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What is Redefining Oil?
Why is it important?
Why now?
What are the benefits of this new approach?
Realizing the vision
Jurisdictional review
News Release
Redefining Oil Informational Brochure
Watch Noia Chair Sean Power announce Redefining Oil Strategy to members
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What is Redefining Oil?

Redefining Oil is Noia’s vision for the continuous development and growth of a competitive, local oil & gas industry. It is a plan that seeks to initiate a process for industry-wide collaboration and set the course for the future focussed on increased participation, technology transfer, technology development and the mechanisms to achieve results.

 

 

Why is it important?

A renewed approach, based on our shared interest with other stakeholders for a competitive and sustainable industry, would reduce uncertainty through better definition and clarity on what the strategy and objectives are going forward. This will provide for better planning and result in reduced risk and uncertainty for both the operator and supply communities. A competitive, locally placed supply and service industry will greatly contribute to the industrial capability and strength of the province. 

Why Now?

Newfoundland and Labrador is expected to experience an unprecedented surge in exploration activities and eventual development, resulting from recent discoveries in the Flemish Pass, recent changes to the offshore land sale system and the Nalcor discovery of large (the size of the Gulf of Mexico) and potentially highly prospective world-class basins both on and off the Labrador Shelf.  This, combined with the recent resource assessment, indicates that significant opportunity exists for both sustained resource development and further participation by the oil & gas service and supply industry.  In addition, sustainable economic development from the oil & gas sector is a long-term proposition and we need to establish the right approach and mechanisms as early as possible.
 

What are the benefits of this new approach?

 

  • It will unlock the win-win benefits of enhanced participation by competitive local firms.
  • Local businesses will be better positioned to increase their participation in local projects, thereby stimulating investment and acquiring the technological competence to effectively compete both here and internationally.
  • Targeted skills enhancement aligned with a long-term view.
  • Increased opportunities for local participation in global supply chains (increased market access).
  • Enhanced and focussed knowledge generation, knowledge transfer and local company participation in technology innovation, development and local commercialization.
  • Spill-over effects to other sectors and areas of the province.

Realizing the vision

Noia is looking to work collaboratively with government and other stakeholders for the improvement of industry capability and competitiveness and the increased effectiveness of public policy for the broader economic benefit of Newfoundlanders and Labradorians.

Our members have a shared interest with other stakeholders in ensuring that local companies acquire the capability to develop, as well as the expertise and skills necessary to be competitive and to attract investment.  Noia’s view is that a new, consistent policy approach with a sound strategy and clear objectives, is required to fully realize the potential for sustainable industry participation and growth. 

To this end, this new approach represents an investment in Newfoundland and Labrador’s future. It supports a local industry to innovate, develops a competitive capability and takes advantage of opportunities - thus creating jobs and business investment locally and enhancing the local industry’s ability to access global opportunities and integrate into global supply chains.

Vision and Strategy

Government and industry must work together to develop a long-term vision and a strategy for the further development of a competitive and competent local supply and service community.

Recommendation:

The creation of an Industry Council to formulate the vision and strategy, and an Industry Development Agency for implementation, monitoring and feedback.

Industry Council

The Industry Council should play a pivotal role in shaping the future of the industry. It must adopt global best practices on collaborative governance and support objective, well-informed policy-making across government for the supply and service sector. It should include representation from across the industry and government and include Cabinet Ministers and representatives from oil companies, the supply and service community, labour, and research and development and educational communities.  Industry champions and industry stewards need to be appointed to ensure everything is on track.

Industry Development Agency

The Industry Development Agency should be responsible for driving the strategy, goals and objectives as determined by the Industry Council and dialogue with the Council on progress and challenges. It must be able to establish strong relationships with the operator and supply and service communities, the educational and research organizations and the CNLOPB.  It should have a degree of independence and autonomy and should have the ability to become involved and influential in day-to-day and long-term challenges and play a vital role in shaping the future of the industry. It should have the ability to set its own priorities and monitor for full compliance with appropriate project agreements.

Project Agreements

Project agreements must be aligned with strategy and long-term objectives for supply and service industry development and must strike the balance between short-term development opportunities and long-term life of field development.

Expertise and Skills 

International cases confirm the importance of knowledge generation and transfer, technology development, dissemination and innovation for the formation of a competitive supply chains able to meet the industries’ growing needs. Noia believes that it is necessary to direct this within project agreements, since optimal local knowledge and technology development will not occur spontaneously with the current practise.

Recommendation:

Project agreements shall include:

  • Work that contributes to the development of appropriate skills and expertise for long-term industry development objectives.
  • Technology transfer agreements that target technology areas for long-term resource development.
  • Ensuring R&D expenditure plans are made with input from local businesses and organizations and are appropriately invested in targeted IP creation founded in the province for the benefit of future domestic and export markets.
  • Defined local participation in targeted areas of project engineering and construction management.
  • Defined local participation and knowledge transfer in project work undertaken outside the province.

Supplier Development

Procurement policy based solely on full and fair opportunity without other mechanisms for industry sustainability, cannot achieve optimal results. Procurement and evaluation policies can strengthen and support local supplier development and the oversight agency should play a critical role in this.

Recommendation:

Industry Oversight Agency responsibility to include the following:

  • The development of appropriate procurement rules specifically addressing openness, transparency, monitoring and compliance.
  • Appropriate and early input from the local supplier community in decision making on contracting plans.
  • Early engagement and access to operator and prime contractor(s) procurement and contracting plans including, bid packaging and local participation strategies.
  • Formal assessment of local participation in all contract awards.
  • Commitments and plans for technology transfer are included in any and all awards to major international contractors.
  • Tender evaluation criteria and weightings in contract awards to support and drive local participation.
  • Bid package bundling that accommodates local capability.
  • Contract terms for local suppliers are commensurate with the nature and end use of the product/service provided and do not unduly add risk for local suppliers.

Atlantic Accord

The benefits provisions of the Atlantic Accord can play an important role in help creating a sustainability industry. New guidelines and industry-wide procurement standards will help fully realize the Accord’s economic growth and development purpose and support supplier development and enhancement of expertise and skills.

Recommendation:

Government, in consultation with stakeholders, implement a process to ensure:

  • Full and fair opportunity and first consideration provisions in the Atlantic Accord are fully addressed in guidelines and include industry-wide procurement standards supporting the provisions.
  • Appropriate guidelines, measurement metrics and monitoring processes include the ability to measure improvement (or slippage) as the industry and the local supply community continue to evolve and mature.
  • Guidelines for the preparation of bid specifications and packages and execution strategies do not unfairly prevent or disadvantage locally placed contractors and suppliers from participating in the bid process.
  • The proponent’s commitments include programs, policies and/or procedures to enable local suppliers to participate in the proponent’s national and international activities and include clearly defined objectives with measurable outcomes.
  • Domestic supplier development is positively affected by the proponent’s procurement and contracting policies.
  • The transfer of technology and “know-how” to Newfoundland and Labrador suppliers and contractors include plans with clearly defined objectives, timelines and measurable outcomes.