Noia Calls for Renewal of Newfoundland and Labrador’s Oil & Gas Industry

Posted in Releases on November 20, 2015

St. John’s, NL (November 19, 2015) - Today, the Newfoundland and Labrador Oil & Gas Industries Association (Noia), released its vision for the province’s oil & gas industry – Redefining Oil. Sean Power, Chair of Noia’s Board of Directors, today unveiled this forward-thinking plan designed to ensure that the oil & gas industry leaves a lasting impact on the province’s local business community, for the benefit of all Newfoundlanders and Labradorians.

“Noia believes that by making the right decisions and moving collectively toward a shared vision, we can create an industry that is stronger, more competitive, more sustainable and one that maximizes the benefits of our provincial resources and our global participation” said Mr. Power. “If we focus strategically on melding what the industry needs, build on our proven strengths, and identify opportunities for new expertise, we can truly redefine oil for Newfoundland and Labrador and develop a local industry that exports globally, offers high labour productivity, is a source of intellectual properties and is known for its efficiencies.”

Noia’s Redefining Oil strategy calls for a renewed, collaborative partnership between industry and government that will:

  • Change the way we develop the vision and strategy and then set it into motion through the establishment of an Industry Council to formulate the vision and strategy and an Industry Development Agency for implementation, monitoring and feedback;
  • Change the way we approach supplier development;
  • Enhance local expertise and skills;
  • Realign project agreement so they focus on the long term, and
  • Fully realize the Atlantic Accord’s economic growth and development purpose.

Details on each is contained in the following backgrounder.

Redefining Oil is a vision for industry-wide collaboration focused on building more competitive local expertise, creating a more secure and predictable investment environment and generating lasting economic impacts for our province,” said Robert Cadigan, Noia President and CEO.  “Moving forward in this renewed direction will support better planning and reduced risk and uncertainty for both the operator and supply communities and greatly contribute to the industrial capability and strength of Newfoundland and Labrador.”

Redefining Oil represents more than two years of research and consultation. During this time, Noia conducted 16 extensive jurisdictional reviews and consulted with its members, industry and other stakeholders in order to fully understand their thoughts on the challenges that exist for them and how they could be addressed; identify areas for improvement in negotiated benefits agreements and the Atlantic Accord; and clarify Noia’s role in strengthening the provincial industry.

For further information on Redefining Oil, visit www.noia.ca

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For more information, contact:

Jennifer Collingwood, Senior Director of Communications, Noia
Tel: 709-758-6617 | Cell: 709-691-2208 | jcollingwood@noia.ca

 


BACKGROUNDER

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 Industry Development Agency should play a critical role in this.

Recommendation:

In alignment with the strategy, the Agency should consider 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 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.

 

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