02 October 2015

Hyping the stock, yet again #nlpoli

Any oil company seriously interested in bidding on an exploration license offshore Newfoundland and Labrador isn’t likely to need the hyped presentation by the provincial government Thursday.

Exploring offshore is expensive.

Always has been.

Always will be.

Exploring beyond the 200 mile exclusive economic zone, in upwards of two kilometres of water, just makes the oil and gas all that much more costly. to find and more costly to produce.

Any oil company interested in the licenses out up for bid since last spring has been working on their bid since then, if not before.  They’ve been assessing the geology using information they can get from earlier exploration in the area and whatever else the offshore regulatory board has to offer.

To play offshore Newfoundland and Labrador, a company needs deep pockets  Those deep pockets go with companies that have their own capacity to do a far more detailed analysis of places in which they want to invest their closely-managed exploration budgets.

Far more detailed, that is, than one done by the provincial government here.  They’ll also assess other issues. They will assess the stability of the local political regime.  They will frown on a company that will use the legislature to strip companies of assets simply to fatten up the government’s own energy company.  What the provincial Conservatives did to Fortis, Enel, and Abitibi in 2008 without cause continues to have its ramifications.

Companies who want to invest in a place like Newfoundland and Labrador will look at the financial regime.  One of the reasons the province hasn’t seen any offshore gas development, for example, is that the provincial government hasn’t been able to produce a gas royalty regime.

In the case of the Flemish Pass there’s no royalty regime that covers the area.  One of the biggest unresolved issues that far offshore is which order of government  - federal or provincial - will pay assessments that must go to the United Nations under Section 82 of the United Nations Convention on the Law of the Sea.

The provincial government insists it will release a royalty regime shortly.  They might. Don’t forget that last year Paul Davis insisted he’d have a development deal done by now on Statoil’s license in the Flemish Pass.  Even if the provincial Conservatives manage to spit something out before the election,  any serious company would likely wait to see if the administration that comes after Davis might change the royalty plans Davis announces.

The government’s massive dog and pony show  on Thursday had less to do with attracting new development offshore as it was in sending messages internally within the province. The biggest one was about the provincial Conservatives themselves.  They’ve trafficked for years in the fairy tale that they alone are responsible for the oil wealth that has flown into provincial coffers since 2003. 

Premier Paul Davis and energy minister Derrick Dalley recited all the old lines about “no more give-aways” and energy warehouse and other hooey.  A publicly-funded seismic survey is a giveaway to multi-billion dollar corporations that other jurisdictions aren’t willing to give away.

Citizen WilliamsAnother key part of the message was hyping Nalcor, the provincial energy monopoly, not as the source of massive debt but as the bringer of great wealth.

The Conservatives trotted out Danny Williams – right, announcing his hockey franchise -  to tell that story.  All Williams’ presence confirmed was that the Tories are really that worried about impact the the Muskrat Falls disaster is having on the party’s political fortunes.

Williams told the same old fibs, like the one that the Maritime Link gives the province a way to break the stranglehold Quebec has on Labrador electricity.  Nothing could be further from the truth, but that never stopped Williams before and it certainly didn’t stop him on Thursday.

He also tried a few new ones, like the idea that Ontario and New England want to buy Muskrat electricity or that Nalcor had something to do with all the oil and gas offshore. Again, nothing could be further from the truth except the stranglehold thing and every other reason Williams touted Muskrat as a good thing.

Ed and Danny tried for years to interest anyone in the Lower Churchill.  They have not been able to sell a single kilowatt hour of it because the thing is too expensive.  Danny even tried to sell Hydro-Quebec a third of the project, without redress for the 1969 power contract even though Danny promised he’d never do that.  Hydro-Quebec turned him down flat.

When Williams dismissed the massive debt his idiotic project is building up for ordinary taxpayers as nothing but mouse droppings, you knew immediately what was up. Use the Rule of Opposites, the single greatest pointer to the truth when assessing any comment Danny Williams has ever made. 

Cost over-runs and delays are mouse-droppings.

That means the opposite.

Benefits from Muskrat Falls are astronomical. 

Read the opposite.

Danny would hire Ed Martin a dozen times over because he is great.  First part true.  Second part:  rule of opposites.

Where Williams did speak the truth is in forecasting further cost over-runs.  We know that already.  Not surprisingly, Williams misrepresented the scale of the over-runs. 

Charles-Foster-KaneAnother place Williams spoke the truth is when he acknowledged that Muskrat Falls was a massive make-work project.  “It's basically keeping Labrador going right now,” said Williams.  “Without that project in Labrador, there'd be huge issues in Labrador."

Anyone who thinks Williams  - not at right - hasn’t continued to pull political strings in the Conservative regime even after he left open politics in 2010 is either blind, naive, or a Conservative.

There’s a lot of oil offshore.

Plenty of gas as well.

We’ve known that for decades.

It was there before the Conservatives arrived in 2003 and it will be there long after they are a memory.  That’s a good thing because we will need money from it to deal with the dozen years of financial mismanagement by Danny Williams and the successive administrations he controlled.