For Oil and Gas Week 2006, there was no news release from the provincial government praising the future potential of the industry.
Nope.
There was an announcement that consultations were starting on an energy plan due later in the spring or summer.
Hebron negotiations were moving ahead on a deal for the fourth offshore field.
The oil industry knew that the Hibernia partners would be looking to develop the 300 million barrels at Hibernia South.
Now it's 2007.
No Hebron.
No Hibernia South.
No energy plan. It's only been under development for 10 years.
Natural resources minister Kathy Dunderdale issues a news release talking about all the undiscovered potential offshore Newfoundland and Labrador. Not a peep about the contribution the oil industry already makes to the provincial economy and to the government's treasury.
Then she adds this thought:
We are continuing our efforts to establish a competitive and efficient offshore and onshore regulatory regime that encourages exploration and the timely development of discoveries, while also ensuring a fair return to the people of the province and industry...The competitive regulatory regime for the offshore already exists and what needs to be adjusted is being adjusted - by the offshore regulatory board. Dunderdale's recent rejection of Hibernia South - based apparently on a series of flimsy excuses - hasn't done a thing to creative a competitive environment for the local offshore sector. Rather it just adds to a very difficult environment in which government demands remain incalculable.
The folly of that can be found in a number of documents, including - oddly enough - a paper written almost a decade ago by former Peckford advisor Cabot Martin. He noted at the time that the oil industry makes its capital decisions on the basis of long-term calculations measured in decades. How true.
Leaping ahead a few years, its easy to see that decisions to investigate Hebron and try to bring it onstream were taken almost a decade ago based in no small measure on the competitive offshore royalty regime the province had at the time. Likewise, the decision to shelve the project means that it will be a while before the proponents come back to the negotiating table.
By comparison, note that Newfoundland and Labrador has never accepted zero royalties, as the Americans did to jump-start exploration and development in the Gulf of Mexico. The local royalty regime also provides significantly better royalties to the provincial government than the American federal regime would provide if the recent Congressional decision is implemented.
There's been nothing done in the past three years to encourage exploration. To the contrary, exploration continues to putter along at an incredibly slow rate due in no small measure to the climate created by Hebron, Hibernia South and the foot-dragging on the gas royalty regime and the energy plan.
Any change in the current freeze offshore will depend on what sits in that energy plan. If it turns out to be a plan modelled on such paragons of sensible economic development as Algeria or Venezuela, we can expect the oil industry to invest its billions somewhere else. Danny Williams' prediction of a better tomorrow a decade from now will have to turn into a longer timescale.
With little or no action in the province's offshore, it seems words now have to serve as a poor substitute.
