15 March 2006

Ed Byrne on PetroNewf and the equity position

Atlantic Business Magazine has a great oil and gas supplement in the current issue, including an interview with provincial natural resources minister Ed Byrne.

Check out the Byrne interview at atlanticbusinessmagazine.com, but here are a couple of excerpts.

On PetroNewf, that is having Newfoundland and Labrador Hydro get into oil and gas:

Over the last year and a half we have moved Nnewfoundland and Labrador Hydro and the Department of Natural Resources, particularly the Energy Division, to more of an integrated approach with each other, particularly on the bigger files and the big public policy issues. We'’ve moved Hydro towards an energy corporation that could potentially participate in the oil and gas play, both offshore and onshore.


ABM: Are you turning Hydro into an oil company?

MINISTER BYRNE: No, we'’ve talked about Hydro becoming more of an energy corporation that moves beyond what it has traditionally done in building dams and burning oil.

ABM: Like doing seismic work and drilling in the offshore?

MINISTER BYRNE: I'’m not sure that'’s where it'’s going. But certainly if there'’s a legitimate business opportunity that will provide a benefit to the province and revenues to Hydro, and thus to the province, we won'’t turn anything down. But all that is being assessed and we are at the ground floor of that right now.

On the equity position in Hebron Premier Danny Williams is apparently making a condition of any development agreement for the last offshore oil field:
ABM: Do you see Hydro taking an equity stake in Hebron?

MINISTER BYRNE: That'’s a public policy position we'’ve laid down that as a province we'’d like to have some equity stake in the emerging oil and gas industry, not unlike what'’s happened in Norway, not unlike what'’s happened in other jurisdictions in the world. Those are some of the things up for discussion right now.


From our point of view, equity is important from this perspective: it puts us at the table and helps us develop an intellectual capacity that doesn't necessarily exist within the provincial structure right now. It puts us in the seat as a legitimate bona fide partner in developments. It helps us gain further insight, expertise and knowledge into the oil and gas industry. It has worked successfully as a model in other jurisdictions and there'’s no reason to think it wouldn't here. Other jurisdictions are both equity partners and royalty partners. So while there is some legitimacy in saying that equity is represented by royalty, there are other benefits associated with being an equity partner.