01 March 2012

Countering Nalcor Negativity #nlpoli

In a speech to the St. John’s board of trade this week, Nalcor chief executive Ed Martin dissed natural gas as a possible alternative to his expensive Muskrat Falls scheme.

According to the Telegram’s Wednesday edition – not online  - Martin told the business audience that a 2001 study said there wasn’t enough demand on the island to justify a pipeline.

Sort of. 

The 2001 study was premised on gas as a commercial development.  As such, the study anticipated that any development would be by one of the existing oil companies.  

They never considered that the provincial government would have cash enough to build a plant on its own, obtain the gas to develop it and charge the domestic market for whatever gas they used.

That’s basically what Nalcor is doing with Muskrat Falls.  At a cost of 21 cents per kilowatt hour, Muskrat Falls isn’t economically feasible.  The local market simply couldn’t take a new source of electricity that had a wholesale cost for electricity twice the existing retail cost of electricity in the market. The only way they can make Muskrat Falls work at all is through a complex series of deals and arrangements among interrelated companies that are all part of Nalcor and the provincial government.

So if Ed Martin wanted to be straight with his audience, he would have to compare apples to apples.  And on that basis, natural gas is a lot cheaper than Muskrat Falls.

Plus, if Martin had wanted to give a full explanation using past studies, he’d have noted a 2005 study that put a price tag on development.  Take the two together and you get a different picture from the one Martin  - selectively – painted.

Second, according to the Telly, Martin told the audience that the oil companies had first dibs on the gas and they were re-injecting it to help oil production.

Again, Martin knows that he only gave his audience a fraction of the full story.  White Rose has gas available today.  They aren’t using it all to produce oil.

But here’s the really important part:  it’s our gas.  The provincial government can claim any quantity of gas it wants for payment of royalty in-kind. 

Martin concluded, as the Telly reports, by insisting he and the gang at Nalcor weren’t dissing gas because they wanted to build a dam.  They were pushing the dam because it was the right decision.

Two things come readily to mind.  First of all, if that was so, Martin wouldn’t have to say it.  The fact he has to insist that Nalcor isn’t biased suggests that he and his company and the other Muskrat Falls proponents have an enormous credibility problem.

And, second of all, they have a credibility problem because none of the project’s proponents can present a simple, concise and truthful account of why Muskrat Falls is better than the alternatives.  Ed Martin’s presentation - with the same omissions and selective use of information we’ve seen from people like Wade Locke  - couldn’t have made that any plainer.

After all, Ed Martin’s lengthy speech about natural gas isn’t what his vice president told the joint environmental review panel.  As SRBP noted last year that “Nalcor dismissed natural gas as ‘purely hypothetical’ since the major oil companies have not identified a ‘viable business case’ (p. 20).  Nalcor hadn’t considered natural gas at all.

They didn’t study it.

All this other stuff that Martin told the board of trade about natural gas? Well Nalcor  started saying that only after people like your humble e-scribbler started pointing out that natural gas actually was viable and cheaper than the big dam in Labrador.

- srbp -