Hibernia Southern Extension MOU Assessment, Part II: Equity and industrial benefits

[Part I  Royalty]

Equity

According to the backgrounder released on Tuesday, the provincial government’s oil company will acquire a 10% interest in only that portion of the extension to be developed through tie-backs. 

That has been described as covering 170 million barrels, however, as with Hebron that figure may become smaller in the final agreement.

The acquisition price is $30 million however the backgrounder provided no estimates the development costs, operating costs or other costs associated with the project.

According to some sources, part of the delay in reaching the memorandum of understanding came from re-unitizing the existing licenses, especially EL 1093.  There are seven interest-holders in that license with four of them having less than 10%.

As with Hebron, details of the acquisition agreement will not be made public.  As with Hebron, information crucial to a thorough assessment of the acquisition and the provincial government’s share will remain hidden from public scrutiny.

Industrial and local benefits

Aside from existing benefits arrangements under the Hibernia development plan and offshore regulatory board regulations, no new or enhanced local benefits are contained in the backgrounder.

The project will be developed using a combination of slant drilling from the existing Hibernia platform (50 million barrels) and sub-sea tie-backs to the platform.  This was not a part of the 2006 application. 

However, planned expansion of the Hibernia GBS appears to have been shelved. This significantly reduces the potential amount of local work available.  The project is smaller than what was suggested last June when the Premier indicated a Hibernia South deal would be in place by the end of 2008. 

"We fully expect Hibernia South to be concluded by the end of this calendar year," Williams told more than 700 people attending the annual offshore conference hosted by the Newfoundland and Labrador Oil and Gas Industries Association (NOIA).

As it turned out, the MOU was signed in mid 2009 and final agreements are not expected until early 2010. That would be three years after the provincial government vetoed the development and two years after the oil companies originally planned to start production.

Local companies already have demonstrated expertise in supply and in fabrication of sub-sea components.  Thus, local companies should be able to secure fabrication and related work on the project.

This is particular interesting since two of the four reasons given for vetoing the development plan in 2007 related to local benefits:

• The province needs more information on what options exist for other modes of development to extract the oil from Hibernia South. This may have implications for overall benefits.
• The lack of a Benefits Plan Amendment. This is a departure from the normal process and the CNLOPB did not require it in the "interest of expediency."

Through the MOU, the provincial government also accepts the offshore board’s position in the voted application with respect to local benefits (affirmative action, research and development and education and training). 

This is significant since these aspects of local benefits were cited as an area of concern for the provincial government  with the board’s approval of the plan.  In a subsequent exchange of correspondence energy minister Kathy Dunderdale accused the offshore board of failing in its responsibilities for local benefits yet it appears the government has ultimately accepted what the companies initially proposed and board approved. 

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Offshore board S-92 inquiry release and terms of reference

Issued Monday by the Canada-Newfoundland Offshore Petroleum Board:

C-NLOPB Announces Commission of Inquiry Terms of Reference

The Canada-Newfoundland and Labrador Offshore Petroleum Board today released the Terms of Reference for the Inquiry into Matters Respecting Helicopter Passenger Safety for Workers in the Newfoundland and Labrador Offshore Area.

On April 16, 2009, the C-NLOPB appointed Hon. Robert Wells Q.C. to head the Commission of Inquiry.

The C-NLOPB has been working to develop the Terms of Reference and put the necessary supports in place for the Commissioner to begin his duties.

The purpose of the Inquiry is to determine what improvements can be made so that the Board can determine that the risks of helicopter transportation of offshore workers is as low as is reasonably practicable in the Newfoundland and Labrador Offshore Area.

The Commissioner’s mandate will be to inquire into, report on and make recommendations in respect of matters relating to the safety of offshore workers in the context of Operators’ accountability for escape, evacuation and rescue procedures while traveling by helicopter over water to installations in the Newfoundland and Labrador Offshore Area, in compliance with occupational health and safety principles and best industry practices.

Specifically, the Commissioner shall inquire into, report on and make recommendations in respect of safety plan requirements for Operators and the role that Operators play in ensuring that their safety plans are maintained by helicopter operators; search and rescue obligations of helicopter operators by way of contractual undertakings or legislative or regulatory requirements; and the role of the C-NLOPB and other regulators in ensuring compliance with legislative requirements in respect of worker safety.

Commissioner Wells stated that the process will provide ample opportunity for the public to express their views in respect of practices which will reduce risks of helicopter transportation in the offshore area.

“The public will be able to make written submissions and there will be formal and informal hearings,” said Commissioner Wells. “There will also be a need to consult other offshore safety regulators in other jurisdictions in respect of best practices and obtain the services of independent specialists with expertise in areas relevant to the Inquiry.”

The Commission of Inquiry offices are located at Tara Place, 31 Peet Street, Suite 213, St. John’s, Newfoundland and Labrador, A1B 3W8. It is expected that the offices will be fully functional and staffed in the coming weeks.

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Terms of reference below. Media Contact: Hon. Robert Wells QC. Inquiry Commissioner (709) 753-7000 or (709) 579-0469 e-mail: robertwells@nl.rogers.com or Sean Kelly APR, FCPRS Manager of Public Relations C-NLOPB (709) 778-1219 (709) 689-0713 (cell) e-mail: skelly@cnlopb.nl.ca

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Commissioner’s Terms of Reference for the Inquiry into matter respecting helicopter passenger safety for workers in the Newfoundland and Labrador Offshore Area

 

WHEREAS the Canada-Newfoundland and Labrador Offshore Petroleum Board (C NLOPB) was established by the Government of Newfoundland and Labrador and the Government of Canada as a joint, independent, arms-length regulator of exploration, development, and production of oil and gas resources in the Newfoundland and Labrador Offshore Area;

AND WHEREAS the C-NLOPB has a mandate to interpret and apply the provisions of the Atlantic Accord and the Atlantic Accord Implementation Acts to all activities of Operators in the Newfoundland and Labrador Offshore Area and to oversee Operator compliance with those statutory provisions;

AND WHEREAS the C-NLOPB is required by legislation, before issuing an authorization for work or activity, to consider the safety of the work or activity by reviewing the system as a whole and its components, including its structures, facilities, equipment, operating procedures and personnel;

AND WHEREAS the C-NLOPB oversees the safety of Offshore Activities by review and approval of an Operator’s plans and implementation to determine that risks have been reduced to a level that is as low as reasonably practicable;

AND WHEREAS the crash of Cougar Helicopter Sikorsky S92-A flight 491 was a serious accident in the Newfoundland and Labrador Offshore Area;

AND WHEREAS pursuant to the Accord Implementation Acts an inquiry into a serious accident is mandatory, and the C-NLOPB has determined that an inquiry into safety matters respecting transport by helicopter to the Newfoundland and Labrador Offshore Area is essential for the C-NLOPB in carrying out its mandate as it relates to overseeing safety in the Newfoundland and Labrador Offshore Area;

NOW THEREFORE the C-NLOPB, pursuant to s. 165 of the Federal Accord Act (s. 161 of the Provincial Act), directs that an inquiry be made into safety matters respecting transport by helicopter to the Newfoundland and Labrador Offshore Area the terms of reference of which are set out herein;

1. Establishment of the Inquiry

There is established a commission of inquiry on matters respecting worker safety associated with helicopter transportation in the Newfoundland and Labrador Offshore Area that are within the jurisdiction of the C-NLOPB. The Commissioner shall be the Honourable Robert Wells, Q.C.

2. Definitions

In these Terms of Reference,

“Accord Acts” means the Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and Labrador Act;

“Board” means The Canada-Newfoundland and Labrador Offshore Petroleum Board;

“Commissioner” means the individual appointed pursuant to para. 165 of the Canada-Newfoundland Atlantic Accord Implementation Act and section 161 of the Canada-Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and Labrador Act;

“Newfoundland and Labrador Offshore Area” means the offshore area as defined in the Accord Acts.

“Operator” means a company which has been issued an authorization pursuant to the Accord Acts to conduct work or activity within the Newfoundland and Labrador Offshore Area.

“Participant” means a person who makes an oral presentation or files a written submission to the Commissioner pursuant to the Rules of Procedure and Practice;

“Rules of Procedure and Practice” means the procedures as may be implemented by the Commissioner;

“Secretariat” means the Commissioner’s support staff.

3. Purpose

The purpose of this Inquiry is to determine what improvements can be made so that the Board can determine that the risks of helicopter transportation of offshore workers is as low as is reasonably practicable in the Newfoundland and Labrador Offshore Area.

4. General Mandate

The Commissioner’s mandate will be to inquire into, report on and make recommendations in respect of matters relating to the safety of offshore workers in the context of Operators’ accountability for escape, evacuation and rescue procedures while traveling by helicopter over water to installations in the Newfoundland and Labrador Offshore Area, in compliance with occupational health and safety principles and best industry practices.

5. Specific Mandate

Specifically the Commissioner shall inquire into, report on, and make recommendations in respect of:

(a) safety plan requirements for Operators and the role that Operators play in ensuring that their safety plans, as represented to and approved by the Board are maintained by helicopter operators,

(b) search and rescue obligations of helicopter operators by way of contractual undertakings or legislative or regulatory requirements,

(c) the role of the C-NLOPB and other regulators in ensuring compliance with legislative requirements in respect of worker safety.

6. Limitation

The Commissioner’s mandate does not include an examination of any issues related to the airworthiness of aircraft, training of flight crew, or flight procedures or any other matters which are included in the Transportation Safety Board of Canada Investigation into Cougar Helicopter Sikorsky S92-A Crash except to the extent specifically described in paragraph 5 hereof.

The Commissioner’s mandate does not include an examination of the provision by the Government of Canada (Department of National Defence) of Search and Rescue facilities for all marine incidents and the location of such facilities within the Province of Newfoundland and Labrador

7. Powers of the Commissioner

Consistent with s. 165(2) of the Federal Accord Act and s. 161 (2) of Provincial Accord Act, the Commissioner shall be vested with the powers conferred by the Inquiries Act, R.S., 1985, c. I-11 and the Public Inquiries Act, 2006, SNL2006 c. P-38.1.

8.  Inquiry Methodology

The Commissioner shall design, make known and enforce rules, practices and procedures for the proper conduct of the Inquiry and where necessary may amend such rules, practices and procedure from time to time.

Phase I – (Parts A and B to be undertaken concurrently)

A. The Commissioner shall solicit the views of the public in respect of practices which will reduce the risks of helicopter transportation in the offshore area.

Mechanisms by which this phase of the inquiry is to be conducted made include:

(i) interviews and surveys,

(ii) calling for written submission, and

(iii) formal or informal hearings as the Commissioner deems appropriate.

B. The Commissioner shall gather information in respect of the specifically identified mandate issues described in paragraph 5 hereof.

Mechanisms by which this phase of the inquiry is to be conducted may include:

(i) research studies,

(ii) consultation with other offshore safety regulators in other jurisdictions in respect of best practices,

(iii) inspections and investigations,

(iv) calling for written submissions, and

(v) informal or formal hearings as the Commissioner deems appropriate.

• Any information gathered by the Commissioner during Phase I of the Inquiry which in his view should be addressed by the C-NLOPB or any other regulatory agency with urgency shall be brought to the attention of the C-NLOPB at a time and in a format the Commissioner deems appropriate. 
• To the extent that it reduces duplication of efforts and facilitates expeditious consideration of issues raised, the Commissioner shall maintain regular and frequent communication with the Transportation Safety Board of Canada Investigation into Cougar Helicopter Sikorsky S92-A Crash.

The Commissioner may retain and as needed request the services of independent specialists whose function would be to provide information on and interpret information and issues relevant to the Inquiry. Independent specialists retained by the Commissioner may be requested by the Commissioner to appear before the Commissioner as experts.

The Commissioner shall provide a Report to the Board on completion of Phase I, which Report shall be provided by March 31, 2010 unless an extension should become necessary.

Phase II Upon completion of the Transportation Safety Board of Canada Investigation into Cougar Helicopter Sikorsky S92-A Crash, the Commissioner shall undertake a review of the Report therefrom and particularly the findings and shall advise the C-NLOPB:

(a) which findings should result in actions being recommended to be undertaken by C-NLOPB and how they should be implemented,

(b) which findings should result in actions being recommended to be undertaken by other legislative or regulatory agencies.

The Commissioner may retain and as needed request the services of independent specialists whose function would be to provide information on and interpret information and issues relevant to the Inquiry.

Independent specialists retained by the Commissioner may be requested by the Commissioner to appear before the Commissioner as experts.

Participation by Parties with Professional and Commercial Interests

The Commissioner shall provide criteria for Standing for those with professional and commercial interest in helicopter transport to the Newfoundland and Labrador Offshore Area.

The Commissioner shall also provide procedures by which Standing will be granted.

Parties with Standing shall provide the Commissioner with written submissions outlining the issues within the Inquiry Mandate upon which such parties have an interest. The Commissioner may request from such parties further submissions either by way of written reports or oral presentations.

The Commissioner may provide for sessions in which evidence is presented to the Commissioner and where appropriate may allow for cross-examination of such evidence.

Scheduling

The Commissioner will provide notice of the detailed schedule and announce specific dates, locations and topics respecting the public sessions, if any, of the Inquiry. This notice will be issued a minimum of thirty (30) days prior to the start of the sessions and shall identify the specific issues on which information is being sought. The Commissioner will hold sessions at such locations, within the province of Newfoundland and Labrador, and at such times as the Commissioner deems appropriate.

9. Consultation by Commissioner with the C-NLOPB

The Commissioner, the Secretariat, or both may consult the Board for the purposes of clarifying any matters respecting the Terms of Reference, the Inquiry process and any matters relating to support of the Inquiry.

The Commissioner may consult the Board to provide information in relation to matters within the Inquiry Mandate.

The Commissioner or Secretariat shall not consult the Board for the purpose of discussing any substantive matters respecting purpose of the Inquiry and the recommendations to be made.

Notwithstanding the above provision the Commissioner shall bring to the attention of the Board matters that come to the Commissioners attention during the Inquiry that are of an immediate nature relating to any safety issues within the jurisdiction of the Board.

10. Support for Commissioner

The Board shall provide funding to the Commissioner so as to fulfill the mandate and effectively achieve the objectives of the Inquiry.

The Commissioner shall occupy such space for offices and hearing rooms and employ staff as may be necessary in consultation with the Board and in accordance with Board policy and practices.

The Commissioner may engage professional services (public relations, technology, website) so as to fulfill the mandate and effectively achieve the objectives of the Inquiry.

The Commissioner shall not express any finding or recommendations regarding criminal or civil responsibility of any person, body or organization.

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Offshore board appoints retired Justice Robert Wells to head helicopter crash probe

The following was issued today by the Canada-Newfoundland and Labrador Offshore Petroleum Board:

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) announced today the appointment of the Honourable Robert Wells Q.C. as commissioner of the Public Inquiry into Worker Safety Associated with Helicopter Travel To and From Offshore Oil and Gas Facilities.

Mr. Wells is highly qualified to lead this important inquiry. He retired as Justice of the Supreme Court of Newfoundland and Labrador, Trial Division in 2008 after 22 years of service.

Mr. Wells also served as President of the Law Society of Newfoundland (1977-1981) and National President of the Canadian Bar Association (1985-1986).

Further details regarding the inquiry, including the Terms of Reference, will be publicly announced in the coming weeks as Mr. Wells takes on his duties as commissioner.

The Board is conducting an inquiry pursuant to the provisions of the Atlantic Accord Acts. The Board is pleased that Mr. Wells has agreed to take on this important inquiry and we look forward to receiving his final report.

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Offshore board announces inquiry into helicopter crash

A news release from the Canada-Newfoundland and Labrador Offshore Petroleum Board:

The C-NLOPB announced today that in accordance with the provisions of the Atlantic Accord Acts pertaining to ‘Mandatory Inquiries’, the Board shall establish an inquiry into worker safety associated with the recent helicopter incident in the Newfoundland and Labrador Offshore area.

The inquiry will not examine issues covered by the investigation of the Transportation Safety Board.

While we believe it is important to announce the inquiry at this time, we continue to work on a definition of the mandate, terms of reference, selection of a commissioner for the inquiry, and timeline for inquiry completion.

A further announcement will be made when these details are available.

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S-92 nosed in

Lead Transportation Safety Board investigator Mike Cunningham told news media today that a preliminary review of evidence collected of the Cougar S-92 crash suggests the aircraft experienced a major problem at about 800 feet above sea level.

"There was something that happened very suddenly and abruptly after the aircraft got down to 800 feet and levelled out," Cunningham said. "After that the helicopter went into the water and it was a fairly significant rate of descent, which resulted in a pretty bad impact with the water. That's why we have the extent of damage to the wreckage that we have."

This is generally consistent with information available to date, including a log of indicated air speed and altitude for the flight.

Cunningham is quoted in other news media (link above to CBC) as saying it appears the aircraft struck the water nose first.  This is based on an assessment of the damage to the recovered portions of the aircraft.  The cockpit portion is reportedly heavily damaged. There is also a suggestion from some of the comments that while the main portion of the fuselage is in one piece, it is damaged considerably as well.  This may have hindered the passengers from escaping. 

These comments today – which are based on a preliminary examination of evidence – suggest strongly that the aircraft inverted immediately on or very quickly after impact.  This would explain a number of details including the apparent absence of signals from personal electronic locator beacons worn by each of the 18 souls on the aircraft. The locators do not work underwater.

In an initial news conference (either the first or second) the search and rescue spokesperson reported that aircraft on the scene had reported beacons from the aircraft itself (it is equipped with three) and from the two bodies of two people observed in the water by the first aircraft on the scene.

Both were recovered by the first search and rescue helicopter on the scene.  The Canada-Newfoundland and Labrador Offshore Petroleum Board mandates that offshore operators (oil companies) keep one helicopter within 30 minutes of St. John’s to provide search and rescue coverage.  Contrary to some media reports, this meets the recommendation of the Ocean Ranger Royal commission.

The cost of the helicopter operations  - including the search and rescue service provided to meet the Ocean Ranger commission recommendations - is borne entirely by the oil companies operating offshore, including the provincial government’s oil company which has an interest in White Rose and which will have an interest in Hebron, once it is built.  Canadian Press reported last week that the operators have tried to shift the search and rescue cost entirely to the federal government.

Misinformation on both safety and search and rescue issues has fuelled a frenzy of media speculation and political opportunism (two links) since the crash last week.

This misinformation persists despite information from many sources, including some apparently knowledgeable comments on CBC’s website that the current issue immersion suit was developed and improved in part from testing offshore Nova Scotia and Newfoundland and Labrador.

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News release: C-NLOPB REACTS TO LOSS OF COUGAR FLIGHT 491

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), issued the following statement in relation to the loss of Cougar’s Flight 491 and its fifteen passengers and two crew on route from St. John’s to the Hibernia Platform and the Sea Rose FPSO.

The C-NLOPB Board and staff wish to express deepest sympathies to the families, friends and co-workers of the passengers and crew aboard Cougar’s Flight 491. This tragedy affects all who work in the offshore oil and gas sector and all of us as Newfoundlanders and Labradorians. Our hearts and prayers go out to them.

The C-NLOPB has been working very closely with responding agencies since the incident occurred and monitoring search and rescue efforts. The ditching of Cougar’s Flight 491 is an air accident and the Transportation Safety Board (TSB) and the Royal Canadian Mounted Police (RCMP) are the lead agencies in the investigation of this incident. The C-NLOPB will fully cooperate with these agencies in the investigation.

The C-NLOPB will also be an observer during the recovery operation. If there are lessons to be learned from this event for the C-NLOPB, we will ensure those lessons are implemented. T

he C-NLOPB has regulatory responsibility for safety on oil and gas facilities operating in the Newfoundland and Labrador offshore area. The C-NLOPB verifies that operators have appropriate safety plans in place. The guidelines for the development of the Safety Plan are on the Board’s website .

The basic safety requirements for working on an offshore oil and gas facility include:

• Successful completion of a medical exam

• Completion of a basic offshore survival course

• Personnel must use certified personal protective equipment and apparel when working offshore

• Also, personnel are provided with a flight suit which must be worn during transport.

The C-NLOPB is committed to overseeing offshore oil and gas activities to verify that safety is the first priority in offshore operations.

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Ruelokke, Rowe and the Rule of Opposites

A couple of years ago, you couldn’t swing a dead cat without hitting a comment by Danny Williams to the effect that Max Ruelokke as head of the offshore regulatory board would be a really bad thing.

How bad?

Andy Wells would be better kinda bad.

The hysteria surrounding that nationalist cause of that moment – Ruelokke is hardly a Newfoundland name, is it? – prompted at least one local journalist to question the value of the rule of law since it was obviously [insert eye roll here]working against “us”.

Ruelokke and the offshore board are looking a lot like O’Brien/50% and the 1985 Atlantic Accord: something that was officially “bad” when it suited the current administration’s purposes but which turned out to be good in actual experience.

It’s yet another manifestation of The Rule of Opposites:  what is correct is the exact opposite of what the official government line was at the time.

Hibernia management and Development Company and Petro-Canada are suing the offshore regulatory board over its rules on local research and development.

At issue: new offshore R&D spending rules brought in by the Canada-Newfoundland and Labrador Offshore Petroleum Board in 2004.

Those rules require HMDC and Petro-Canada to spend a percentage of their annual offshore revenue on research, development, education and training activities in the province.

That money was estimated by the board in 2007 at $25 million annually, depending on world crude prices.
Under the new rules, the board has the right to suspend production licences if oil companies fail to meet their R&D spending obligations.

Both HMDC and Petro-Canada say the board has unilaterally changed the rules in midstream and they question its authority to do so.

Incidentally, the Hebron deal includes a huge give-away on research and development but that’s another story.

So this case has been working its way through the courts with the offshore board winning at every turn. The oil companies are now headed to the Supreme Court of Canada for the last legal round of the fight.

Odds are they’ll win again.

But you can’t help but notice that this is running contrary to the predictions from a certain segment of local public opinion.

The courts appointed by Ottawa, the courts that ruled “our” oil wasn’t our oil in the early 1980s are here standing by the crowd at the offshore board led by Max Ruelokke as they protect Newfoundlanders and Labradorians yet who, we were told emphatically, would not act to protect the best interests of Newfoundlanders and Labradorians.

And the appeals court justice who dissented from the majority opinion  - i.e. who sided with the oil companies - was a guy Jerome Kennedy recommended to go to the Supreme Court of Canada last September 6.  Kennedy’s recommendation of Mr. Justice Malcolm Rowe – along with Mr. Justice Leo Barry - was faithfully reported by the voice of the cabinet minister at the time, even if they don’t like you reading stuff from that long ago. (you can find the story through google but clicking on it generates and “error” message.)

Amazing as it seems, in the case of the offshore board – like Equalization - you really can’t go wrong most times by taking the government position of the moment and thinking the opposite.

And what about those oil companies like ExxonMobil that were “bad” in 2006 but which are now called “our offshore partners” by everyone from the Premier to his official spokesperson in natural resources?  Well, judge for yourself.

Your humble e-scribbler didn’t accept that they were enemies when some people wanted you to think that.  These days, they aren’t friends.  They are just companies doing business in the offshore and they should be treated as such. 

In the case of the suit against the offshore board the companies are just doing what they think is in the best interest of the people they represent: their shareholders.

That’s basically what the offshore board is doing on behalf of the people of Newfoundland and Labrador. Funny though how what happened is exactly the opposite of what some people wanted you to believe.

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AG quietly starts offshore board audit

Officials of the province’s auditor general have started their audit of the Canada-Newfoundland and Labrador Offshore Petroleum Board, the spokesperson for the board confirmed for Bond Papers.

The audit began earlier this month.

The board is the joint federal provincial body that regulates the province’s offshore oil and gas industry.  Last year, the board issued invitations to both the federal and provincial auditors general to conduct audits;  only the provincial auditor accepted.

In the letter, chairman and chief executive officer Max Ruelokke notes that the board is concerned about "recent comments in the media concerning its finances which may be construed to imply some impropriety in the Board's finances."

That would be comments by Noseworthy, who is no stranger to making unsubstantiated accusations.

Auditor general John Noseworthy decided last year to audit the board, despite the fact that his office had never listed the board as an entity subject to audit.  Noseworthy claimed to have legal advice supporting his new position.  The legal opinion has never been made public.

The board refused the request indicating that  - as a joint federal-provincial body – the board should be audit by both federal and provincial auditors.

This did not satisfy Noseworthy who issued a special report accusing the board of breaking the province’s Auditor General Act.

Noseworthy made reference to the special report in his annual report for the year ending March 31, 2008.  However, Noseworthy neglected to note in the report that the dispute had been resolved and his office was now conducting the audit.

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Related:

“No access restriction: offshore board”

“NL AG hoist by own petard of misleading statements”

Nice work if you can get it, patronage appointments version

Voice of the cabinet minister puts a happy government- face on the news that the provincial government just appointed Ed Drover to the offshore regulatory board on a “part-time” basis.  That’s a wee bit odd since the board isn’t a full-time job anyway.

Well, it’s also a bit odd that a radio station that started out claiming to be the Voice of the Common Man has flipped 180 degrees, but that’s another issue.

CBC’s Here and Now reminded everyone in the province tonight of two things.

First, the guy who got the plum is a well-known Provincial Conservative fundraiser.

Second, they reminded us – as CBC reported last April  - that the guy and the company he worked for are being sued by a former employee of the life insurance company who claims “she was verbally abused, harassed and bullied while on the job.”

No less a personage than Olympic gold medalist and Danny icon Brad Gushue had a few observations about the guy as well:

Gushue was employed as an adviser selling London Life products for nine months beginning in 2001. When he quit in June 2002, Gushue wrote to company vice-president Jim O'Neill, saying the office was led through "intimidation and fear."

Gushue alleged Drover addressed him in a "very unprofessional and inappropriate manner" in a meeting, and also said that when he quit, Drover called him "a failure."

So what is it about this cabinet and appointments to the offshore regulatory board?  Andy Wells and now this guy, neither of whom have any obvious background or experience in anything related to the offshore industry.

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Offshore land parcels net $129.8 million

From the Canada-Newfoundland and Labrador Offshore Petroleum Board [format changed from original]:

The Canada-Newfoundland and Labrador Offshore Petroleum Board today announced the results of the 2008 Calls for Bids NL08-1 and NL08-2 for exploration rights in the Newfoundland and Labrador Offshore Area. Bidding closed on November 14, 2008 and successful bids were received on all five parcels offered totaling $129,892,000. Three of the successful bid parcels are located in the Central Ridge/Flemish Pass and two are located in the Jeanne d’Arc Basin.

The bids represent the expenditures which the bidders commit to make in exploring the parcels during the initial five-year period of a nine-year term Exploration Licence. If companies discover significant quantities of petroleum resources as a result of the exploration work, they may then seek a Significant Discovery Licence from the C-NLOPB. Any Significant Discovery Licences issued in respect of lands resulting from these Exploration Licences will be subject to rentals which will escalate over time.

The following bids have been accepted:

NL08-1 Flemish Pass:

• Parcel 1 (138,200 ha)  -  Husky Oil Operations Limited 40%, Petro-Canada 40%, Repsol Exploracion S.A. 20%:  $18,600,000
• Parcel 2 (134, 227 ha) - Husky Oil Operations Limited 67%, Repsol Exploracion S.A. 33%:  $1,188,000
• Parcel 3 (55,954 ha) - StatoilHydro Canada Ltd. 65%, Husky Oil Operations Limited 35%:  $18,724,000

No. NL08-2 Jeanne d’Arc:

• Parcel 1 (19,430 ha) - Petro-Canada 50%, StatoilHydro Canada Ltd. 50%: $81,900,000
• Parcel 2 (121,348 ha)  - Husky Oil Operations Limited 67%,  Repsol Exploracion, S.A. 33%: $9,480,000

 

Subject to the bidders satisfying the requirements specified in the Call for Bids and Ministerial approval, the Board will issue an Exploration Licence for each of the five parcels in January 2009. The licences will be for a term of nine years, with an initial period of five years.

Media contact: Sean Kelly APR, Manager, Public Relations (709)778-1418//(709)689-0713// skelly@cnlopb.nl.ca

 

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Results of Labrador parcel sale: offshore board

The following was released today by the Canada-Newfoundland and Labrador Offshore Petroleum Board.

C-NLOPB Releases Results of 2007 Land Sale for Labrador Offshore Region (Call for Bids NL07-2)

The Canada-Newfoundland and Labrador Offshore Petroleum Board today announced the results of the 2007 Call for Bids NL07-2 (Labrador Offshore Region) for exploration rights in the Newfoundland and Labrador Offshore Area. Bidding closed at 4:00 pm on September 10, 2008 and bids were received on 4 parcels totaling $186,430,680.

The Bids represent the expenditures which the bidders commit to make in exploring the parcels during the initial 6-year period of a 9-year term exploration licence. If companies discover significant quantities of petroleum resources as a result of the exploration work, they may then seek a Significant Discovery Licence from the C-NLOPB. Any Significant Discovery Licences issued in respect of lands resulting from these exploration licences will be subject to rentals which will escalate over time.

The following bids have been accepted:

Parcel 1

Husky Oil Operations Limited (100%)   $10,162,800

Parcel 2

Vulcan Minerals Inc. (50%) and Investcan Energy Corporation (50%)  $9,601,000

Parcel 3

Husky Oil Operations Limited (75%) and Suncor Energy Inc. (25%)  $120,166,880

Parcel 4

Chevron Canada Limited (100%)  $46,500,000

Total  $186,430,680

Subject to Ministerial approval and the bidders satisfying the requirements specified in the Call for Bids, the Board will issue an Exploration Licence for each of the four parcels in November 2008. The Licences will be for a term of nine years, with an initial period of six years.

Bond Papers Note:  The CNLOPB release (available at the link above) included a map of the parcels.  Parcel 3 surrounds two existing significant discoveries (natural gas).

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Lone 2007 offshore parcel awarded

The lone offshore parcel available in 2007 went to Corridor Resources, Inc, the Canada-Newfoundland and Labrador Offshore Petroleum Board announced today.

The Western Star incorrectly reported that the provincial government made the announcement. CNLOPB is a joint management board of the federal and provincial governments.

The C-NLOPB accepted a bid from Corridor Resources Inc. in the amount of $1,521,000 for the parcel which is composed of 51,780 ha. The Bid represents the expenditure which the bidder commits to make in exploring the parcel during the initial 5-year period of a 9-year term exploration licence.

The provincial government merely issued a news release stating that the land sale was a positive sign and attributing positive developments to the recently released energy plan.

Horse hockey. One solitary parcel is a sign of an offshore that is suffering a serious lack of interest from developers.

We'll need to see what happens in the next few years to determine if the energy plan has had a positive effect. The energy plan won't be complete and therefore won't have an impact until both the gas royalty regime and the oil royalty regime are finalized.

Update 05 Dec: The Star has corrected the reference in the current online version.

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Andy Wells: Not in the public interest

Anyone familiar with St. John's Mayor and likely Dan-didate wannabe Andy Wells, left, [Photo cbc.ca]understands that one result of his presence anywhere is that a functional entity like a board or a municipal council quickly becomes dysfunctional.

It quickly becomes distracted by the Wellsian bluster, sheer bullsh** and his trademark: vicious personal attacks against those who resist his boorish ways.

Premier Danny Williams is more than passing familiar both with Andy Wells and his ways.

The Telegram rightly notes the current situation at the offshore regulatory board, although the editorial seems to suggest dysfunction is merely a coincidence rather than a direct consequence of Wells' presence.

Ok.

Maybe it is.

But it isn't like there isn't a bit more than a coincidence.

Andy Wells shows up.

Positive stuff tends not to happen, except in spite of Wells' efforts.

Tons of histrionics.

Not much else.

Public Utilities Board.

St. John's City Council.

Canada-Newfoundland and Labrador Offshore Regulatory Board.

So the questions that we should consider are these:

1. Given the obvious pattern, why would anyone - especially Premier Danny Williams - appoint Andy Wells to a board whose proper functioning has such a profound influence on the province's future well being?

The answer to that one might actually be easier if you consider first:

2. Whose interest is served by turning the offshore board from a functioning one (without Andy Wells) into the dysfunctional one described by the Telegram?

Frankly, your humble e-scribbler wouldn't suggest the offshore board is dysfunctional yet.

The board itself is perfectly capable of carrying out its crucial role. It has highly competent, board members with knowledge of the oil industry, with the obvious exception of Andy Wells.

Just how little Andy Wells knows must be painfully obvious at every board meeting with the likes of Hal Stanley at the table. It must be personally mortifying for Wells - a crushing blow to the considerable and distended ego - to be so painfully, so obviously out of his depth.

Maybe that's why he has resorted to the public grandstanding seen in recent days. He doesn't have anything of substance to offer.

Of course, the board's professional staff is second to none when it comes to the job of regulating offshore oil and gas development.

But given all that anyone knows about Wells' behaviour, whose interest is served by having him be the monkey-wrench in the offshore board works?

It certainly isn't in the interest of the people of Newfoundland and Labrador.

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A wealth of knowledge

The offshore board retains a huge archive on the offshore area within its jurisdiction.

Core samples.

Oil samples.

Gas samples.

A host of paper and electronic records.

And soon the paper and electronic stuff will be available through a computer database.

This is one of the best kept secrets in the province. Your humble e-scribbler has had an idea on how this wealth of knowledge could be made available to people interested in the offshore, but who aren't researchers or oil and gas companies.

Maybe it's time to make the pitch.

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Wells to offshore board chair: "He can get stuffed on that."

In a situation that is likely no surprise to anyone, St. John's mayor Andy Wells is in hot water with the chairman of the offshore regulatory board.

CBC News is reporting that Max Ruelokke, chairman and chief executive officer of the Canada-Newfoundland and Labrador Offshore Board complaining about comments made by Wells in a recent oil magazine article. Wells, who is a provincial appointee to the board, reportedly called the board "incompetent" in its recent handling of a development application.

The provincial government vetoed the board's approval claiming a lack of information, even though the provincial government did nothing while the application was in process to obtain the information it claimed it needed.

In January, the board took the unprecedented step of releasing its decision and associated correspondence, although the documents have been removed from the board's website.

"He can get stuffed on that," Wells said.

"He's not going to be telling me how I'm going to respond to any issues that come before this board. I'm not going to stand by and allow some bureaucratic hack to tell me what I can and cannot say on matters of public interest," he said.

Wells was Premier Danny Williams surprise choice in 2005 to head the board, coming as it did despite the fact that the selection process agreed to by both the federal and provincial governments was well under way.

Wells didn't get the job, even after a second process as established under the Atlantic Accord (1985).

Wells has commented publicly on the decision previously.

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