03 July 2005

Reduction to absurdity II

Contrary to what some people believe, I love Brian Dobbin's million dollar folly, known officially as the Independent but known to many of us out here in the world as the Spindy.

Grab the new issue today and have a gander at some of the choice offerings.

1. On page one there's a story about an unnamed consultant in the provincial department of education who holds a degree from what the Spindy says is a degree mill. For $10 Large and the effort of filling out a few forms you can get a doctorate. There sounds like the makings of a great story here and a very embarrassing situation for a whole pile of people in the provincial bureaucracy.

2. Then there's the letter from soon-to-be Liberal leadership candidate Chuck Furey in which he denies ever having said anything vaguely like "Dick Cheney bought off Brian Tobin", as the Spindy reported a couple of weeks ago. Its factually anemic original story (based on one source who apparently now has recanted) claimed that a company that had no controlling interest in the Terra Nova project gave the province a few warehousing jobs in lieu of engineering and procurement jobs on the Terra Nova project.

That "fact" gave Spindy publisher Dobbin the chance to attack the provincial government for supposedly selling the shop on Terra Nova. (What he really meant was they didn't weigh down the thing with a gravity-based structure; do the Dobbins have interests in big concrete manufacturing and such? It's a just a question.)

This week Dobbin puts the ultimate pseudo-nationalists Evil Eye on Terra Nova, calling it a Bad Deal. He hasn't compared it to Churchill Falls yet but I am waiting for that one.

Its such a bad deal, Brian, that the project will pay off its costs after a mere three years and is the principal reason the provincial government will reap at least $400 million in revenues this year alone abovewhat it projected in the spring budget. Brian obviously missed the point that once Terra Nova pays its starting costs, the whole project starts generating revenues for the province on the order of double digits. Incidentally, the total value to the provincial economy of the "lost" engineering and procurement jobs was estimated by the Spindy at $400 million.

While Dobbin slams the idea of politicians and bureaucrats negotiating big business deals, given Dobbin's obviously pathetic grasp of math and the Big Picture, I think I'll leave oil and gas decision-making to someone other than Brian Dobbin.

3. My favourite story this week though is the all-too-short-on-details piece on the front page that claims there are legal "road blocks" in the Atlantic Accord (1985) that might prevent the provincial government from luring someone into building a new oil refinery in the province.

Let's get this clear once and hopefully for all: there is nothing in the Real Atlantic Accord that prevents anyone from building an oil refinery in Newfoundland and Labrador.


I challenge anyone to find a clause preventing a refinery from being built here or that forces the provincial government to get permission from Ottawa.

This is nothing more than a big fib being foisted by everyone from George Baker back in the mid-1980s to talk-show maven, Spindy researcher and former advisor to Roger Grimes, Sue today.

Build a heavy oil refinery. There's a global shortage of refining capacity for heavy oil such that Saudi crude (heavy and sour) goes for about half the price of our light sweet stuff.

Bring in the oil from the Middle East.

Refine it and sell it to your heart's content. There's no one to stop you, if the venture is commercially viable. If it isn't, someone might even give you some tax incentives to refine crude here.

It would be easier to figure out what everyone is talking about if the Spindy actually gave some facts in its story. Near as I can figure though, the Premier may have been talking about Section 54 of the Real Accord, when he gave the Spindy an interview.

Here's the kicker, though. That section talks only about making offshore oil available to a refinery in the province. Given the world-wide shortage of heavy crude refining capacity, we could build a refinery here and never have to worry about that clause. But even if it did, the clause makes it clear the province can have access to offshore product "on commercial terms", i.e. without any preferential pricing unless the oil companies developing a field want to make some type of deal.

There is a caveat that the feedstock (i.e. crude for refining) is in excess of the needs of existing refineries in eastern Canada, but by taking that one step further we can see there isn't likely much of an issue here either.

An earlier clause of the Real Accord establishes something called national self-sufficiency and security of supply. Basically, that is calculated every five years. If there is self-sufficiency, then control over development passes to the provincial energy minister. By implication, it would be hard to be nationally self-sufficient without also being regionally self-sufficient, especially considering there have been refinery closures in eastern Canada since 1985.

There really shouldn't be any obstacle to building a refinery that could handle heavy crude from Hebron, for example. We just have to double-check the numbers.

The sad thing is that the Spindy only has to talk to a few people who actually understand these things and they might actually find a better story. Or they might just stop wasting time pumping out more stuff like they have been about the offshore.

The Spindy has become, on some issues anyway, an ongoing reduction to the point of absurdity.

Just so you can make your own judgment, here's the regional security of supply clause:

Regional Security of Supply
54. Hydrocarbons produced from the offshore area will be made available to Newfoundland and Labrador on commercial terms to meet both total end use consumption and the feedstock requirements of industrial facilities in place on the day that legislation implementing this Accord is proclaimed. Similarly, feedstock availability shall be ensured, on commercial terms, for new industrial facilities in Newfoundland and Labrador, provided such feedstock is excess to feedstock required to meet the demand of presently existing industrial capacity in eastern Canada.