Thank you, Mr. Chair. This is a great honour and pleasure to be before the committee, even virtually.
I'd like to talk about four things. One is just to touch on the macroeconomic position of oil and gas within Newfoundland. Then I'd like to jump into the perspective of one of the high-tech companies that's emerging out of our milieu, and how we have penetrated export markets and the crossover into adjacent industries. As I go along, I will be pointing out how our experience mirrors that of other similar high-tech companies that are emerging out of an ocean technology cluster in St. John's.
First of all, to be in Newfoundland right now is a very exciting time. Our GDP growth rate is higher than India's, lower than China's. Our unemployment rate is the lowest since 1973, and that is largely attributed to the growth of the oil and gas industry in our province.
To put it in context, the oil and gas fields off the Grand Banks are a similar size to the North Sea. So if you can combine Norway and the U.K., that is the type of potential that we have in our offshore. Unlike the North Sea, our offshore is virtually unexplored: compare our 200 wells with 5,300 wells in their jurisdiction.
The big barrier to growth in our area, I believe, is the harsh environment that we have to deal with, in particular, ice, remote distances, and high sea states. That demands that our offshore needs to be grown on the back of innovation and high technology, much of which is being developed in Newfoundland by companies like ours.
To give an example, through the Atlantic accord, there is a requirement for research and development investments in Newfoundland. As of 2011, with the figures provided by the oil industry itself, there's been roughly $200 million of investment by the oil industry in high tech in Newfoundland, mostly concentrated on Arctic operations and improving health, safety, and environmental performance for the industry.
When we look at Virtual Marine Technology, our company emerged from solving an offshore oil and gas problem. What we were asked to do, and eventually were able to do, was to train offshore workers how to launch lifeboats from platforms in hurricanes. That is something we managed to do. The initial investment for that came from the oil industry itself, and was levered by a number of co-investments by federal and provincial innovation funds. The program started in 2003, and by 2009, the first simulator was deployed for training. As of today, we have thirteen systems in three countries.
When we look at the export—very much as our first intervenor Céline Bak had said—our economy and our company has to be based on export. The Newfoundland offshore, at this time, is too small to sustain a high-tech company like ours and like many of our peers. Of course, we have eyed the export potential in other offshore jurisdictions. In this we are very fortunate, not only when we solve a problem for a local oil and gas player like Exxon Mobil or Husky, but also when there are very many Newfoundlanders who are participating in the global offshore oil and gas industry, mainly having been trained at the Marine Institute in St. John's. Through those connections and networks, companies like ours are able to get introductions with the main players around the world.
Our first export sale was in Mexico, in 2010, after an offshore incident they had that mirrored the Ocean Ranger. We have since targeted the Gulf of Mexico and the North Sea. We expect that our first exports into the Gulf of Mexico will occur this year, and into the North Sea next year.
As previously mentioned, many of the customers for the ocean technology companies in Newfoundland are the oil and gas majors themselves. The way that things are structured in the oil industry, we do not need to go through tiers as you would see in the defence industry in order to sell into the oil sector.
The final thing I would like to touch on is crossover into defence. Newfoundland and Labrador is not really a host to a very strong or large defence industry. However, our high-tech companies have been solving problems for the oil industry and many of these technologies have crossover applications into defence.
As a typical Newfoundland company like ours breaks out of serving the local oil industry and goes into a more regional market, we jump over into defence. An example of that would be our participation in the Halifax-class modernization program, which ultimately led to us being put into the supply chain of a major defence contractor and being brought into the German F125 frigate program as well.
Another interesting piece is that the Irish are spearheading a research program within Europe to help first responders operate in arctic conditions. Through our work with the oil industry, we've developed ice navigation modules for lifeboats. That is now being exported into Europe through Ireland—of all places—to be consumed in Norway and Sweden.
My final comment, though, I would say, is that there is a marked difference between defence contracting and oil and gas contracting. Companies like ours find it much more efficient and much easier to deal with oil majors in their procurement processes rather than with governments through their defence contracting processes. That's why you will probably see a lot of high-tech companies initially focused in our area on oil and gas and then switching to defence.
With that, thank you very much. It has been an honour to make this presentation to you.