Muskrat Falls ‘straightforward’ from here: CEO
Nalcor president and CEO Stan Marshall presides over his final AGM with controversial megaproject completion in sight
Stan Marshall presided over his final annual general meeting (AGM) Thursday as head of Nalcor Energy after a tough stretch of pulling the corporation — and the Muskrat Falls project — through the snowbanks of Snowmageddon and over the impact of the COVID-19 pandemic.
Marshall, who retires on Tuesday, said he is looking forward to a summer off before continuing working on other business interests he is involved with.
Though he says he won’t be there when Muskrat Falls goes online this fall, he can see the end of the line five years after taking the lead on the over-budget, delayed megaproject.
“Five years ago the thing was on the verge of collapse. It was in absolute crisis. You had a hole in the ground, basically, with a main contractor within weeks of abandoning the project,” Marshall said. “You already spent … committed $8 billion and you had nothing to show for it.
“Now you’ve got a system that’s finished, construction, yes there’s work to be done … so it should be pretty straightforward now to bring it to a finish.”
At the end of the tumultuous year of 2020, Nalcor recorded a loss for the year of $90 million, compared to a profit of $126 million in 2019 — a decrease of $216 million.
According to the Crown corporation’s annual report, the key drivers of the decrease included the non-cash impairment of oil and gas assets of $225 million recorded in the first quarter of 2020, lower realized oil prices, higher depletion in oil and gas and a full year of interest costs for Lower Churchill Power (Muskrat Falls) transmission.
Decreases in 2020 were partially offset by higher oil production volumes, lower royalties, as well as no exploration or evaluation expense for 2020.
“We have overcome many challenges,” Marshall said. “2020 brought Snowmageddon and the COVID-19 pandemic, yet we successfully implemented protocols to ensure the safe return to all of our facilities. We also celebrated milestones and accomplishments across the organization.”
For the first quarter of 2021, Nalcor recorded a loss for the three months ended March 31 of $57 million, compared to a loss of $171 million for the same period in 2020.
The report states the key drivers of the reduction in loss for the quarter relate to the impairment of oil and gas assets taken in 2020 as a result of a significant decrease in oil prices, along with lower depletion in 2021.
Marshall noted a significant milestone in 2020 was first power generation at Muskrat Falls and delivery of that power over the Labradorisland Link (LIL) to customers on the island.
In December 2020, Nalcor’s energy marketing team exported Muskrat Falls energy over the Maritime Link between the island and Nova Scotia, with power flowing to Atlantic Canada and beyond.
Marshall said commissioning work on the Muskrat Falls generating facility is ongoing.
In mid-may, Unit 2 was successfully synced to the electricity grid — the third and fourth units are expected to come online in the coming months.
“On the LIL, interim bipole trial operations started in mid-march and were completed on May 1 with LIL transferring a peak power flow of 225 megawatts from Muskrat Falls to the island,” the annual report notes.
“The LIL contractor, GE Grid, is focused on completing the final bipole software and, once received, testing will continue through the summer and fall before being turned over to operations, which is expected later this year.”
Marshall said the Holyrood Thermal Generating Station — with 2020 marking the 50th anniversary of the facility — will be kept operational for another couple of years as the Muskrat Falls system become fully operational and proven reliable.
Marshall’s advice for the province — no matter what decision is made on the future of Nalcor — is to keep the expertise that has developed in the province through Nalcor.
“The future of this province depends upon what we do with our hydroelectric resources,” Marshall said.
“What do we do with the Upper Churchill, what do we do with Muskrat Falls, what we do with Hydro and the systems we have. You are going to need the expertise that’s at Nalcor.
“The problem we have in Newfoundland and Labrador is that we’ve gotten terrible advice on our hydroelectric projects. You are going to need the expertise of Newfoundlanders. If you don’t, you are going to end up in the same place you’ve gotten in the past.”