11 September 2006

Danny on L'affaire Ruelokke

Following are some observations on Danny Williams' scrum announcing he would be confirming the appointment of Max Ruelokke as chairman and chief executive officer of the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB). CBC Radio's On the Go played excerpts of the scrum this afternoon:

1. It's history. While it took an inordinately long amount of time, the Premier has finally done the right thing. There are good words coming from both Ruelokke and the Premier. Ruelokke is a professional and so this matter should be in the past, as Ruelokke described it.

It's over. let's get on with the business of properly regulating the province's offshore resources.

2. Take the hint. In response to a question from the Telegram's Craig Jackson, Williams acknowledged he had been trying to get Andy appointed as vice-chairman. The federal government rejected the proposal, according to the Premier.

Two completely different federal governments have rejected Wells; it's time for the Premier to take the hint.

3. Bond Papers likely won't get credit... for Wells' appointment. We noted last July, when the whole matter first blew up, that while Wells didn't meet the job specs agreed to by the province, the Premier had a seat on the offshore board he could use any time he wanted. If Danny had appointed Andy last year, Andy would have had over a year of practical experience to offset whatever shortcomings his background had in consideration for the top job at the board.

4. So where was our lobbyist? Danny Williams accused the federal government of being swayed by Big Oil and its paid lobbyists.

That begs the question of what Williams was doing himself on a file he considered so vital.

But if Danny didn't have time to fly to Ottawa and work the rooms, one wonders what his new personal envoy to the National Archives has been doing. Now John Fitzgerald has only been in the job since May, but surely he has been doing something to lobby the federal government on this supposedly crucial issue.

At the same time, Danny could have replaced Bill Rowe much more quickly than he did, thereby ensuring his voice was being heard upalong.

5. Compare apples to apples, Dan-o. In the scrum, Danny mentioned the United States Senate upping royalties on its offshore lands, claiming its ironic the Canadian federal government is supposedly giving Big Oil a break.

Well, right off the bat, Danny knows full well that Danny Williams sets royalties in the local offshore. The feds have nothing - nada, zilch, zip and zero - to do with it.

More to the point though, the Premier knows - or ought to know - that our royalty regimes for the offshore are lower at the outset, but as with Terra Nova, once the start-up costs are paid, the province starts collecting royalties on the order of 30%.

Compare that to the United States where a rider on a US$460 billion defense appropriation will remove the policy of waiving royalties altogether on difficult offshore fields and restore them to the usual 12% to 16%. That's what Danny was referring to, but he just wouldn't admit that our royalty regime never waives royalties altogether and can deliver to the province more than double the American federal royalty. There is no state royalty on the affected fields.

Our royalty regime - set solely by the provincial government, i.e. Danny Williams - is actually better than the American regime in that respect. The big difference between us and them is that they actually create incentives for companies to invest in field development.