08 September 2007

Brave talk, but still meaningless blather

Natural resources minister Kathy Dunderdale signed off on another extension to the White Rose oil field on Friday. Husky energy, the main partner in the project can now develop 24 million barrels of recoverable oil at a cost of $595 million.

Good news, considering there was much speculation that the provincial government would try and squeeze cash out of the lucrative development. White Rose's light, sweet crude is easier and cheaper to develop than Hebron.

Turns out the province is just going to settle on talking about possibly, theoretically maybe getting some extra cash or local benefits.

Don't bet on it.

If the financial discussions are not a specific condition of the development application amendment approval, there's pretty much Sweet Fanny Adams that Dunderdale can do. She says some brave bluster words, but consider Dunderdale to be full of so much hot air.

As Dunderdale told the Telegram:
"The proponents have chosen to proceed with this development, even though the fiscal and other terms haven’t been finalized.

"What we will have to ensure, as we continue our discussions around these satellite field developments, is that the province receives a fair return."

Right off the bat, "fair return" is the sort of meaningless phrase that Danny Williams and his minister's like to throw around. They never say what it means, which means that it can be anything they want it to.

Dunderdale and her boss add nary a nickle to the existing development over and above the lucrative generic royalty regime established in 1996? That's a "fair return".

The company agrees to do "whatever work is possible" here in the province, but with no obligation to do any fixed percentage or amount?

That's a "fair return" as well.

Vague words.

No possible way of defining it and measuring it.

Therefore, success or failure are impossible to determine.

It's the opposite of accountable.

In fact vague language like "fair return" is deliberately designed to promote unaccountability.

Second of all, no oil company in its right mind would develop a field - even an extension of one in development - unless it knew the costs of development were settled or could be predicted reasonably well. The idea Husky is going to figure out later what to pay the provincial government is simply ludicrous.

But it's an election season so the provincial government has to give it's goosed version of the facts. To reinforce what will quickly become the Hebron myth, Dunderdale is obliged to say the province is looking for all the things it won at Hebron.

Only difference is, at Hebron they held up approval to negotiate first.

On White Rose, Dunderdale and her boss don't have quite the same leverage.

They signed it away, up front.