Gas, and new energy. As well, there should be innovators, business leaders, tech gurus and futurists on the board and on the Nalcor team to ensure resources are managed with the advancement of technology. Clearly, Oil and Gas and Hydro should be represented more heavily on the board and in direct proportion to provincial resources.

Hired and appointed Nalcor people should have a proven track record and have been involved in massive projects that have achieved success – projects that are the magnitude of Churchill Falls, Muskrat Falls, Hibernia, Terra Nova, White Rose, Hebron, and others. Board members in the oil and gas sector should have extensive experience in areas such as global marketing, exploration of new frontiers, and the building of an industry such as that of the North Sea. How can you expect people with no experience in global mega-projects to know how to manage them effectively? World class experience is necessary for the transfer of knowledge, skills, systems and intelligence. The board and the company team members should also consist of 50 percent men – 50 percent women.

In the Oil and Gas sector, the Nalcor team and board should be responsible for the successful delineation of resources in the Flemish Pass and other basins offshore. For example, people with the magnitude of experience of Helge Lund, who is the former CEO of Statoil (Now with BG/Royal Dutch Shell), would be a perfect fit for the Nalcor board. He is not a candidate because Shell is now a landowner offshore Newfoundland, and that would be a conflict of interest, but someone just like him who can implement the vision and successes of the North Sea would be perfect.

Nalcor leadership should implement public intelligence as well as oversee initiatives such as the current MG3 Survey. The MG3 (Survey) UK Limited and Amplified Geochemical Imaging, LLC, with investment by Nalcor Energy, are carrying out the first phase of a multi-client seabed coring and slicks study covering an area from the central Labrador Sea to the Orphan basin. The project region includes three of the C-NLOPB Areas of Interest in the upcoming 2016, 2017 and 2019 license rounds. 

The board and team members should be responsible for having Nalcor remain profitable especially in tough economic times. Transparency of operations with weekly public reporting should be mandatory for a crown corporation like Nalcor.

Public & Industry Intelligence Network

There should be a mechanism in place for the board to present current issues and get public and Nalcor team members input on a weekly basis, by voting online! This fosters transparency, responsibility, and accountability, and the people of the province become intricately involved in board choices. This way the Nalcor team and board members are facilitators of a collaborative and collective intelligence network rather than making singular decisions.

Candidates for the Nalcor Board and the team should have global perspectives and experience, not local perspectives and experience. Local intelligence is simply not enough if we are going to be world leaders and exporters of energy resources.

The province of Newfoundland and Labrador is resource-rich and it is the people who build industries, not companies. The right people at the helm must be global leaders who can move mountains and put Newfoundland and Labrador in a primary global energy position that capitalizes on global energy exports. Stan Marshall at the helm of Nalcor Energy definitely ticks all the boxes in terms of qualifications, managing $billion mega projects, and creating impressive growth and profit with integrity.  Can he make the difference? Time will tell. 

In my humble view, after 25 years working in the oil and gas industry in Newfoundland and globally, I believe this is a sustainable model and a baseline for the Newfoundland and Labrador economy. Do I believe offshore Newfoundland has the potential to be that of the North Sea and then some? Yes, absolutely I do.

Building a leadership culture

To have our resources do well, we need top level leadership. That doesn’t mean top level pay; it means top-level competence. We can reduce spending by reducing public salaries. The projects and pay scale in the energy sector are not sustainable. We see that right now with the current price of oil, and everyone is adjusting pay and positions in the oil and gas sector to accommodate the times.  In my view, crown corporations should not have salaries that are more than $150-$200,000 for any and all leadership positions.  Many people who lead in public positions are interested in visionary leadership, making a change, being a contribution and paving the way for the future for our children.  They generally are not motivated by money. 

We should not chastise, crucify, blame and drama-monger our leaders as we have with Ed Martin.  Great leaders take on public positions to serve and should not “automatically” be subject to low-level blame, drama, and criticism. This is a formula for no leadership and is not sustainable. If we want to attract competence we must eliminate that as a cultural norm first and foremost. It’s not sustainable and I believe the people of the province owe the current Nalcor team an apology even when projects are over budget and off schedule. Have you ever had a project over budget or off schedule? How many billion dollar projects do you know of that did not go over budget or off schedule at times in their development? Let’s focus on how to fix it, rather than attacking our leaders. Blame is one of those things that makes one person right, and the other wrong, and nobody ever wins.

Have you ever had a project over budget or off schedule? How many billion dollar projects do you know of that did not go over budget or off schedule at times in their development? Let’s focus on how to fix it, rather than attacking our leaders. Blame is one of those things that makes one person right, and the other wrong, and nobody every wins.  Ed Martin deserves our gratitude and acknowledgement, and so does Stan Marshall for taking on such incredible challenges and responsibility in public service.

Nalcor Energy, like all companies, can improve with daily and constant adjustments, performance integrity, strong corporate culture and innovative futuristic thinking.  A team of global competence, energy-passionate, entrepreneurial-minded and highly creative will make the difference. Accepting anything less will postpone the possibilities of the province’s great resources.

What are your suggestions? Who’s it going to be?

 

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