Crown Liability Act?

So why exactly has the Government of Newfoundland and Labrador introduced a specific piece of legislation that will prevent any legal action against the Crown in relation to the break-up of Fishery Products International?

The Crown Liability Act, 2007 provides that

"2. (1) An action or proceeding does not lie or shall not be instituted or continued against the Crown or a minister, employee or agent of the Crown based on a cause of action arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited.

(2) A cause of action against the Crown or a minister, employee or agent of the Crown arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited is extinguished.

and...

3. A person is not entitled to compensation or damages from the Crown or a minister, employee or agent of the Crown arising from, resulting from or incidental to the disposition of the assets, business and other undertakings of FPI Limited or Fishery Products International Limited.

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The Pitcher Plants are in full bloom

labradore makes some observations on comments found at vocm.com.

Yes, it's spring (almost summer), in an election year, and suddenly the orchestrated political comments - known as astroturf, or Pitcher Plants in their local variety - come popping up everywhere.

Chief Justice Derek Green's report may change some of the things Danny Williams inherited from Brian Tobin, but it seems the Premier is still addicted to Tobin's greatest political legacy: the organized support calls to VOCM and the manipulation of its public forum "Question of the Day."

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Shooting one's own foot off

Telegram columnist Brian Jones does a fine job of shooting his own argument out of the water in a column today.

Offal News tears it apart nicely.

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Jim Flaherty: myth monger

Federal finance leprechaun Jim Flaherty is just as much a myth monger on the Altantic Accord (1985) and even the 2005 side deal as his predecessor, John Crosbie.

Flaherty writes in the Chronicle Herald:

Let me be clear, Canada’s New Government is honouring the Atlantic accords fully in its budget.

If this were true, Flaherty would not need to amend the 1985 Accord, in his budget bill, thereby violating section 60 of the 1985 agreement.

Since he is applying a capto the 1985 and 2005 agreements, he is also not honouring either the letter or spirit of either agreement.

For him to claim otherwise is to state something which is incorrect, and in truth, Flaherty ought to know that what he is stating is patently false.

Perhaps he has been listening too much to Crosbie.

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The disingenuous Mr. Crosbie

John Crosbie has waded into the current budget and Equalization row with the federal government.

He builds his claim on the contention that it was the intention of the Government of Canada in 1985 - when he was the Newfoundland and Labrador regional minister - to ensure that under the real Atlantic Accord the Government of Newfoundland and Labrador would receive 100% of oil and gas revenues as well as Equalization in full as if the oil revenues did not exist. He appears to be saying that it was the intention to have this situation continue in perpetuity.

Mr. Crosbie is either:

1. Extremely forgetful;

2. Deliberately misleading the people of Canada and in particular, the people of Newfoundland and Labrador; or,

3. Attempting to blame others for his own failures in 1985.

Either way, the 1985 Atlantic Accord makes no such provision as Mr. Crosbie claims.

Indeed in 1990, Mr. Crosbie himself specifically dismissed the issue - with characteristic sneering condescension - as being a case of the provincial government attempting to bite the hand that fed the province.

Mr. Crosbie's efforts at historic revisionism make Stalinist photo retouchers look like kindergarten finger painters.

Following is an extract from an unpublished follow-on paper to Which is to be master?

Additionally, specific sections of the Mulroney offer, and of the Atlantic Accord, deal with Equalization. It is important to note that these are not included in the section on revenue sharing in either document. Therefore, Equalization was not seen by either parties to the Atlantic Accord as representing a form of revenue to be shared among the parties. The Mulroney letter contains the sentence: “The Current [sic] Equalization provisions will apply.” This clearly established that the Atlantic Accord and any revenues related to offshore oil would be subject to the Equalization program; as such, the provincial government’s Equalization entitlement would normally be reduced by growth in offshore oil revenue.

The Mulroney offer contained a caveat that there should not be a dollar-for-dollar loss of Equalization payments as provincial own-source revenues increased from oil production. As such the Atlantic Accord contains a section to provide a payment to the Government of Newfoundland and Labrador in the form of an Equalization offset. It is clear from the structure of this section of the Accord and of the enabling legislation that the Government of Canada and the Government of Newfoundland and Labrador accepted this offset as a temporary, transitional and declining offset.

The offset mechanism established in the original Atlantic Accord did not provide the level of Equalization protection implied in Mulroney’s letter, although it matched in general outline the declining format he proposed in June 1984. The offset provisions of the Atlantic Accord, as signed in 1985, had the effect of shielding only three cents of every dollar in oil revenue from Equalization.

This was apparent by 1989-90 and was raised publicly by the Wells administration following the signing of the Hibernia agreement. In a speech in Clarenville, Premier Clyde Wells countered arguments that Hibernia was a massive make-work scheme by pointing to the direct and indirect benefits accruing to the Government of Canada. One of those benefits was reduced federal transfer payments to Newfoundland and Labrador. John Crosbie dismissed complaints about reduced transfer payments in this way:

"That’s the whole point to the [Equalization] formula… This is nothing to complain about; this is something to be joyous about. So why would they try to pretend that Newfoundland gains nothing from the royalties? I mean this is absolutely bloody nonsense…".*

The Wells administration had been briefed on this aspect of the Accord prior to the Hibernia signing and a further brief was sent to cabinet in December 1990 ; it is likely the shortcomings of the federal proposal were known in 1985.

In a 1991 assessment conducted for the Institute of Social and Economic Research at Memorial University, economist Wade Locke confirmed that the Accord offset actually shielded as little as 3% of provincial revenues from Equalization. Locke had earlier cautioned against public expectation that Hibernia development would cure the province’s unemployment or debt problems. In an article published in the Newfoundland Quarterly, Locke concluded that "[w]hile it may be true that the sun will shine one day, it does not appear that have not will be no more because of Hibernia." Similar cautionary flags had been raised by Doug House and others, as early as the environmental review of Hibernia in 1983.

Whatever the reasons for Mr. Crosbie's claims about federal (i.e. his intentions) in the 1985 Atlantic Accord, there is no question that what he claims today is simply not true.

His own words condemn him.

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* Philip Lee, “Newfoundland, Ottawa clash over Atlantic Accord royalty provisions”, The Sunday Express (St. John’s), 23 September 2004, p. 14 [continued from page 1 under head: “Almost ‘dollar-for-dollar’ loss will leave province no better off, Gibbons claims”.

Latest shocker: Connies poll numbers drop

Another poll from Corporate Research Associates shows the the federal Tories have dropped nine percent in voter support across the Atlantic region, standing at 30% regionally compared to 39% in CRA's last post.

The Connie satisfaction rating in Newfoundland and Labrador stands at 17%, compared with 47% in February.

Is this really a surprise to anyone?

Regional results have a margin of error of plus or minus 2.5%, 19 times out of 20. The provincial results have an MoE of plus or minus 4.9%.

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The case against Mr. Harper

"A little neglect may breed great mischief"

The Harper administration's move to alter fundamentally two bilateral agreements between the Government of Canada and two provinces is proof of Ben Franklin's age old aphorism on the great consequences bred of the seemingly smallest of actions.

Stephen Harper and his administration are neglecting the commitments not only contained in the agreements involved but the fundamental principles on which those agreements are based.

Two Travelors On the Road to Perdition

John Crosbie has waded into the affair, through private correspondence now provided to the news media, and his memoranda identify the core of the problem. Unfortunately, along the way he engages in an example of historical revisionism which would make Stalinists seem like rank amateurs at the game of altering the public record to state the opposite of what occurred. He also proposes an unduly complex series of possible actions that would, on some level, also strike the fundamental principles underpinning the agreements he helped negotiate.

For his part, Premier Danny Williams has met the Harper affront with entirely appropriate anger and indignation. Sadly, his mercurial temper has led him to run bare headed at the whole matter. In the process, the Premier has set himself on a course that cannot attain its destination.

He has set an impossible policy goal, namely removal of non-renewable resource revenues from the calculation under Equalization of a province's fiscal capacity. The results of such an approach would be to create fundamental inequities in a federal program that ought to be equitable in its treatment of all provinces. As difficult as some may find the O'Brien Equalization formula, cap or no cap, it is at least an honest compromise among contending proposals on Equalization. It's result would be fair.

Mr. Williams has set himself on a political goal - namely defeating Harper at the polls - which is, if not impossible, one which also sets an appalling - if not downright dangerous - precedent. For the first time in recent memory, an administration of one province has set itself on a policy of defeating the administration of another jurisdiction.

Were the Premier to carry his campaign beyond a few speeches, he is unlikely to achieve that political goal either, but at the same time he has set a precedent which would justify any administration in Canada, federal or provincial, overtly or covertly conspiring to defeat Mr. Williams or any of his successors. His anti-Harper campaign is potentially as dangerous for the future of the country as the grievance he seeks to redress; while his intentions may be excellent, Mr. Williams might well find in his actions proof of another truism about the road to perdition.

Casey has it right

Of all the politicians discussing Equalization and the various accords, the only one to get it right is Nova Scotia Tory Bill Casey.

He said a Canadian signature on a contract should mean something and if the government can walk away from its commitment, what does the future hold?

“It is our reputation as a country,” he said in the House. “It is important that people around the world know when the government of Canada signs a contract, it is bullet proof, one can depend on it. It is important. It is bullet proof, solid gold.”

No one has said it as cleanly as that. Mr. Crosbie and Mr. Williams are chasing irrelevant side-issues and each does so for his own individual reasons.

Both are missing the issue of greatest importance to the people of the province. That is as unconscionable as it is unfathomable.

Section 60 of the 1985 Atlantic Accord - the real Atlantic Accord - states simply that neither party can amend the enabling legislation unilaterally. Yet that is exactly what Stephen Harper is doing in one consequential amendment in his current budget bill.

If Mr. Harper can change one provision of the Accord and get away with it, what else can he change in that deal? Management? Revenues? He can change anything he wants.

Successive Liberal and Conservative federal government's have honoured the Accord both in letter and spirit since it was signed. (Mr. Crosbie ought to know that his claims are false on this point) Successive federal governments have improved on the original deal to cope with problems. That would include, incidentally, the 2005 subsidiary agreement that delivered - apparently - what Mr. Crosbie could not get himself or - if we look to 1990 - didn't want to give the ingrates in his own province.

In the end, Mr. Crosbie seems to embody his own cheap words about cake and regurgitation. Entirely appropriate, given how many Conservatives seem to be guilty of the same failings they usually have attributed to others.

But all that ignores the very dangerous course Mr. Harper is on, one made no less perilous by the focus of both Mr. Williams and Mr. Crosbie on the irrelevant.

Changing the 1985 Atlantic Accord - the real one - can take away the very basis on which the second one even exists. Changing the original agreement can take away the entire industry, not merely the extra revenue from federal transfers.

And it's not like that thought hasn't been tossed into the public discussion. Conservative Norm Doyle told a VOCM audience yesterday that times changes and so the Accord must change as well. He warned that nothing is permanent, or words to that effect. Under pressure, it would seem that something a little closer to the truth slipped out than anything Doyle has said previously on the offshore.

Fundamentally, the case against Mr. Harper is exactly as Bill Casey has described it.

It remains a mystery why Norm Doyle and Loyola Hearn, cabinet minister's in Newfoundland when the 1985 Accord was reached, would put the whole thing in jeopardy.

Likewise, it remains a mystery why both Danny Williams and John Crosbie have each gone off
on their own tangents, ignoring in the process a simple point with potentially profound consequences.

Bill Casey figured it out.

What's wrong with the rest of them?

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Local case influences SCC decision on Alberta case

The Supreme Court of Canada today overturned the conviction of an Alberta man in a case where the trial judge issued his written decision 11 months after issuing a verbal verdict.

By majority decision, the Supreme Court of Canada ruled:

Although not precluded from announcing a verdict with "reasons to follow", a trial judge in all cases should be mindful of the importance that justice not only be done but also that it appear to be done. Reasons rendered long after a verdict, particularly where it is apparent that they were crafted after the announcement of the verdict, may cause a reasonable person to apprehend that the trial judge engaged in result‑driven reasoning. The necessary link between the verdict and the reasons will not be broken, however, on every occasion where there is a delay in rendering reasons after the announcement of the verdict. Since trial judges benefit from a presumption of integrity, which in turn encompasses the notion of impartiality, the reasons are presumed to reflect the reasoning underlying the decision. Fairness and impartiality must not only be subjectively present but must also be objectively demonstrated to the informed and reasonable observer. While the presumption can be displaced, the onus is on the appellant to present cogent evidence showing that, in all the circumstances, a reasonable person would apprehend that the reasons constitute an after‑the‑fact justification of the verdict rather than an articulation of the reasoning that led to it. Here, the written reasons should not have been considered by the Court of Appeal. While the written reasons do not appear to have been crafted to answer points raised in the appeal, in the particular circumstances of this case, a reasonable person would apprehend that these reasons, delivered more than 11 months after the verdict was rendered, did not reflect the real basis for the convictions. Without this requisite link, the written reasons provide no opportunity for meaningful appellate review of the correctness of the decision. However, the delay in rendering reasons, in and of itself, does not give rise to this apprehension. In this case, it is the combination of several factors that constitutes cogent evidence sufficient to rebut the presumption of integrity and impartiality.

Interestingly, the courts cited the case of R v. Sheppard [2002] 1 S.C.R. 869, an SCC decision on a case from Newfoundland and Labrador in which the court decided on how much a judge must state orally or in writing in delivering a verdict.

The trial judge addressed none of the troublesome issues in the case but said only: "Having considered all the testimony in this case and reminding myself of the burden on the Crown and the credibility of witnesses, and how this is to be assessed, I find the defendant guilty as charged." A majority of the Court of Appeal characterized the trial reasons as "boiler plate". The conviction was set aside and a new trial ordered based on the absence of adequate reasons.

Held: The appeal should be dismissed. The trial judge erred in law in failing to provide reasons that were sufficiently intelligible to permit appellate review of the correctness of his decision.

Representing the Crown in that appeal was Harold Porter, then deputy director of public prosecutions and currently the Provincial Court Judge in Grand Bank. Porter's decisions from the bench in Grand Bank have sometime made news for their clear writing and humour.

Porter made the local papers in Ottawa at the time Sheppard was first heard by the SCC. In an exchange with then Madam Justice Louise Arbour, Porter offered the view that a judge must offer some indication of the reasons for a decision. The length of the indication would have to fall somewhere in length between what had been offered by the trial judge in Sheppard and Marcel Proust's A la recherche de temps perdu.

For other Porter cases and their sometimes colourful summary of the evidence and the law, consider:

R.v Kearley, which begins with the lines:

Lobsters, being creatures of the sea, do not routinely migrate ashore en masse to take up habitation in plastic boxes under fishing stages. Therefore, the thirty seven live lobsters and fourteen codfish that the fisheries officers found under Kearley’s shed on January 10, 2004, must have been put there by somebody. By laying the charges, the Crown has alleged that the fish were caught and hidden under the step of Kearley’s shed by the Accused. For the reasons which follow, I have concluded that the Crown has failed to prove the charges beyond a reasonable doubt.

or the other R. v Kearley or R. v. Kearley.

Then there's R. v. Mitchell, an impaired driving case. This one is worth reading for the inadvertent humour in a deplorable circumstance. Police testified that they encountered the accused at approximately 3:00 AM speeding. Porter summarises the events of the case, as presented in evidence.

There are passages like this:

The Accused says that he did not realize until he had parked his car that the police were behind him, and that he had wanted to go into the house to check on his teenaged daughter. He denies that he overshot his driveway, and says that he often parks in the same place as where he left his car that night. He also denies saying the things to the police that they say that he said, although he does admit to having said some "misdemeanour words", which include the phrases "fuck off and leave me alone" and "what the fuck is going on?" He also admits that he might have asked "who ratted me out ? ".

[Police testified they pursued the accused for upwards of three kilometres in the middle of the night as he sped along at 23 kilometres per hour above the posted speed limit.]

Who said being a judge couldn't be fun as well as socially useful?

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The Green Report

You can find Chief Justice Derek Green's report at the provincial government website.

Bond Papers will tackle the report in detail over the next couple of days.

In the meantime, and in light of Bond Papers' previous posts on soft money take a close look at Chapter 10 and recommendation 76.

And when that is done, consider Chapter Three in which Chief Justice Green describes in greater detail the consistent pattern of overspending by the House of Assembly previously revealed by Bond Papers.

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Will Ron recover his credibility?

Offal News' Simon Lono takes a look at a controversy swirling around newbie councillor Ron Ellsworth and his different stories about who sponsored a poll done recently on possible mayoral candidates.

Lono calls Ellsworth an amateur.

That's obvious.

How will any citizen of St. John's trust this overly ambitious fellow, again?

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Stelco sells stake in Wabush to Consolidated Thompson

From the Globe and Mail:

Stelco Inc., which slapped a "For Sale" on its door last week, is selling its stake in the Wabush iron ore mine joint venture for an estimated $163.4-million as part of its efforts to "surface value" for shareholders.

As its annual meeting was getting under way Wednesday morning, the Hamilton, Ont., steel maker, announced it has struck a deal to sell its 44.6 per cent stake in the venture to Consolidated Thompson Mines Ltd. (CLM) of Toronto.

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I am Big Oil

The small-minded will no doubt take the headline as an admission of the scurrilous crap they have been circulating about your humble e-scribbler.

Not sorry to disappoint.

The Canadian Association of Petroleum Producers is running a series of television spots highlighting Newfoundlanders and Labradorians working in the local and gas industry.

At some point, I'll take a closer look at these videos from the standpoint of message and impact, but for now, here they are:

The Globe on bridge building

Newfoundlanders and Labradorians are surely agog with the attention paid by the Globe and Mail to the province's offshore oil and gas industry.

First the story on Tuesday that contained little in the way of new information and missed a great deal of other stuff. There's a Bond commentary with a link to the first Globe story.

Now on Wednesday a piece focusing on Hydro chief executive Ed Martin and his supposed role of building bridges between the major oil companies and the provincial government.

The Globe parses the core issue reasonably well: there are two different perspectives with two contending objectives.

The role attributed to Martin is difficult to confirm. Certainly, he is an experienced oil and gas industry executive and he can certainly understand how the industry operates. How much he is able to do in building any bridges between the two perspectives is less clear. As NOIA's outgoing president Ted Howell put it in the Globe piece:

"He knows how the companies evaluate projects, and he brings that to the table with government. But ultimately, it is going to be the Premier's call in terms of what he feels is the appropriate deal for the people of Newfoundland and Labrador."

The main problem in building the bridge may well be determining how wide is the span that needs to be built. The Globe story gets it monumentally wrong.

Industry officials warn that, if the province insists on making unrealistic demands, the international oil companies will simply not explore or develop in the waters off Newfoundland. In a nutshell, the message is: Five per cent of nothing equals nothing.

The equity position demand is more like 10%, not five. The government has stated - and as the Globe reported on Tuesday - that the equity demand in the forthcoming energy plan will be more than 5%.

More importantly, though, there appears to be a fundamental disagreement between industry and government over what shape the equity takes. That point is found only in the last paragraph of the story: the oil companies would expect that a state-owned enterprise would farm in, that is, buy in and take the risks everyone else takes.

That's essentially what occurs in some other places, like Norway, where the government's oil and gas company Statoil operates in the private sector like all the other companies in the business. Statoil, now merged with Norsk Hydro, has been able to expand its operations outside Norway and works globally with private sector companies and other state-owned oil and gas enterprises.

The alternative - the one that appears to be government's intention - is to add the equity position onto government's royalty regime. That's where the problem starts and it is at the core of why the Hebron deal failed.

As Bond Papers has noted previously, one of the major philosophical divides between the parties on Hebron centred on Ed Martin's conflicting roles as the chief tax and benefits negotiator for the province on the one hand and then his position as a potential business partner on the other.

The two interests are fundamentally incompatible, to some minds. As an operator, the concern would be about controlling costs and maximizing profitability. As the government's agent, the goal would be to maximize local benefits through royalties, jobs and - as in government's original Hebron demand - expensive capital projects that may not be required except to meet the political demand.

The Globe missed that entirely, except for what can read into the comments from Ed Martin:

"So from a strategic perspective the province is crystal clear: Premier Williams wants to make sure he gets this right in terms of how these developments occur for the benefit of the province. And for that, you need a seat at the table."

The Globe also missed the obvious: for all the talk about a seat at the table and the strategic importance of oil and gas, the provincial government still hasn't figured out exactly what role Martin's new energy company will fill or how that so-called seat at the table will be acquired.

Ask Ed Martin or Danny Williams whether the energy company will acquire licenses and operate like any other oil business and you'll likely hear the reply that that option hasn't been ruled out.

Ask about farming in - that is, buying the equity stake - and you'll hear that government intends to pay for its share. There has not been any indication of how it intends to pay for the share. Buying in occurs all the time. It's a straight-up business transaction and it needn't be limited formally to five percent, 10% or any specific level.

It's just plain odd that government would insist on any specific amount in every project. On that level, government's demand looks like the sort of stuff one gets from developing countries where oil and gas is a political issue, a nationalist issue. It isn't about how the state-owned oil and gas company can get into the industry, make cash and then return the benefit of that cash to the owner in just the same way that a private sector company returns profit to its shareholders.

One way follows the Norwegian approach. The other way is the Venezuelan one.

Resolving that confusion would likely do more to re-start the Hebron talks than any supposed back channel discussions between Ed Martin and his former colleagues at Petro-Canada.

Maybe the answer will be in the energy plan.

Then again, as the energy plan becomes more of a political document than a business one, maybe it won't.

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Apropos of a diversion

When a government delegation travels abroad, it will surely spend money.

But when an opposition party raises a question on travel spending, it should do some homework to get the goods.

Like say in the 1980s.

Collecting information requests on travel and discovering cabinet ministers billing visits to German strip clubs.

The recent kerfuffle about the ground transportation costs for a provincial government excursion to Ireland wound up falling flat as the government simply released the invoice covering the van and the limos.

What appeared to be $24,000 turns out to be about $10,000. The amount may seem large but under the circumstances it isn't really excessive.

Still, the whole thing seems to warrant a limerick: a silly rendition of the issue that occupied so much of the Premier's attention and that of the opposition at a time when other matters should have been foremost on their minds.

So, for the nonsense of taxi rentals when the hydro bill and the energy bill quietly slip through the House, here's a little nonsense rhyme:

While on a wee trip to the Isle
to develop the Irish biz file,
they couldn't ride burros
so for five thousand Euros
the Taoiseach and his pals rode in style.

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Apropos of nothing in particular

According to Healy Willan, there are three kinds of limericks:

- Limericks for women and children;

- Limericks for the clergy; and,

- Limericks.

Limericks have always been a favourite of your humble e-scribbler. They allow for a certain verbal ingenuity to fit a humorous and ribald comment within a confining structure. Fitting the most meaning into the smallest space is a challenge.

If memory serves, Craig Welsh once wrote a column in the old Express lambasting the city council for appointing a poet laureate. He received an e-scribbled original limerick on the subject and true to his name never bothered to reply.

All of this is merely an introduction to a simple limerick that serves to point the uselessness of some people's use of figures to support an argument. It's funny too, and for those of gentle disposition, definitely in Willan's third category of the five-lined poem.

There once was a young man named Paul,
Who had a hexagonal ball.
The sum of its weight,
plus his penis, times eight,
was two thirds of three fifths of fuck all.

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Has anyone seen Rossy Barbour?

If the Cal-cu-tron over at labradore is right, Danny Williams' Progressive Conservatives will take all but three seats in the fall general election.

That projection is based on the latest CRA poll results.

As an aside, does CRA poll results actually qualify as news any more? The numbers have been roughly the same for so long, it hardly seems to be new information to say that they are the same as they have been for over a year.

Anyway...

labradore wonders about the state of the current opposition and likens the whole thing to the 1966 general election. Joe Smallwood's Liberals swept all but three seats and interestingly enough, the 1966 election marked the entry to provincial politics of both Clyde Wells and John Crosbie.

Do you still think it's smart politics not to be vocal and unrelenting in your criticism of, and opposition to, Danny Williams?

Strong opposition parties are not necessarily a feature of Newfoundland and Labrador politics and the post-1966 House of Assembly might well be a good thing to look at.

The Tories at the time weren't renowned for opposing the Premier and on the Churchill Falls project, the whole thing received unanimous support of the legislature. Now times change and perspectives change.

Even people who sat at the cabinet table in the late 1960s will scarcely acknowledge today what they backed at the time.

Eh, Bill?

The pattern in local politics seems to be the emergence of a caudillo around whom virtually all rally. Smallwood. Peckford. Tobin. Williams.

In between are leaders of a different character and style.

The strong opposition suggested by labradore supposes that the members of the opposition are capable of developing or want to develop a position which is different from what the majority appears to want. This isn't a specific comment about one party or another or even the individuals involved.

Rather it is to point out that all too often the opposition members are inclined to present the sort of comment heard yesterday in the House of Assembly. The discussion was on the new energy and hydro corporation bills. The opposition parties were looking for a background briefing from the government side on what was contained in the bills. Even if a facetious comment, this line gives a clue to the fundamental problem:

"I learn a lot better if I have someone to basically point it out."

The opposition parties apparently cannot figure out what a bill means without help from the people drafting it.

Have they no staff at all?

Have they no telephones capable of reaching the assorted experts across the province who could give an analysis of the bill, gratis or for a modest sum? Do the names Bill Wells or Vic Young mean anything to anyone?

We can only expect that whatever the opposition parties manage to come up with, it will be whatever the government briefing slips them. What an amazing position for any government: to be capable of directing not only ones own members but to direct the opposition as well.

The tableau presented is breathtaking in its implications.

labradore may well be right.

If Danny Williams doesn't take every seat, he may well take all but three. For most of us pondering yesterday's events in the House, though, we may well wonder what difference that fall election would make.

The opposition today may well go the way of their predecessors from 1966.

And what difference would that make? After all, some 41 years later, some people can't even remember that they sat in cabinet at the time. Does anyone remember - or even care - who the Tory Three were?

[WJM you are out of this little trivia quiz]

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NOIA conference: building a strong, competitive industry

NOIA's 2007 annual conference is titled East coast Canada oil and gas: building a strong, competitive industry.

Look at the speaker line-up. There are heavy-weight presenters on every major topic currently under discussion from land tenure issues (fallow field) to technological developments and harsh environments.

Nothing like starting off with a bang.

Premier Danny Williams is scheduled to deliver opening remarks on Day 1 - June 19. He'll be followed by the usual update on the past year and existing developments.

The luncheon speaker is federal energy minister Gary Lunn.

The closing keynote is former Alberta premier Ralph Klein.

It would be hard to build a stronger, potentially controversial program.

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Energy plan as political plan

Looking at the Globe and Mail story on the Newfoundland and Labrador energy plan, it gets easy to see just how out of touch the Globe is with what's going on outside some very narrow confines.

There isn't anything in the story that qualifies as news.

For example, the provincial government has been saying for some time what local politicos have been figuring, namely that the energy plan will be a key part of the Williams administration's nationalist platform for the fall general election.

The energy plan isn't about economic development any more. It's about politics.

That's the news in the piece, but the Globe seems to have missed it.

The energy plan will be framed as a battle between Newfoundland and Labrador and Big Oil. It will be about hanging tough and looking for what is "reasonable."

Dunderdale merely repeated to the Globe what Danny Williams has already said: Big Oil better come back to the table because once the energy plan is released, the oil companies will have to pay a lot more than they would have a couple of years ago.

It's talking smack and talking tough for domestic political consumption.

But as both Williams and Dunderdale both know already, the oil industry is taking the view expressed by Paul Barnes local manager for the petroleum producers association in the Globe piece. Equity is fine if the provincial government wants to farm in and shoulder the costs - a la Statoil and Norsk Hydro - but anything else is likely to discourage outside investment.

Predictable positions on both sides. It really doesn't matter which one is right. The energy plan is now pure politics. Pure talk.

Take, for example, the Globe referring to the tough document that will demand "at least" a 5% equity position in all future oil and gas projects in the province. By some comparisons, five percent is actually pretty small, and that's likely why the number is being tossed out there: it sounds innocuous.

But, the Globe needs to do its homework.

The real number is likely to be 10%. Word from the oil patch and other places has it that the draft natural gas royalty regime has already been handed back to the provincial government with the polite advice that the government's plans would scare away investment. That's because the 10% equity position would come on top of the considerable share of cash flows the provincial government already receives.

The chart at right shows relative shares of cash flows for the local offshore, as presented by MUN economist Wade Locke in a public presentation last fall.

All things considered, it gets fairly obvious that the Great Battle Against the Foreign Demons of 2007 isn't really the same battle of 25 years ago.

What we are talking about today are fairly fine shifts of cash that look tiny. However, those fine adjustments of cash may tip the very sensitive investment balance against exploration investment in the local oil patch for some period of time.

If the equity demand will be applied to every new development, as the Globe reports, then we may also see impacts on existing significant discoveries. Hebron is already off the table until sometime in the next decade. Hibernia South: ditto.

Small developments like Norsk Hydro's West Bonne Bay would also be affected, especially if the results of Norsk Hydro's exploration program on the field shows oil reserves are much larger than current estimates.

Even White Rose would fall under that sort of requirement. Husky Energy has been working hard to cultivate a strong, positive relationship with the Premier. However, if White Rose turns out to be larger than currently estimated, that is, if there is an opportunity for the province to get more, then that relationship could change dramatically.

Delaying those developments aren't really important as the energy plan morphs into a political document. The government's real issues are bigger and look ahead over longer time spans.

The new energy corporation is likely to become the focus of export energy developments, some of which are tied to oil and gas. It wouldn't be surprising, given the corporation's mandate, to see it take control of the Lower Churchill project which may be generating power before the middle of the next decade. Part of that project will likely be the construction of the transmission infrastructure - sub-sea cabling - that would carry electricity to markets in the United States.

The new energy corp might well be the license holder at the end of the bid for Labrador parcels next year. With some exploration work - potentially carried on by the energy corporation on its own - the natural gas available from the Gudrid, North Bjarni and Bjarni fields could double in size. That gas, as much as eight trillion cubic feet (8 tcf) including the three existing significant discoveries, could be brought ashore and used to generate electricity in a new facility on the coast of Labrador. The power would be sold down the Lower Churchill lines to markets in the United States.

None of that would really be affected by the equity issue.

That bit on the energy corporation is speculative, of course, but it certainly fits with public statements by provincial officials. It also fits the Premier's concern about shipping natural gas directly to market without some form of added local value.

All of these plays or possible plays are well in the future, of course. In the short- to medium- term, the provincial government knows that it will have significant cash flows from existing oil production. There's no risk in the rhetoric. There may not be an economic gain either, even in the longer run, but the energy plan is increasing something other than economic development.

There really isn't any risk for the provincial government in using part of the energy plan for political purposes. Whatever consequences come will come so far in the future as to be irrelevant to any of the politicians currently making decisions or likely to make decisions on these issues over the next decade.

But to give credit where credit is due, the provincial government's posturing on oil and gas - with all the distortions and misrepresentations about revenues to date and who makes what - is a masterful example of framing a discussion in a way that can't be counteracted simply by anyone, political or industrial.

It will produce the political effect desired in October.

As a political plan, the energy document is already working its magic.

As an economic plan?

Well, that remains to be seen.

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Provinces lining up against senate reform package

The Globe and Mail is following up on a story reported on the weekend by Canadian Press that the provincial premiers are raising objections to the Harper administration's senate reform proposals.

The Globe quotes extensively from a May 30, 2007 letter from Premier Danny Williams to the Prime Minister:

Mr. Williams asks that Mr. Harper withdraw both Bill S-4, which would impose eight-year term limits on senators, and Bill C-43, which would create a process for electing senators.

"If you are intent on Senate reform, then it must be done correctly," Mr. Williams says in the letter.

"Any changes should be carefully considered by both (federal and provincial) constitutional orders of government in the context of a national public debate. The current piecemeal and unilateral approach does not suffice."

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Carter lands book deal

From Breakwater, the news release (issued May 28) announcing a book deal for NTV's Glen Carter:

Breakwater to publish first book from NTV's Glen Carter

Breakwater Books is pleased to announce the signing of the first book deal from award-winning reporter and NTV Evening News anchor Glen Carter. Negotiations were finalized last week for the first book, and a standing agreement remains for a potential two-book deal.

A newspaper, radio and television journalist for more than twenty-five years, Glen Carter has covered local, national and international stories as a reporter and as a six o'clock anchor.

Carter has covered a significant repertoire of newsmaking events including the mysterious crash of an American passenger jet which killed more than 250 U.S. soldiers. He's covered world leaders and royalty, including Diana, the Princess of Wales, and he once scored a rare and exclusive interview with former Soviet President Mikhail Gorbachev.

Carter has twice skimmed the North Atlantic aboard an American Coast Guard aircraft during a sentimental quest for the grave of Titanic. In May of 2005 he wrote and played the lead role in an internet viral film which won more than a dozen world awards, including a bronze Cyberlion at Cannes. The film, which was nominated for an Emmy, has been seen by more than 40 million people worldwide.

Glen Carter can now add published author to his impressive list of credentials. Carter's international experience and keen reporting abilities have equipped him with story-making skills in the same vein as Tom Clancy and John Grisham.

Angels of Maradona is a fast-paced action novel delving into international crime in various locales. Set in Columbia, Canada and the US, the novel boasts murder, romance, mystery, the illegal drug trade and global politics in a sleek and clever writing style.

Scheduled for publication in early 2008, Angels of Maradona by Glen Carter is anticipated to be one of Breakwater's most noteworthy spring releases.

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Jamieson to seek father's old seat

Roger Jamieson, son of former deputy prime minister and foreign affairs minister Don Jamieson will be seeking the Liberal nomination in the federal riding his father once represented.

Jamieson is a former media executive. He currently operates a tourist resort and has extensive experience in the tourism industry. Jamieson is past president of Hospitality Newfoundland and Labrador.

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PAL to train at Goose Bay

Provincial Aerospace will conduct training at Goose Bay for crews providing ocean surveillance to the Netherlands Antilles and Aruba.

The provincial government is spending $250,000 to support the training, described as a demonstration project in the government news release.

In mid-2006, Provincial Aerospace's maritime surveillance division won a US$100 million contract to conduct surveillance over Dutch territories in the Caribbean using two modified Dash-8 aircraft.

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Wow! Green delivers whopper.

Forget anything said or heard before at Bond Papers on Chief Justice Derek Green's report on legislative indemnities.

The thing runs 1300 pages and contains 80 recommendations, according to early media reports.

Just on that basis alone it appears to be well worth the wait.

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New Hydro Corp; same problem

While legislation creating a new Crown-owned energy corporation and a new version of Newfoundland and Labrador Hydro were announced last week with the words that "energy investments in non-regulated activities will not affect electricity rates", a closer look at the legislation shows the problem will still exist.

Bond Papers noted last May that changes made to existing legislation at that time created the potential that residents of the province would pay for government's energy policy through electricity rates.

Specifically, Bond Papers pointed out the interaction of two specific changes. First, changes to the Hydro Corporation Act not only allowed Hydro to invest in oil and gas projects but also provided that Hydro may undertake any other activity approved by cabinet. Second, a change to section 24 of the Electrical Power Control Act exempted Hydro from the restriction that, as a utility company, it could only be involved in electricity generation and power delivery.

The new Hydro-electric Corporation Act includes the same fundamental problem. While the oil and gas portions of the existing statute are removed, section 5(2) establishes that

Notwithstanding subsection (1), the corporation may engage in those other activities that the Lieutenant-Governor in Council may approve.

There are no changes to the Electrical Power Control Act. While the 2006 amendment that exempts Hydro from that section of the Act is not in force, it would merely a simple administrative procedure for the section to take effect.

Given that the provincial government is now creating a new energy corporation to take on the non-regulated activities of its energy program, there is no apparent reason to give Hydro the power to engage in any activities other than electricity generation and distribution.

Two new bills in front of the House of Assembly re-organize the Hydro corporation and create a new energy corporation. However, the fundamental problem identified by Bond Papers last May - namely non-electricity investments affecting electricity rates still remains. The current administration may not intend to implement changes to the Electrical Power Control Act enacted last year. However, leaving the legal authority to do so on the statute books may create an unnecessary temptation on some future date.

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Being Cassandra

Professor Michael Enachescu has taken some considerable umbrage at the post "Pollyanna Dunderdale 2", specifically for the remarks that began the commentary. At his request, his first reaction is contained in a comment at the end of that post.

Fair enough.

At the outset, let's make it clear that the comments were not meant in anyway to question Professor Enachescu's competence as a geoscientist or his knowledge of the oil and gas industry locally or globally.

Rather, the CBC story linked in the original post and the interview [ram file] connected to it seemed to be exceedingly optimistic in dealing with the prospect of exploration returning to Labrador because four parcels offshore Labrador had been offered for bids in the most recent land sale by the offshore regulatory board.

In the interview Professor Enachescu said that we "have to be very cautious" in projecting what will occur offshore Labrador since exploration must come first. That's considerably different than the implication of the comment used by CBC in the online story. Professor Enachescu did not take issue with the quote so let's work on the basis that the comment was accurately quoted.

On the point about exploration and development, Professor Enachescu is absolutely correct: exploration will determine what if any resources are available. That knowledge must come before any development.

In the interview, he also described the potential of the parcels up for bids containing at least as much in the way of natural gas, natural gas liquids and oil as the existing significant discoveries at North Bjarni, Bjarni and Gudrid.

If that turns out to be the case, there would be a total of around eight trillion cubic feet of natural gas in the area.

Put another way, the natural gas available for development in the area would be about double the amount of gas in the Snohvit field currently being developed in the Barents Sea. Ted Howell noted Snohvit as an example of an offshore gas field located well offshore in a harsh environment. Mr. Howell pointed out that a number of factors have changed to attract the first interest in exploring offshore Labrador in two decades.

That is not really the issue, however.

Rather, the point of the two posts on the land parcels was that other factors may well see the four parcels going without bids.

The most significant factor would be the provincial royalty and benefits regime. The gas royalty regime - the one directly relevant to the Labrador parcels - has yet to be revealed. One of the reasons bids will close on those parcels in August 2008 may well be to give time for companies to assess the impact of that regime.

If the regime increases the costs of development beyond the point at which companies are willing to invest, then the parcels will lay fallow. Alternately, if the regime is one thing but the provincial government reserves the right to add costs, then the parcels may sit fallow because the financial environment is too uncertain in comparison to other places. Exploration investment in those cases will go elsewhere.

Companies may still take up the parcels. As noted in the earlier post, they may decide that the potential resources in the parcel would justify the risk and whatever royalty and benefits regime the province imposes. Companies may also decide that no matter what the royalty regime occurs, the long lead times involved - nine years to complete exploration and whatever time after that to develop any significant discovery found - may well give further opportunity to change the provincial royalty regime.

Look ahead to 2020. The existing offshore oil fields will be drawing down. The provincial government will be faxing increased costs owing to the impact of demographics. In the absence of any significant new offshore development, the financial pressures on a provincial government a decade and more hence may well cause that future government to amend whatever royalty regime is announced this year.

Exploration indeed must precede development. But, if we look at the issues potentially affecting private sector interest in the fields, it is much too early to determine whether we will even get to exploration in the first place.

The other possible interest in those fields, as noted in the earlier post, may be from the province's new energy corporation. That's the second possible reason for the long time bids will be open. As we learned last week, the province's new energy corporation will be running by early in the New Year. Exploration costs are well within the financial means of the energy corporation and the long lead time on this bid process would allow the new energy corporation seven months to sort out any interest it has in acquiring exploration rights.

Once again, though, there are simply too many unknowns to project with any accuracy what will happen with those parcels. We may have a better idea the closer we get to August and of course we will know with certainty on August 2.

In any event, and as much as we might wish it were otherwise, it is far too soon to be discussing the return of oil and gas exploration to the Labrador shelf. It is tempting to be optimistic - particularly in the wake of Hebron and Hibernia South - but experience with the local offshore over 25 years ( and including those two spectacular setbacks) should give us all an abundance of prudence and caution when it comes to projecting what will occur.

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Your drain on bugs

For the third time in the past four weeks police have uncovered marijuana grow-ops and their associated production labs.

The second one turned up because it exploded.

The latest was discovered by police attended at the scene of a domestic disturbance.

If it wasn't so serious an issue, it would be comical.

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Quote of the week: Loyola Hearn

At the tail end of an interview with The Independent:

"I will not get down into the gutter, but it is getting to the point where if people push too far, they can expect a slash," he says. "I get sick and tired sometimes of listening to people who are doing a lot of damage to our province by inactivity, by constantly blaming others for what's not happening, who are doing nothing themselves except ridiculing and burning bridges.

The people in our province better wise up. We have tremendous opportunities, the best people in the world, we have greater resources, and we are letting some people, for personal reasons, try to build a little kingdom in our province."

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Premiers push back on senate reform

Ontario and Quebec are entering the debate on senate reform, saying the Prime Minister must obtain the consent of the provinces to reform the institution.

Canadian Press' Joan Bryden discusses the issue in French, in an article carried in la presse on Friday. Quebec - referred to by Bryden as one of the two most important provinces in Canada - wants the federal senate reform measures halted:

"Le gouvernement du Québec ne s'oppose pas à une modernisation du Sénat", a écrit la province dans un mémoire soumis au Comité permanent des affaires juridiques et constitutionnelles du Sénat.

"Mais si nous cherchons à modifier les caractéristiques essentielles de cette institution, la seule avenue possible est de lancer un processus constitutionnel coordonné au niveau fédéral-provincial qui réunit les joueurs constitutionnels, incluant le Québec", a-t-elle ajouté.

It appears that the Government of Newfoundland and Labrador has taken a similar position. In a May 9 session of the Senate committee on legal and constitutional affairs, senators make references to a letter or letters received by the committee from Premier Danny Williams:

Senator Milne: We will send a letter to the premiers of the provinces inviting their input on this matter, giving them a cut-off date so we can receive the reply before May 31. In a package along with this letter with suggested wording, we will send along copies of Premier Graham's letter and the legal opinion. We received letters from Premier Danny Williams, and the testimony of four different provinces and the report of the special committee. They have all the information with a request to reply before May 31.

...

Senator Hays: For the rest, Premier Williams wrote saying he was not going to appear, that anything involving the Senate should involve the provinces. It was not an opinion; it was just a letter saying that....

...

Senator Bryden: Premier Williams was pretty clear in his letter. He made a statement that nothing that would affect provinces should be determined without the provinces' participation. He went on, in either that letter or another, to say do not forget that the Council of the Federation has passed a resolution "... that no changes would be made in federal assets, including the Senate, without the agreement of the provinces."

...

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NL behind NS in space race

With 120 hectares of Crown land to build on, an American company has put Nova Scotia decisively ahead of Newfoundland and Labrador in the race for space.

When will people be organizing protests about this great slight to the people of Newfoundland and Labrador?

This sort of venture could have put Newfoundland and Labrador on the leading edge of the 21st century's great challenge.

Surely, this is proof that Confederation was a giant conspiracy to oppress the poor, downtrodden people of a poor downtrodden land.

Nova Scotians are already looking down their noses at us as they take away some of the greatest assets of the province in an unprecedented give-away of our resources. Next thing, they'll be looking down on us from outer space.

And while we are at, the Government of Newfoundland and Labrador should be lobbying for federal funding to build a museum to this affront to intelligence.

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MHA/MNA/MLA pay

Here's are two pay reviews completed for provincial legislatures in the past year:

1. British Columbia: Tabled on April 30, 2007. Appointed on January 30, 2007.

2. Saskatchewan: Report filed in June 2006. Appointed February 2006.

Chief Justice Derek Green's terms of reference weren't significantly different from those of any indemnity review appointed by any legislature in the country over the past umpteen decades.

The bit about financial administration in the House of Assembly was essentially spent before he got to it since the legislature's management committee, likely with heavy input from the Executive, hired all manner of staff and added all sorts of procedures. That should have made Green's job easier, rather than more difficult.

Green's terms of reference were also carefully constructed in such a way so that while it appeared he had the powers of a public inquiry, he actually didn't. That's not what the official news releases said, but then again claims in a government news release don't always match reality. That meant that essentially Green wasn't able to delve into questions his jurist-mind might have wanted answered - like who was responsible for the fiasco in the first place - but then again his terms of reference didn't allow him to go there anyway.

All that was left was a simple pay review of the type done countless times in the past, within 90 days.

Of course no one has ever explained why that review was ordered by the Crown, and not by the members of the legislature themselves. Perhaps it had something to do with the provisions of the legislation that would have given a commissioner appointed that way with all the powers of a public inquiry.

This is no reflection on Chief Justice Green.

Far from it.

The outcome of his report, the terms of reference, the manner in which he was appointed and now the inordinate delays in producing what ought to have been a simple result, appear to be related to unanswered questions about the constitutionally dubious origin of the whole appointment in the first place.

Let's not even get into the sometimes ham-fisted attempts at managing the fall-out from the fiasco itself.

Sometime soon we may know what Chief Justice Green has reported, but it is highly unlikely we will ever find out what caused one of the darkest stains in the history of our provincial legislature.

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The longest quick report in history

The delays have been longer than the report is likely to be but Chief Justice Derek Green finally has his work finished.

What work you ask?

Well, the relatively simple job of reporting on what members of the provincial legislature should be paid, based on practices in other places.

Saskatchewan finished a review - almost identical in scope - just before Green was appointed.

So, according to the news release, the Premier gets it on Friday. He's already been briefed at least once on its contents, hasn't he?

When will the rest of us see it?

Ooooooh. Oooooooh

Maybe it will be like the energy plan.

Often promised. Not yet delivered.

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FPI: One Nova Scotian's View

Jim Meek's column in the Chronicle Herald:

Demone says that consolidation is coming – belatedly – to the fishing industry. FPI’s assets should put the Nova Scotia company in a position where it is among the winners – or consolidators – in this transition.

It doesn’t hurt, either, that High Liner’s major shareholders include Nova Scotians with long-held stakes in the company. These are not quick-flip artists.

As for Henry Demone, he seems to have done the impossible in this FPI deal – convince Danny Williams that it’s OK to sell Newfoundland fishing assets to a Nova Scotia company.

We’re talking high-level diplomacy here. I may even have to rethink the Attila thing.

Does anybody else finding it passing strange that Danny Williams has blessed the break-up of a major local fish company and is planning to sell off the most lucrative marketing assets to a Nova Scotia company?

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Investing non-renewable revenues

A retired St. John's financial consultant is recommending the provincial government follow the example of other jurisdictions, including Alaska and Norway, and invest revenues from oil and gas development in Newfoundland and Labrador.

Bastedo figures Newfoundlanders and Labradorians would receive dividends between Cdn$3,000 and $3,300 once its own fund is worth $25 billion-$30 billion.

Established in 1976, the Alaska fund receives at least 25 per cent of the state's oil royalties and other income, such as mineral lease payments.

Six years later, the fund started paying dividend cheques to native Alaskans and those who had lived in the state for more than 21 years. Those dividends are based on a formula and the amount varies annually.

The lowest payments were US$331 in 1984, while the highest was US$1,964 in 2000.

The Norwegian fund, which is invested only in international markets, reported first quarter earnings of over US$300 billion in 2007.

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Public hearings on Bloom Lake, Fermont, June 19

The Quebec Bureau d'audience publique sur l'environment (BAPE) will hold a public information session 19 June 2007 in the Fermont Curling Club beginning at 7:30 PM.

The purpose of the session is to provide the public with information on Consolidated Thompson's proposed Bloom Lake mine.

According to the BAPE news release, the Bloom lake project will involve annual production of 7,000,000 tons of iron ore, with the ore being moved by train to Wabush. From there, the ore will be moved to Sept Iles for shipment to market. The $400 million project is expected to ship its first ore by the fourth quarter of 2008.

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Fortis to build new Belize hydro project

From the company's news release on Wednesday:

BECOL, an indirect wholly owned subsidiary of Fortis Inc. (TSX:FTS), announced today that the Company has received all major approvals for construction of a US$52.5 million 18-megawatt ("MW") hydroelectric generating facility at Vaca on the Macal River in Belize. BECOL has signed a 50-year agreement with Belize Electricity Limited for the sale of the energy generated by the Vaca facility, commencing late in 2009.

"The Vaca facility represents the final phase of a three-phase development on the Macal River to maximize its hydroelectric potential," explains Stan Marshall, President and Chief Executive Officer, Fortis Inc. "The existing upstream Chalillo and Mollejon hydroelectric facilities have benefited the customers of Belize Electricity and the country of Belize by helping to stabilize electricity rates and by increasing reliability of energy supply," he says.

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Province to create new energy corporation

While the provincial government changed the Hydro Corporation Act only last year in order to create a new energy corporation, two new bills were read for the first time on Tuesday which will create:

- a new Hydro Corporation; and,
- a new energy corporation.

We'll know what it's about after a media briefing on Thursday.

Until then, we can only scratch our heads in bewilderment.

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Pollyanna Dunderdale Part 2: The Labrador Land Plots

Michael Enachescu, an earth sciences professor at Memorial University in St. John's, said natural gas is the target for the current round of exploration, although oil reserves may also be located.

"[The] call for bids means that practically next year we'll have the return of oil and gas companies to Labrador for exploration, but drilling might not happen before the end of the decade," Enachescu said.

If natural resources minister Kathy Dunderdale was being giddily optimistic about this year's offshore land offer, then Michael Enachescu (quoted by CBC in the paragraphs cited above) likely needs to be placed in restraints and heavily sedated.

At this point, land parcels have been offered for sale (opened for exploration bids) and at this point, four of those parcels are around or adjacent to two existing significant gas discoveries.

The first thing to bear in mind is that the Labrador gas is well offshore and sits in an environment subject to icebergs and other forms of sea ice that thus far deterred development. Technological issues coupled with natural gas prices haven't made these Labrador gas fields prime candidates for development

The second thing to bear in mind is that exploration activity anywhere offshore Newfoundland and Labrador is heavily dependent on the financial issues. The province has been struggling to issue a natural gas royalty regime since 1997 and even the current administration has repeatedly slipped back the release date of the final version of it.

If the regime looks like what has been reported - complete with a 10% equity position and other royalty add-ons - it may well be that Newfoundland and Labrador will price itself out of the international competition for exploration dollars.

And that's where people need to recall the third point: on more than a few occasions in the past, companies have expressed interest in offshore parcels only to leave them sitting on the table when bids close.

Had Enachescu conducted even the simple comparison illustrated at right, he'd have noticed the historic tendency for more parcels to be offered than are taken up.

Had he factored in the financials, he'd have been even less optimistic. (Of course if Enachescu had looked at the closing date for bids - August 1, 2008 - he'd know it would be impossible to meet his time lines for exploration, but that's really a side issue.)

And, with a fairly simple analysis, there's just no way based on that information that he'd credibly claim that we are about to see exploration for natural gas "practically next year" offshore Labrador.

Incidentally, the land parcels as well as the existing significant discoveries can be seen more easily in the map provided by the Canada-Newfoundland and Labrador Offshore Petroleum Board.

The most he could say is that there has been some interest expressed. By the time bids close, we may see some interest turn into exploration commitments. Even then, successful bidders have nine years to complete their exploration. Add it all up and you may well see very little if any activity on the Labrador shelf for upwards of a decade.

About the only way we might see something earlier is if one or both of two possibilities turns up.

First, we might see action on the Labrador parcels if the gas royalty regime turns out to be less scary that it might first appear. Companies may just gamble that even if it called for a Chavez-like equity stake, the odds of those rules still being in force over a decade from now are slim and none.

Second, and perhaps more likely, the province's Hydro Corporation might wind up being the successful bidder. There have been rumblings for some time that Hydro wants to develop what has been euphemistically called low-hanging development fruit. Hydro is fronting a study of development options for the Labrador fields, a study being funded by the Atlantic Canada Opportunities Agency (ACOA). The cost of the exploration parcels would be well within Hydro's retained earnings and the company would have a decade to arrange exploration.

None of that means that exploration will return to the Labrador shelf "practically" next year. In fact, when the bids on the Labrador parcels close - almost 18 months from now - the parcels may wind up laying fallow simply because the financial situation doesn't support exploration.

If Hydro gets involved, that will be as much a political decision as a solid corporate one based on a thorough cost-benefit analysis. in fact, given the experience on the Lower Churchill it would easy to conclude the decision will be made entirely on a political basis, the financials be damned.

Now matter how you slice it, both energy minister Dunderdale and earth sciences prof Michael Enachescu are being wildly optimistic.

They are alone though. People in the oil and gas business in this province have simply slowed down. They are taking a wait-and-see attitude to everything.

After the Hebron fiasco and the Hibernia South, they've taken the practical approach of planning for the worst and hoping for the best.

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BP to ink exploration deal with Libya

British Petroleum will announce a US$900 million exploration deal with the Government of Libya, according to The Australian.

The OPEC member is the African continent's second largest oil producer, at 1.7 million barrels per day. It also has natural gas reserves estimated at 1314 billion cubic metres.

The Financial Times reported in January 2006 that BP had entered negotiations over a multi-billion dollar gas exploration and development agreement in Libya. It said discussions involved a liquefied natural gas project that could supply the North American or European markets.

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Promise made? Promise knee-capped

From Saskatchewan comes a simple statement of the case against the federal Conservatives and their verbal dancing over language, promises and caps on offshore offsets:

During the House of Commons finance committee session Monday, here's what the Calgary backbench MP said to Calvert: "There was no mention of an (equalization) cap when this was discussed in (Conservative) election rhetoric, but there was no mention that there would not be a cap, either." This isn't quite the case. In fact, the Conservatives were absolutely clear -- at least with one part of the country -- that there would be no equalization caps.

"The Conservative Party of Canada believes that offshore oil and gas revenue are the key to real economic growth in Atlantic Canada," then-federal opposition leader Stephen Harper said in a mailout directly to Atlantic voters, ironically headlined with the Gaelic proverb "There is no greater fraud than a promise not kept." "That's why we would leave you with 100 per cent of your oil and gas revenues.

"No small print. No excuses. No caps." The problem with Ablonczy's remark is you simply can't promise voters in one part of the country "no small print, no excuses, no caps" and then tell the Saskatchewan premier "there was no mention that there would not be a cap, either." That would be a lie.

That last sentence just about says it all.

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Connies dump another election commitment

The Harper administration will be locating 6200 federal jobs in Quebec, a move that will involve relocating about 4000 existing employees and adding another 2200, according to CBC Ottawa.

Infrastructure Minister Lawrence Cannon noted that the cost of office space in Gatineau is 20 to 30 per cent lower than in downtown Ottawa.

"So we're doing this for the Canadian taxpayer as well as, of course … respecting the long-standing policy that's been in place [since] back in 1994," he said.

That policy sets as a goal a ratio of 75:25 between federal office space in Ottawa and Gatineau. Right now, the ratio is 77:23, the government says.

Of course that policy on how to distribute workers within the National Capital Region doesn't square very well with the Conservative campaign commitment, as contained in Stephen Harper's letter to Danny Williams during the last federal election campaign:

There is an over-concentration of certain federal government services in some areas of the country and an effort must be made to ensure that there is a fair distribution of the federal government presence across the country.

It will be interesting to see how local Conservatives react to this news. Federal presence was a major issue for the Conservative team, including provincial Progressive Conservatives. An incomplete assessment by the Harris Centre at Memorial University was used by both candidates, the provincial government and Conservative supporters at the time, like members of St. John's city council as a political issue during and after the election.

Now the whole issue of federal presence was a partisan crock wrapped up with all the nonsense of looking at public spending as a matter of pure pork. That's been the Bond position, whether it's been about federal jobs or provincial government jobs. It's just laughable to see all the posturing that went on during the last election from federal Conservative politicians, backed by their provincial friends only to see the issue all but vanish from their collective minds. Sure it gets a mention once in a while but it hardly gets the shrill attention it used to get, that is before the federal administration changed hands.

Face it. There was as much commitment to the federal jobs thing as there was to custodial management or Loyola Hearn's call in 2004 for the federal government to hand over its Hibernia shares to the provincial government. Nothing stopped Hearn from pushing that and then running twice for a party that specifically rejected the idea.

Newfoundland and Labrador's federal cabinet representative Loyola Hearn made quite an issue of saving a single position originally to be relocated from St. John's to Montreal. In a news release issued at the time, Hearn was obviously proud of 14 new positions shifted to Newfoundland and Labrador and about the relocation of public weather forecasting to Gander from Dartmouth. Hearn, of course, did not note that marine and aviation forecasting remained in Montreal. Weather forecasting was moved from Gander to the two other locations in a move widely criticised in Newfoundland and Labrador.

"Despite commentary in the media last week, this position will continue to reside in St.John's. I would encourage everyone to gather the facts first, before jumping to conclusions."

"People who know me know that federal presence in our province has always been a key issue for me. Whenever it makes sense to have federal jobs in different parts of the country, I will push for that."

"Since we've taken power, we've put 14 new Fishery Officers on Newfoundland and Labrador waters, we've reinstated the Gander weather office, and we've protected this position."

"Newfoundlanders and Labradorians should be encouraged by this trend during our first eight months in office."

Hearn subsequently announced the relocation of Coast Guard jobs from Dartmouth to Newfoundland, but thus far promises to locate hundreds of military personnel remain unfulfilled.

Of course, none of that addresses Hearn's comments just before he was appointed to cabinet. CTV quotes Hearn as saying something about the need for increased federal presence in the province to promote growth of the local oil and gas industry:

"Newfoundland and Labrador requires a federal presence capable of promoting the province as a fantastic place to do business and to address the industry's requests to streamline regulations," Hearn says in a written statement on his website.

"We need someone in the province, not a faceless bureaucrat thousands of kilometres away, that industry can approach to deal with the day-to-day issues stemming from all the significant oil patch business being generated."

While there's no indication about the departments receiving the 2200 new employees, if any of them are employed by Natural Resources, it looks like the Newfoundlanders and Labradorians will be dealing with thousands of what Hearn once thought of as "faceless bureaucrats" thousands of kilometres from where the work gets done.

The whole move to abandon the federal presence issue just fulfils the point noted in this Bond Papers post from February 2006. Then treasury board president John Baird vowed at the time to stop any plans to relocate federal jobs outside the National Capital Region. Bond wasn't alone.

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Separated at birth: the reader input version

There's Normand Lester and Robin Philpott.

Ya got yer Leandre Bergeron, your Pierre Bourgeault, and the other sovereignists.

Who would be the Newfoundland and Labrador equivalents?

Any suggestions, serious or otherwise are welcome.

-srbp-