While a great many people across the province are cheering on Danny Williams in his latest fight on behalf of this place with someone not from here, it is doubtful the proponents of the Hebron-Ben Nevis development are overly concerned about the premier's latest public claims that any development of the field will have to include a combination of two of the following:
- an oil refinery;
- better royalties for the province; and/or,
- an equity position - read direct involvement by the provincial government - in the field.
Chevron and the other oil companies involved know the premier is fond of making great claims only to accept something remarkably different at the end.
He did it with the federal government over offshore revenues. Williams' starting position was was one thing; he eventually settled for far less than he wanted at the beginning. He also hauled down Canadian flags vowing they wouldn't go up again until a meeting with the prime minister. Then he quickly started talking about putting them back up before that and under other circumstances. When a public opinion poll showed the strength of the public's negative view of his flag stunt, he simply ran the Canadian flags back up the flagpoles at government buildings.
Williams changed positions with Abitibi Consolidated, even going so far as signing a deal that had the province paying the company to keep operating and effectively making no government revenue whatsoever.
The Hebron team also knows that local public reaction never gave the premier a lick of a problem over his shifting pronouncements and positions.
Williams is very good at leaping to the barricades to protect the local Us from the foreign Them. It's an old theme in local politics here, one that stirs the blood of the natives and keeps them distracted from the substance of what's going on. In this instance, Williams is simply making the sort of public statements he likes to make to build up his store of political capital. There is no cost in this to Danny Williams, no cost that is unless he suddenly goes crazy and refuses to sign any deal at all, leaves Hebron in the ground and in the process damages the local offshore supply and service sector.
A man willing to pay a company to take away local resources may be a little crazy from some perspectives. But it is unlikely Danny Williams will go the kind of crazy that would see some political damage being caused over what amounts to the kind of political rhetoric Danny Williams has yet to stand behind. Danny Williams may talk like Brian Peckford, but he doesn't act like him all the time.
As for the specifics of this negotiation, the companies know that two of the premier's three conditions are non-starters. The premier knows it too.
The companies don't want a refinery tacked onto the Hebron project at a sizeable cost to their profits where a refinery isn't necessary to make this project work. The companies know the premier has a private sector group interested in a refinery anyway and that refinery will not depend on Hebron oil for its success.
They also know that deep down, the premier can do the math. Danny Williams understands that a refinery merely delays the point at which Hebron pays off and therefore the province gains higher revenues under the generic royalty regime. Think Terra Nova and White Rose here, not Hibernia.
On the issue of an equity position, the companies simply don't want to have a public sector corporation involved in the day-to-day decisions about running the field. They've told the premier this already. The companies are not anxious to let someone slide into the project who hasn't risked anything or paid a share of the costs to get the project this far.
In any event, an equity position would have to be purchased at fair market value and with the province assuming a share of the costs and liabilities as well as the potential profit. All things considered, the cost to Danny Williams of the equity position would likely outweigh its cash value and certainly would all but neutralise any value in royalties and local benefits. Put another way, the Hebron equity position may well make the Hibernia deal look like a lottery win by comparison. Expect it to disappear from consideration.
Both the provincial government and the oil companies have set April 1 as the deadline for a deal. If one is to be had, expect it to consist of royalties and local jobs benefits. The refinery and the equity position will likely vanish. The reasons are simple: the costs of either of these to the provincial government is simply too great. Shelving the entire project is the only outcome that potentially damages Danny Williams' political position and he has never stuck blindly to a position which ultimately costs him political capital. Danny Williams is more like Brian Tobin than Brian Peckford.
The premier will claim victory no matter what happens. Many will praise his success, as they have in the past and the last of the major offshore discoveries will move into production. No one will notice that yet again what he demanded as his bottom line and what he accepted as his final position are totally different.
No one will notice, that is, except for the companies with which Danny Williams is negotiating on our behalf.
