14 June 2008

What a difference a week makes: the latest Hebron project stories

First - June 9 - a deal was "close".

There were just a few minor details left to sort out.
Mark Nelson, Calgary-based president of Chevron's Canadian subsidiary, said Hebron discussions are focused on such issues as how much of the project has to be built locally, how the province will pay for its share, how ownership interests will change to make room for the province.
Then the deal was perhaps as close as "next week."

The latest is that there's just a 25% chance the deal can be closed by the time the Premier speaks to the NOIA conference next week.

The biggest hold up - by logical extension there are other hold ups - is the "confidentiality agreement".

The curious thing about that version of the story is that Bill 35 - the latest amendments to the energy corporation legislation - essentially make just about everything connected to the deal and the project entirely confidential and exempt from just about every form of public disclosure except what is required by the offshore regulatory board.

Maybe everyone should just kick back with a cold one and let the whole thing work itself out. When there's a real deal, there'll be an announcement and not before.

Face it. If the stories are true the parties would be a long way from a deal at this point, like maybe 75% of the way from a deal. (Get it? If there's only a 25% chance of it happening next week, there's a 75% chance it won't and that could be a way of saying the final version of the deal is a long hot summer away from happening. That would still be well within the time frames people have been talking about for project start-up; it's just not as quickly as some of the local speculators have been hoping.)

They still have to sort out:
  • a confidentiality agreement, in addition to the confidentiality agreement in the memorandum of understanding (Didn't that portion of the MOU alone take something like four months to hammer out?);
  • how much of the project will actually be built locally given local labour market shortages;
  • how the original corporate partners are going to re-divide their shares to give some to the provincial government; and,
  • how the provincial government will actually pay for its share of the capital costs. That's the only thing that might be in question since the energy minister clearly told the legislature this past spring that "[t]he funds will be transferred from the government to the energy corp to purchase the equity in Hebron as well as in the White Rose extension."