The Natural Resources Canada (NRCAN) report omits reference to certain projects in Newfoundland and Labrador and adds to recent assessments that Newfoundland and Labrador is fast slipping behind the competition on everything from offshore oil and gas to the Lower Churchill project.
The Williams release is long and verbose, repeating his previous statements that all is well and looking good here.
A closer examination suggests otherwise. Simply put: NRCAN's projections are accurate in some areas and bizarrely out of date in others given the report was released last week. As for Premier Williams, saying things here in Newfoundland and Labrador are rosy in a windy news release does not make it so.
Take, for example, the Lower Churchill project which Williams touts as being "among the best undeveloped hydroelectric projects in North America, and yet it is completely discounted in the report."
The operative word is undeveloped. Hydro Quebec for example is considerably farther ahead of Williams in getting hydro projects into development.
As NRCAN puts it,
NRCAN got it right. Williams is just talking but his talk simply can't erase the reality that Hydro Quebec is well advanced in developing its projects. Williams' Lower Churchill option hasn't even gotten to the point where costs have been accurately projected. Nor has Williams determined how he will finance a project estimated to cost an amount equal to the current provincial accrual debt load.The reference case includes a number of hydro projects: in Quebec, large projects together with small facilities will add almost 2,000 MW of hydro capacity by 2009, at which time another 800 MW will be added to capacity elsewhere in Canada, principally in Manitoba. La Romaine with a capacity of 1,500 MW, will be in service in 2018. The Revelstoke and Mica projects in BC, with a combined capacity of 950 MW, will be in service between 2013 and 2015.
The Lower Churchill Falls proposal in Newfoundland and Labrador, and the Conawapa project in Manitoba were not included. These projects are not sufficiently well advanced into the planning stage to make an informed judgment on their capacity and timing. [Emphasis added]
Williams mentions a second oil refinery for the province and a liquefied natural gas terminal which is under consideration. Unfortunately for the Premier, the second refinery remains an outside chance given competition from a recently-announced refinery in New Brunswick.
Similarly, the LNG terminal remains a paper project and is years away from development, if it is developed at all. Irving is already building an LNG terminal at Saint John processing imported natural gas for export to the American market.
As for local gas development, both technical issues and the long-awaited provincial gas royalty regime will determine whether gas might be developed or if it will go into the same holding tank alongside Hebron. Energy minister Kathy Dunderdale is quoted in the release as highlighting uncertainty in American natural gas imports. Apparently, she missed developments in the Gulf of Mexico which will see the development of gas reserves that are about two thirds the size of the entire reserves offshore Newfoundland and Labrador.
Interestingly, the provincial government release does not take issue with NRCAN's forecast that sees Hebron coming on stream in 2011. That would have occurred if negotiations had ended successfully in April. As it stands, there are no signs of talks resuming within the next three to five years if at all. Even if, by some chance, talks resume and there is a deal within the next 12 months, Hebron could not meet the 2011 first-oil target assumed by NRCAN.
