Shaping political attitudes

The quarterly CRA promotional poll hit the streets today and it's interesting to see, among other things, one rather curious difference between the numbers as reported and the corrected figures.

Search Bond Papers and you'll find plenty of commentary on these quarterly surveys and they way they are misused and misinterpreted by all sorts of commentators in the province.  Last spring, for example, we looked at the discrepancy between the polling numbers and the actual election result a year ago.

As for the misused and misinterpreted, one need only look at the Great Oracle of the Valley, a.k.a. voice of the cabinet minister, which headlines its online story Williams and His Government as Popular as Ever: Survey.

As popular as ever?

Not even close.

Corporate Research Associates likes to report its results as a percentage of decided respondents.  That is, when figuring out the numbers they report, they drop out the undecided people and those who gave no response and then recalculate the percentages using only the rest.

The most obvious effect of this approach is that it inflates the number, as you can plainly see in the chart at left. Over the last year, the difference between the reported result for the Provincial Conservatives and the corrected result (as percentage of total respondents reported) has been between 13 to 15 percentage points. 

In the latest poll, the difference is 17 points.

The effect of this inflation is no where near as dramatic for the opposition parties where the difference between one number and the other is only a couple of percentage points.

Bear in mind, of course, that distortion from reporting as percentage of "decideds" is on top of the distortion evident from comparing the poll results and election results last fall.  That variance was potentially upwards of 20 percentage points on its own.

The other distortion can only be seen when you actually take the time to correct the figures. Rather than seeing a political party which is every bit as popular today as it was six months ago - as the Oracle reported -  there's apparently been a fairly steady decline in support for the Provincial Conservative party.

Now the decline is not any sign of impending collapse but stop and think about it for a second.  News reports which state that the government retains its high popularity are strictly accurate:  government remains extremely popular.  But such reports miss the actual result.

The fault here lies not with reporters and editors in the handful of newsrooms covering the province.  How many of them have the time to flick their calculators on and make the adjustments?  How many of them would be able to report adjusted figures - as opposed to simply reporting the expert's results - without running the risk of accusations that they were biased or unqualified to change what they had been handed?  How many have the time in the course of a busy day to find a polling expert who could legitimately provide a different interpretation, again with the risk that such action would be criticized as "biased"?  Since there is no polling readily available to contradict the CRA results, on what basis would they ethically pursue an alternate interpretation in the first place?

What we are left with is  a situation in which reporters relay the information they have.

Consider the impact that this situation may have on public opinion. With everyone reporting huge popularity for the governing party that doesn't seem to vary over time, it's not to hard to imagine people who disagree with the government feeling isolated.  After all, anyone not feeling too favourably disposed to the government party generally or on a single issue and just catching these numbers quickly would think that he or she is merely one in 18 or 20.  In reality, they are almost one in 40, if we allow that the so-called undecideds are not favourably disposed either but, for the most part, they would not know that.

There is a fairly large body of social psychological research since the end of the Second World War on notion of conformity.  That is the idea that individuals will tend to adjust their stated opinions and their behaviour to conform with a real or perceived standard.

And we don't really need to get too deeply into the phenomenon of conformity to pose the notion that CRA polls aren't really measuring public opinion accurately any more.  In fact, there is a good reason to suggest that these polls have become - in effect  - part of an effort to shape public opinion. 

While it was once dismissed, the notion of poll goosing now appears to be generally accepted.  Recent revelations suggest the government employs a tightly managed system of information release both to coincide with polling periods and, in some instances, to bury unfavourable news. Those who have critical opinions report being advised by politicians and senior government officials to keep silent. Some, such members of as the offshore industry association, have been subjected to public attacks.  Others have been threatened with legal action.

The Premier himself comments regularly on his own concern with counter-acting what he calls "counter-spinning negativity".  That is, by his own accounts, he spends considerable energy coping with opinions that differ from the official government position.

We saw a classic example this week of the effort to enforce conformity. An accusation that some members of his own caucus may not support the Anybody But Conservative campaign is met with an e-mail that, while it claims there will be no repercussions for dissent, then demands a statement in writing as to whether "you support the government's position against the Harper government or if you support the Harper government". The e-mail uses the word "team" which suggests, in itself, the notion of suppressing individual views and actions in favour of a conformal position. The e-mail, incidentally, is not the first time, the Premier has emphasized conformity from his caucus.

There are indications of the conformity phenomenon outside the government caucus as well.  Consider the number of people calling open line programs or leaving comments on local news web sites who feel the need to preface their criticism of government with some variation of the phrase "Now I support the Premier as much as anyone, but...". On the face of it, that sort of phrasing suggests a perception of a social norm which must be acknowledged first in order to make acceptable the expression of an opinion. 

None of this is conclusive and the language is deliberately conditional.  That is because the notion of conformity and public opinion in Newfoundland and Labrador would require a far more detailed study than can be offered in this space. Nonetheless, there are  reasons to believe that the only public opinion polls in the province available to the public are inaccurate and that, in a larger sense, they actually serve inadvertently as part of a wider effort to shape public opinion in a sophisticated and integrated fashion.

In the context of the current federal election campaign, an accurate interpretation of events may depend as much as anything else on appreciating the difference between the only poll known to the public and the others available only to some of the political parties.

-srbp-

Humber Valley Resort gets 30 day creditor protection

The owners of Humber Valley Resort sought and obtained court protection for at least 30 days in order to develop a financial reorganization plan to creditors.

Only three weeks ago, the resort owners announced a major restructuring.

The resort owners are reportedly in discussions with government, as they have been apparently since last year, seeking some form of government financial support.

-srbp-

Family Feud: another angle

So which Provincial Conservatives are gonna sign on to this campaign?

The premier's apparently got answers from all his caucus and only one is abstaining from any involvement.

 

-srbp-

Family Feud: the silverback swipes again

A federal Conservative statement hot off the e-mail:

Minister Hearn Challenges Premier Williams To Allow Caucus to Campaign for Conservatives

The Honourable Loyola Hearn, Minister of Fisheries and Oceans and Minister Responsible for Newfoundland and Labrador, today issued the following statement:

Today Premier Williams said he would not threaten any MHAs to adopt his position of ABC in the next federal campaign.

My comments in local media were based on a growing number of calls we have received from concerned caucus members and Progressive Conservative staffers who used exactly that that phrase.  They felt there was a clear expectation that they needed to publicly campaign for ABC, even if they didn't agree with it, or there was a threat to their career advancement within the Williams government.

If the Premier's statement is true, and he wishes to let democracy take its course, will he send another e-mail to his caucus and clarify that there is no threat?  Will he tell them he means it when he says members are free to do whatever they believe is in the best interests of their districts -- even if that means campaigning for Conservative candidates at the federal level?

If there is no threat, will the Premier commit publicly that there will be no action taken against MHAs who choose to volunteer for Conservative Party of Canada?

He can put this issue to rest by sending another memo to caucus right away.

As your humble e-scribbler already maintained, Hearn is a scrappy silverback politician.  Experienced, used to being dominant, savvy and fully of inherent political strength just like the biggest gorilla in a family group.

He'll tolerate nonsense for a while but at some point he'll be ready to rip apart any challenger.

Hearn's been working the local media this Friday before the writ drops and his language is designed to go right at the heart of the so-called ABC campaign.

With the comment on leaks a couple of days ago, Hearn and his federal Conservative brethren have already shown they know how to campaign hard when they need to and, in the caucus leak story, set the other guys to constantly responding instead of setting the agenda.  Hearn's release today will increase the pressure and counts as another shift in the political agenda.

If this campaign keeps going with the same intensity, the repercussions will be felt in provincial politics.

-srbp-

Friday election round-up

1.  The latest political scuttlebutt has Loyola Sullivan out of the country and not taking the Prime Minister's calls. As it stands now, incumbent Avalon member of parliament Fabian Manning is the only federal Conservative with any profile standing for election in the province in the fall general election.

2.  Former newspaper editor Ryan Cleary and Sierra Club activist Fred Winsor will be squaring off for the New Democrat nomination in St. John's South-Mount Pearl.

3.  For those wondering about the Liberals, all their candidates are in place.

4.  From the "Nothing spells election..." file, nothing can keep politicians from announcing public cash, not even an ABCDLMNOPQ Family Feud.

5.  From the "Surreal Life" file, the cash announcements even include a joint one involving federal Conservative Fabian Manning.

-srbp-

Family Feud: Hollywood style

In 1989, a younger Danny Williams campaigned to make Loyola Hearn premier of the province.

Almost 20 years later, the feud between the two Conservatives - one provincial and federal - is as vicious as a Hollywood divorce.

Hearn called some of Williams' rhetoric both "truth-twisting" and "underhanded."

Hearn said worse in another place as noted by CBC in its coverage of the Premier's scrum:

Williams was reacting Friday to comments Hearn made on a public call-in show after his Thursday announcement, calling the premier a dictator and accusing him of being "as gutless as a capelin."

"As well, if anyone would recognize a dictator he certainly worked for one, so he'd know a dictator I can guarantee ya," Williams said.

 

-srbp-

The Polar Opposites Express

Many of you may already read Mark Watton over at nottawa, but for those who don't, you might rethink what you've been missing.

"Alphabet Soup" is Mark's take on the election, the Family Feud and federal political parties of all stripes.
It is as insightful as it is concise.

Then, when you are done with that, you can ponder something as far from insight as is humanly possible.

-srbp-

Family Feud: George Orwell meets Walt Kelly

Steve Kent was quick off the mark on Thursday to pledge his unswerving, unstinting and constant loyalty to the ABC cause.

Yes, the Family Feud is on.

CBC's David Cochrane reported this evening that the Premier was so unsettled by a recent blog post at Meeker on Media that he fired off an e-mail demanding government caucus members declare their support for the Feud and indicate which candidate they would be supporting.

The post, based on comments by Loyola Hearn's communications director, suggested there were leaks inside the Tory caucus heading to Hearn and that not all Provincial Conservatives were comfortable going to war against their kith and kin.  The post also indicated that the Premier and his team were organizing a trademark astroturf campaign.

Hearing Kent of the Williams Conservatives commit to defeat the "Harper Conservatives" in the context of the Premier's e-mail only serves to confirm the background to the Meeker post and other commentaries.

First, the e-mail is a clear signal that not only are there Provincial Conservatives who are not happy with the Family Feud, the premier himself is so conscious of it - and worried about it -  that he is looking for declarations of loyalty.

Second, Kent's use of the talking point "Harper Conservatives" invites the obvious conclusion that the Family Feud merely pits the Harper Conservatives against the Williams Conservatives, a phrase that only slightly morphs the "Williams Government" phrase so popular in official government news releases.

Third, having Kent pledging to campaign throughout his district against the federal Conservatives is only fitting for what is - essentially - an internal spat among people on the same end of the political spectrum. Only a decade ago, Kent was being courted by and apparently considered running for the old Reform/Alliance Party.

One could almost hear Kent's talking points as a bizarre mix of 1984 and Pogo: 

Mount Pearl has always been at war with Eastasia. 

We have found the enemy and they is us.

-srbp-

Candidate scuttlebutt - St. John's

1.  Connie organizers are working hard to get Tom Rideout in St. John's East.

2.  Hearn is out but Loyola "Rainman" Sullivan is in to replace him.

3.  Reg Anstey will declare for the NDP in St. John's South.

4.  Jack Harris...oh that never was scuttlebutt any way.

-srbp-

ROFLMAO @ ABC

Over at Geoff Meeker's blog, his post on a supposed leak from inside the Provincial Conservative caucus has brought out a self-described chauvinist doing as any imitator of Nicholas Chauvin might do.

It can be pretty funny stuff if you just read what's on the page. 

Here's a summary of the discussion thus far:

According to PW, before the PM goes to see the GG, ODP needs to define ABC PDQ so things aren't FUBAR because the people of NL will not know how to X their ballot in the GE in OCT unless they hear HMV, likely on CBC, NTV, VOCM or for VIPs via TXT or PIN on RIM.

The ABC, you may recall, is supposed to KO SH and the CPC everywhere in CDA from NL to BC because they were NSF on the BP to ODP's L2S in the 06 GE. There's been no DND in HVGB or new HMP in HG, represented in the HOA by the AG.

Before now, ODP DW and SH were BFF.

ABC would also KO LH, the CPC MDFO in the GOC, who represents SJSMP in the HOC, and keep him out of the PCO in NCR but right now he is MIA.

But it's not just an ABC, according to PW who plugs his blog, PAP, in his comments on GM's MOM. 

It's ABC...D.

And worse than that PC MHAs will be PO'ed at voting for WN, SC, SA and other LPC ESP JF, who was a CM for BT and RG when they were ODP before DW.

But JH of the NDP in SJE is OK with ODP DW.

The only letter missing thus far in PW's alphabet folly "Z ", but undoubtedly someone is working on that rogue letter and will send it along ASAP.

At this point, everyone is likely LOL and well they should be WRT the whole ABC/FF thing.

MW of ON can rest easy, though.

You don't need a BA, MA or PHD from MUN to spot the BS of PW and the FF.

Now YHE-S must go to the ER and see a GP because this whole thing is causing MEGO.

K?

-srbp-

Mile One runs huge deficit

St. John's Sport and Entertainment, the municipally-owned corporation that runs Mile One Stadium, known to some as the Wells-Coombs Memorial Money Pit is reported to have posted a surplus or even a profit.

Read a bit more closely and you'll see the devil in the details.

Taxpayers of St. John's are pumping almost $2.0 million into the thing as a subsidy.

That supposed surplus of $110,000 is actually a deficit of almost $2.0 million.

There'll be no right-sizing Mile One until the subsidy is down-sized, rather than up-sized as Council has done since 2006.

-srbp-

Backuppable Tom to run for federal Connies?

The Family Feud could get infinitely more entertaining if local political rumours hold true.

Former Provincial Conservative Premier Tom Rideout is looking at running for the federal Conservatives according to CBC's David Cochrane.  When Rideout quit Danny Williams' cabinet a couple of months ago, Bond Papers had Rideout looking at a run against incumbent Liberal member of parliament Scott Simms in central Newfoundland.

The specific riding isn't as important as the idea of the guy who ran through the 1989 provincial general election like the love child of Speverend Rooner and Mrs. Malaprop running for the federal Conservatives in the fall federal election.

Rideout's departure from provincial politics was never just about a million dollars of roadwork, despite what some people would have you believe. There's quite obviously some considerable animosity between Rideout and Williams, likely dating back to Rideout's leadership win in 1989.

Rideout - who served in key roles in the Williams administration - is in a position to know where more than a few bodies are buried in the Provincial Conservative backyard.  He'd also likely attract a fair bit of support from long-time Provincial Conservative voters and backroom workers who are dissatisfied with the internal party strife resulting from the ongoing Anything But Conservative campaign, as the Family Feud is officially known.

The scrappy veteran campaigner would also be inclined to smack back at any attacks from his former Provincial Conservative caucus and cabinet mates.

Even if Rideout worked behind the scenes or as a spokesperson for the federal Conservatives in the province, the Family Feud could turn out to be the surprise hit of the fall political season. The Family Feud likely won't shift too many votes, but it would be political theatre of the kind the province hasn't seen in years.

-srbp-

The safest Conservative riding in Canada. Not.

That's what your humble e-scribbler thought too, until he bothered to check the facts.

Turns out the seat currently held by Norman Doyle has voted other than Blue a fair bit since 1949.

Years	MP	Party
1949-1953	Gordon Higgins	Progressive Conservative
1953-1957	Allan Fraser	Liberal
1957-1963	Jim McGrath	Progressive Conservative
1963-1968	Joseph O'Keefe	Liberal
1968-1986	Jim McGrath	Progressive Conservative
1987-1988	Jack Harris	New Democratic Party
1988-1993	Ross Reid	Progressive Conservative
1993-1997	Bonnie Hickey	Liberal
1997-2008	Norman Doyle	Conservative

 

Jim McGrath racked up the biggest margins in previous elections, capturing over 70% of votes cast in some elections.

If you want to check for yourself, follow the summary at Wikipaedia down to the bottom.  The data at the Wikipaedia entry is taken directly from Elections Canada  and Library of Parliament results.

-srbp-

Provincial Conservatives plan ABC astroturf

Bond Papers readers are no doubt shocked at the very thought, but it seems to be true.

They may even be struck speechless at the very idea.

The Provincial Conservatives are organizing astroturf as part of the Family Feud. That's according to some information Geoff Meeker obtained courtesy of Loyola Hearn's office, whose spokesman conveyed it this way:

“We were contacted late last week by a member of the provincial PC caucus, who told us that they were contacted by someone in the premier’s office, asking all ministers and MHAs to find at least four people in their ridings who they can call upon to put their names to letters to the editor, or to put calls in to Open Line shows, to give the appearance that the ABC campaign is away more ‘grass roots’ than perhaps what it is. These calls are happening during business hours from someone in the premier’s office, though I won’t get into who.”

The piece contains another claim destined to leave people truly dumbfounded:  the astroturf campaign is already underway.

Not like people haven't been writing blog posts and calling open line shows expressing their sedimental solidarity with the New Democrats, talking up the positive features of the Family Feud and condemning Stephen Harper at every opportunity.

-srbp-

The jazz of life vests

Air Canada Jazz recently announced the airline will be removing passenger life vests from their flights.

The move is aimed at reducing weight on aircraft and thereby reducing fuel consumption. There's a Transport Canada regulation making life vests mandatory on flights 50 nautical miles from shore and since Jazz doesn't typically fly that far from land, they won't be breaking the rules.  On routes where they did get more than 50 miles out, the airline plans to adjust the route to bring them within the limit.

Incidentally, the 50 mile run is there since Transport Canada figures that an aircraft at altitude and no more than 50 nautical miles from shore can glide to a landmass if need be.

Some are very upset, claiming it's a safety risk.

Some of the local loons are using it as yet another example of how people upalong don't give a damn about Newfoundlanders.

That generates nothing more than a big sigh.

As someone who has kept track of aviation issues for a fair while, your humble e-scribbler had a hard time recalling the last time a commercial airliner ditched, let alone successfully.

There have been a few spectacular crashes in which the aircraft was pretty far from in control which, by the way would be pretty much the only time when a life vest would be of any demonstrable use beyond helping to find your remains.

Turns out that since 1970 there haven't been any such landings on water anywhere on the planet by commercial airliners according to the guys at Freakonomics. 150 million commercial airline flights and 15 billion passengers and not a single person has been able to use the 15 second instruction (30 secs in bilingual Canada) let alone use the vest.

It's interesting to see that in all the comments on this two year old article, there isn't one that contradicts the life vest/water landing thesis.  Not one.  Even on one aviation forum, the contributors had a hard time coming up with a contemporary ditching story in which the passengers would have been able to don life vests ahead of the time the aircraft hit the water.

What you do see are a couple of examples of aircraft on final approach landing short of the runway which, just by happenstance, abutts a body of water.  It's highly unlikely any of those passengers did anything beyond head for the nearest exit once they got over the shock of the crash.

Interesting that Air Canada doesn't seem to have used the safety issue very much if at all in defence of its decision.

They'd have a pretty powerful argument or so it seems.

-srbp-

Quietly Conservative

Over at the Telly, the weekend and holidays crew is writing headlines designed to arouse the irk of the nationalist fringe.

Either that or they didn't notice it's not just the apparent mainlander quoted by Canadian Press as dismissing the Anything But What It Seems campaign.

At least one of the people from Newfoundland and Labrador isn't impressed by the Premier's bout of high dudgeon and he's not a political science professor somewhat removed from reality, err, the front lines of political organizing.

Liam O'Brien points out the bleeding obvious, the so-bleeding-obvious that Memorial University political science professor Steve Tomblin missed it entirely. Sayeth Liam:

“It’s the strangest thing. It takes me back to my Catholic days when you go to confession. We’re getting these people walking up and whispering to us, ‘I’m a provincial Progressive Conservative, but I’m also a federal Conservative,”’ he said.

“They (Tory voters) don’t need to scream it out loud, they just need to mark their X on the ballot.”

That's pretty much what they did in 2004, the last time the provincial Conservative leader had a bit of a disagreement with his federal brother.

Comparing the 2004 and 2006 vote counts shows some slight suppression of turnout in the St. John's area ridings and a slight drop in federal Connie vote. But once the provincial Connies were given dispensation to work for the federal crowd, the numbers moved back up.

Overall though, the population continued its usual pattern of voting anything but Conservative. That's what they've done in almost every election since 1949. And when they didn't do it, as in the late 1960s, the vote was driven almost entirely by their dissatisfaction with the provincial Premier of the day.

Like say 1997, when the locals were so rotted with the provincial government and Brian Tobin (Lloyd Matthews, father of Danny's Liz as health minister) over health care, that they bucked the trend and turned out a bunch of Connies even in formerly safe Liberal seats.

Poof.

Times change.

The irk subsides.

Every sign that voters are going back to their usual voting patterns not just here but across Atlantic Canada.
Up pops young Mr. Tobin to proclaim that he is leaving the premier's job behind and heading back to Ottawa - notwithstanding his promise of just a few months earlier he'd finish the full second term - to lead a joyous crusade for something or other and set it as his personal mission to restore Liberal seats in Atlantic Canada.

Restore Liberal seats.

When the polls showed voting patterns returning to the historic norms and seats which had gone Connie or Dipper in 1997 would be returning to the Gritty crew.

And some less than observant observers vowed it would be possible what given that young Mr. Tobin was wildly popular, a brilliant political strategist and able to walk on water, heal the sick and turn water into Jockey Club at the drop of a hat.

Miraculous lad, that young Brian, said all the sayers of sooth.

Had a bit of trouble with the fishes, though, but other than that a wonderful popular fellow who at no point had an ulterior political motive like say becoming prime minister. Pay no attention to that guy behind the curtain holding fund-raisers.

He's just going back to Ottawa on a mission for the people and he will produce a voting miracle.

But you see the pattern, right?

Predict something that usually happens and the rubes will think you are a genius.

It's the stuff of a late-night infomercial by The Amazing Ruth and her Psychic Bunions.

It does point out the weakness in all the drivel about Danny being pissed because Steve fooled him and so now Danny is going to make Steve pay by campaigning against him.

That weakness being the lack of tangible evidence the Provincial Conservative will have any sway with voters anywhere at all, including locally when it comes to federal politics.

'Cause, as Liam points out, in the secret ballot box where even the dogsbodies sniffing out the unfaithful for their master cannot go, there's no way of knowing what a given person does in the secrecy of the ballot box.
That little reality would be galling if that's what the dogsbodies' master really had as his political goal in the Anything But Reality campaign.

Not everything is as it appears, even on a Blackberry screen.

-srbp-

 

Eats, shoots and leaves update: 

There are typos. 

Untied instead of united?  That's a typographical error in which letters are tapped out of sequence.

Then there are spelling problems.  Typing sediment when you meant sentiment.  Or tudor when you meant tutor.

No matter how you try and explain those, there is no way that those misuses of words are a function of fingers hitting the wrong keys.

Then, there are problems with punctuation.

Turns out that the headline on the story linked above is the original Canadian Press headline.

Almost.

The CP version had a colon between the word "Ontario" and the word "commentator".  The colon suggests that the words before it are a paraphrase of a comment made by the commentator.

In this instance, there's a slight difference to the two headlines given the punctuation variation.

The Telly headline suggests that the commentator from Ontario isn't impressed.  That's true, if you read the story, but the CP version gives the sense of the comments in the story story, namely that voters in Ontario won't be impressed.

All of this may only bother a handful, but when you are trying to communicate an idea clearly, everything from spelling to punctuation to verb tense to getting the words in the right order can affect what idea the reader sees.

For those who are troubled by punctuation, for those who do not know the difference between a colon and a semi-colon, there is help:

Your humble e-scribbler has looked for this book in a local bookshop for some time now.  The heavens aligned recently and delivered it at a second-hand bookstore in Mount Pearl, in pristine condition and for only a handful of bucks.

Lynne Truss gives a master class in punctuation using simple sentences and plenty of humour.

What more could you ask for?

Globe editors wonder: How many Scott Reids could there be?

More than they evidently know.

The guy in the photo is the former javelin catcher for Paul Martin.

The guy who made the comments about the glory of fixed election dates is one of Stephen Harper's gang who are about to toss aside the glories of fixed election dates they championed.

They don't look anything alike.

-srbp-

MUN Crisis continues

Just because it hasn't been in the news lately doesn't mean that the Memorial University crisis is not simmering away beneath the surface.

You know that because Pam Frampton has another column this week which starts out with an e-mail exchange with the Premier's Office.

The open and accountable Premier's publicity department doesn't think that further comment on the presidential search would be in Memorial's interest.

When she went looking for a few comments from the Premier - likely to come via e-mail - Pam got the usual response from the Blackberry that runs government's publicity machine:  not interested.

If it weren't for opposable thumbs, this administration would not be able to carry out its media relations policy:

The interview is ducked. 

Declined. 

Avoided. 

So as not to have to give an actual answer or provide information.

It is the Blackberry version of government testimony at Cameron.  The talking points have to set a new record for brevity:  "I can't recall."

Rarely has the functioning of human society been so dependent on something monkeys could do. 

In order to tell some reporter to sod off, one does not need the gift of speech. 

One need only be able to click one's thumbs on some small keys in a certain sequence.

One need not have the ability to understand complex or abstract concepts, like the value of sustaining mutually beneficial human relationships through direct voice contact. [The concept of zero, as in the amount of useful information conveyed by the average government publicist, would not being among those unknown ideas.  That's about the only abstraction involved.]

And therein lies the larger problem here.  While none inside the Confederation Building likely see it, this is a sign of the full-on rot which takes hold in all administrations after a certain point. 

They become so convinced of their own immense value to the evolution of the species. They start to think that that their claims issued in written "statements" are not merely profound but universally true; like the Bible but better somehow. 

As they grow weary of the mortals with whom they must deal each day, they start to dismiss them as cavalierly as Louis or Marie ever did. 

In the last couple of years of the Peckford era, people wondered if the premier's media guy existed.  In the days before Blackberry kiss-offs, he just stopped returning phone calls from reporters.

Period.

Joe Smallwood coasted along on the daily stops at voice of the cabinet minister. Down with window, in comes microphone.  Blather for a few minutes and then drive off hopefully after reporter got arm back out of window.

The people in these august positions do not realise what is happening of course.  Their delusion is so complete that they neither see nor care to see the slow erosion of everything that supports them. 

They carry on with petty political feuds among themselves, as if these things were  important, let alone as important as what they were supposed to be focusing on.  In the process, supporters, friends and sometimes even family walk away. 

The whole apparatus of a particular administration can be propped up by nothing more substantive than a CRA poll. To those at the heights, it appears as though the whole thing is magically floating, held aloft by the righteousness of whatever it is they are doing.  They imagine a giant concrete base because they cannot see the real base:  two guys lashing broom handles together with duct tape.

You see, governments rarely fall apart before your eyes.  They don't just up and fall in on themselves one day. There is no final cataclysmic destruction.

They rot.

They decay.

They erode.

There is never anything truly spectacular except at the end when someone from another party finally pushes the whole mess over in a heap of ash.  By then, no one really cares any more.

Until then, there are the slights.  There are the dismissals.  There are broken promises. There are the frustrations and in some cases the outright insults that all remove another layer of the social bonds on which a political party is sustained.

The gotterdammerung - the twilight of the gods - is not heralded by the Ride of the Valkyries.

It is foretold, these days, by a RIM-shot.

-srbp-

Risky Business 2: Provincial government cost/revenue estimates

The Telegram front page today carries a story on the provincial government's revenue estimates for the Hebron project in three scenarios.  The scenarios use oil at an assumed average price over the life of the project at US$50, US$87 and US$113 (constant 2008 dollars). The story is also available online.

Given that oil prices haven't averaged anything near US$87 or US$113 over the past 25 or 30 years, that US$50 a barrel estimate in constant dollars is probably a little closer to the likely performance of oil prices sometime after 2018.  In that scenario, the provincial government estimates revenues at $6.8 billion, including $5.4 billion from the revised royalty regime.

That royalty regime keeps royalties at a constant 1% up to simple payout and then provides for an additional 6.5% in any month after simple payout in which prices average above US$50 for West Texas Intermediate at Cushing, Oklahoma.

To see the impact of oil prices on the revenue projections using the revamped royalty regime, all you have to do is lop one measly dollar off the assumed average price. At US$49 - a 2% drop from the government's assumed average price -  the province's royalty take drops by at least $1.25 billion.  That's 23% less. Factor in the loss from the changed royalty regime, which government estimates at $105 million at the average price of US$50 a barrel and the loss climbs.

The provincial estimates see the 4.9% equity position generating $800 million for the energy corporations oil subsidiary at the US$50 price assumption. This appears to be based on total costs for the company of $600 million over the life of the project (construction to decommissioning).

Based on the provincial government's own estimates of costs for acquisition and the construction phase, that would assume the OilCo's share of all production and decommissioning phase costs at $200 million. That works out to a total projected cost of $4.0 billion for ongoing operations of the rig, exploration, delineation and production drilling after first oil and whatever share of decommissioning costs the oil company will bear.  It would also have to include any fees and charges for handling the sale of crude which represents the OilCo share of production.

Low-balled costs?  Could be. Bond Papers' preliminary estimate of lifecycle costs for OilCo came in at about twice the amount apparently used in the provincial government calculations. Bond Papers used a figure of $10 billion as the cost of operations expenditures and production phase drilling, and decommissioning costs, including the $250 million for a liability guarantee.

Fixing an accurate estimate of the costs after first oil would help refine the calculations.  That may be difficult, though, since the acquisition agreement between the provincial government and the oil companies hasn't been released to the public.  It might become somewhat easier when and if a development application is filed with the offshore regulatory board.  That application would include a forecast of drilling activity for the production phase.

-srbp-

 

Related:

1. "Hebron second royalty: a second view".  (August 2007) Examines the Hebron royalty, as originally presented in the memorandum of understanding, using an assumed average price in constant 2005 dollars.
2. "Hebron basic royalty: a preliminary assessment" (August 2007)
3. "Masters of our domain: Williams concedes on royalties". (August 2007)
4. "Masters of our domain: province lowers royalty for Hebron pre-payout phase". (August 2007)
5. "History repeating itself".(August 2007).  Notes the impact of changing assumptions on the price of oil on perceptions of the "value" of a deal.

Connie bitch-slapping intensifies

The Family Feud continues unabated.

There must be a federal election coming.

The latest volley is a statement released by federal fish minister Loyola Hearn this afternoon:

It's interesting to hear the Premier say today that he was simply "stepping up to the plate" to fund arts initiatives within the province, and to highlight his own commitment to the arts.

Residents of Mount Pearl may find this message a little bit confusing.  The original proposal for Mount Pearl's Lifestyle Centre included a local theatre.  With federal and municipal money on the table, the Williams government responded that they would not fund the project if the federal government was involved. 

In the end, the Lifestyle Centre became a victim of the ABC campaign, and will proceed without a theatre.

Hearn's a scrappy old silverback politician.  You don't have to agree with his politics to appreciate that he's unlikely to take the sort of pokes Danny Williams has been making without hitting back.  And it's not like Hearn has been afraid to go right up Danny's nose if need be to make a point.

But at this early stage of the campaign, it won't be too long before the Universal Rule is broken and someone's mother gets dragged dragged into the whole fracas.

Oh dear.

Fights in the family are always the ugliest.

How ugly?

Well, there's always this video of a very young, but no less irk-filled Danny Williams telling CBC's Deanne Fleet what a great premier Loyola Hearn would make.

 

-srbp-

Family Feud

The federal Conservatives and the provincial Conservatives are still hacking away at each other.

This time it's iambic pentameter at 10 paces with cuts to arts funding.

The other day it was provincial Conservative dauphin Jerome Kennedy and funding for a new prison in the province, likely to be built in his own district if the feds cough up the cash.

The only thing missing is Richard Dawson.

All highly entertaining but beyond that, it's nothing more than a sign a federal election is around the corner.

-srbp-

Familiar names, one surprise running OilCo

The directors of the Oil and Gas Corporation of Newfoundland and Labrador (OilCo) include some familiar names from the energy corporation board, one of the Premier's former law partner and the head of the Steele Communications.

John Ottenheimer is a former provincial cabinet minister currently serving as chair of the board for the province's energy corporation and its Hydro subsidiary.

Fellow board member Ken Marshall  - the Rogers Cable boss in the province and a former business partner of the Premier - also sites on the new OilCo board, along with Gerry Shortall, a former Hydro board member appointed by the Williams administration.

Glen Roebothan is a senior partner with Roebothan, McKay and Marshall, the Premier's former law firm.

John Steele is the surprise.  He's the head of Steele Communications, parent corporation of VOCM.

OilCo was incorporated in August 21 under the Corporations Act as a subsidiary of the provincially-owned energy corporation.

-srbp-

Hebron not sanctioned; may not be sanctioned solely at call of oil companies

The Hebron project has not been sanctioned  and may not be sanctioned, according to the fiscal agreement released on Thursday by the provincial government and only the oil companies can make a decision when - if at all - to develop the project.

That's a huge change in policy for a provincial government that, in the wake of the first Hebron negotiating failure only two years ago, was threatening to legislate development of projects offshore.  The premier and others complained that development could be held up indefinitely by oil companies.

Under the fiscal agreement, the proponents are under no obligation to proceed with the project or any project and that choice remains the sole discretion of the proponents.

2.3   Project Sanction Obligations.

The entering into of this Agreement does not obligate the Proponents to sanction or continue the Hebron Project or any other Development Project, which shall be in the sole discretion of the Proponents.

On top of that, the proponents have at least a decade to decide to sanction the project before the provincial government may terminate the agreements signed this month. However, as with the rest of the agreement that minimum 10 year life span of the agreement could be continued by agreement among the companies and the provincial government. 

2.4 Time Limit for Development.

If, at any time after the tenth anniversary of the Effective Date, the Proponents have not obtained approval from the Board of the Development Plan, absent agreement to the contrary the Province shall have the right to terminate this Agreement on thirty (30) days notice.

While the provincial government released the acknowledgement agreement, the fiscal agreement and the benefit agreement, it withheld two other key agreements.  One is the closing agreement.  The other is the acquisition agreement which presumably covers details of the provincial government's equity interest in the project.

In addition to the points noted above, the fiscal agreement appears to involve a more substantive change to the royalty regime than originally disclosed. There'll be more on the fiscal arrangements and the benefits agreement once your humble e-scribbler has had a chance to go through them in detail.

-srbp-

Conservative megalomania...

or are they all on some new form of mind-altering substance that is extremely potent but not yet illegal?

First, we have the provincial Conservatives spouting grand conspiracy theories.

Then, we hear that the federal Conservative leader is engaged in a long term political campaign not to introduce new ideas in politics and improve the country but to destroy a rival political party.  This according to Tom Flanagan, the former Harper chief of staff who has gone back to Calgary to teach political science..

These guys must be on something that makes crack cocaine feel like a pipeful of Cream of the West.

Stephen Harper is a superior campaigner, apparently.  Now that one has likely got people rolling on the floor from coast to coast, including people who aren't Liberal supporters.

Compared to who?

Ed Broadbent?

Jack Layton?

Kim Campbell?

John Turner?

Then there's this gem of a quote:

“You can fight a war with some objective less than total victory,” he [Flanagan] said of the coming campaign.

That sounds like the vintage game theorist horse hooey that guys like Bob MacNamara used In Vietnam to just overwhelming success.

Like your humble e-scribbler said three years ago, game theory is to strategy as Intelligent Design is to science.

Next thing ya know, someone will be telling us that Harper proved with geometric logic that there was a duplicate key to the wardroom icebox where the strawberries were kept.

You can hear the clacking of the ball bearings at 24 Sussex from here.

-srbp-

Oram blames Danny for JSS cancellation

When Newfoundland and Labrador becomes the focal point and our shipyard becomes seemingly the best and only shipyard that can be used to do this particular contract, all of a sudden they first talk about going offshore and now they decide to cancel the project.  There is something going wrong somewhere.

"Something wrong with JSS contract, Oram says", Telegram, Tuesday, 25 August 2008

Newfoundland and Labrador business minister Paul Oram is blaming the strained relationship between his boss and the Prime Minister for the federal government's decision to scrap the joint support ship contract.

Premier Danny Williams said much the same thing in a radio talk show Tuesday.

Now of course that isn't what they meant, but, in truth, the very notion that the federal government would deliberately scrap an important contract because Danny and Steve don't get along is ludicrous in itself.  Silly as the thought is, both ministers offered it up to news media with a completely straight face.

In the Telegram story quoted above, Oram related a conversation he claims to have had with federal industry minister Jim Prentice while both ministers attended the Farnborough air show in July.  In the conversation, Prentice reportedly said that the federal government was considering having the hulls built outside Canada and the topsides and other fitting out work done in the country.

That part of the story is likely accurate since it jives with media reports that predate Oram's junket to the world's premiere air show. Oram would have had those reports long before Farnborough if his media clipping service and Our Man in a Blue Line Cab were doing their jobs.

Ottawa Citizen defence columnist David Pugliese reported in late May that both finalist shipyards had advised government they could produce only two of the three required ships for the $2.9 billion budgeted by treasury board for the project.

Pugliese blogged in early August that National Defence was examining a number of alternatives, including building the ships overseas.  That was seen at the time as politically unpalatable given that two shipyards in the country were technically capable of doing the work.

That's where Oram's account of the Prentice exchange and the likely one start to diverge.  While Oram claims the offshore option was considered because yards couldn't do the work, the thread that runs consistently through the story - and the one devoid of the political silliness Oram was trying to flog - is that there was enough money budgeted for either of the Canadian yards to be able to complete the project as tendered.

Big difference.

The joint support ships contract will likely come back and come back quickly since the vessels are needed urgently to replace the worn-out auxiliary oil replenishment vessels currently in service.  One of the consistent criticisms of the project is that the ships were supposed to do too many jobs for one hull.

In addition to providing logistics support for deployed naval forces (food, fuel and ammunition resupply), the JSS was supposed to serve as a transport ship capable of carrying an infantry company plus equipment to an overseas deployment.  At one point, the navy reportedly considered leasing a mothballed American amphibious assault ship for army support role while building conventional stores ships to replace the existing vessels.

There's no question these ships are needed, no matter what the configuration involved. Whatever the reason, the project was dealt a serious blow with the cancellation.  Coupled with the reported financial problems inside the current federal administration, it may not be back on track for some time to come.  In the meantime, the existing hulls will reach the end of the workable life in 2012. 

Something needs to be sorted out and sorted soon.

That will likely need to be done by federal politicians.

This contract may well serve voters as a good test to use when sorting through their federal candidates in the next election. If they are toeing a line - especially the childish ABC one - it might be an idea to leave them on the bench and look for a better alternative.

Unfortunately, the provincial government - through administrations of all stripes - doesn't seem to understand either the importance of defence industries to the provincial economy or what it takes to be effective in dealing with the federal government on defence issues.  Oram's not the first provincial cabinet minister to make asinine comments and sadly he likely won't be the last.

When politicians leap into complex issues they clearly know nothing about - as Oram clearly doesn't - they only serve to bugger up the works at worst or get ignored at best.

The men and women of the Canadian Forces, a great many of them from this province,  can do without that kind of "help".

The men and women of businesses like Marystown can do without it as well.

-srbp-

Government considering subsidies to private sector businesses

The provincial government is considering subsidizing air travel for people owning property in western Newfoundland but living outside Canada.

The idea of discount air travel using public money has been around for some time but has picked up momentum as Humber Valley Resort restructures and withdraws from tourism activity.  Currently, the resort offers its property owners a subsidized direct flight between the United Kingdom and Deer Lake. The resort won't be continuing the subsidized air travel for its property owners.

International commercial air travel is currently available to the island's west coast through connections in Toronto, St. John's, Halifax and Montreal.

A summer service by Air Canada between London (Gatwick) and St. John's was canceled after Astraeus Airlines - which then operated the private charter flights to the resort - introduced a stop in St. John's to challenge what was already a weak intercontinental market out of St. John's. Astraeus canceled its St. John's to Gatwick flight as well citing low business volume.

A west coast lobby group - Humber Direct-Air  - is looking at ways of providing the subsidy currently covered by Humber Valley Resort using other funds, apparently including a source that isn't the public till.

The lobby group includes west coast businesses, as well as the Deer lake airport authority head and a representative of Humber Valley Resort.

-srbp-

At the fictitious shareholders meeting...

Surely your humble e-scribbler is not the only one to notice that the provincial government is regarded by natural resources minister Kathy Dunderdale and her colleagues as a business venture.

Well, surely you've noticed that since 2007 (and a comfortable stranglehold on democracy, the ruling Conservatives have shown themselves to be nothing like the spitting and spewing populists they were.  Stephenville and Abitibi are but a dim memory.

So anyway so let's carry on with the delusion of some that this province is run by ProvGovCo, a wholly owned subsidiary of DW Enterprises.

Let's also imagine that there is an imaginary stockholders meeting in which all of us with shares in this little escapade get to put questions to the senior management.  Basically, this is cable Atlantic where four guys ran the whole thing.  This is more like ExxonMobil where even the lowliest shareholder can grill The Suits at least once a year.  Surely if its good enough for Big Oil it should be good enough for Big Oil's newest big buddies.
Anyway, there are a couple of fairly simple questions about AbitibiBowater and the provincial government's subsidies over the past couple of years.  Dunderdale puts it at $20 million.  The figure is likely more like $30 million, based on earlier comments, but the $20 million is a good starting point.

1. How much is the provincial government subsidizing the paper mills at Grand Falls and Corner Brook, annually?  Break it down by mill, and by the purpose of the subsidy.  Go back a decade so we can see any trends.
2. How much does the provincial government make every year from the mills in the forms of taxes, leases, rents, including income taxes and sales taxes resulting from mill activity?  Break it down, again, by category and amount and go back at least a decade to see what the trends have been.

That's pretty basic stuff.

No one should hold his breath expecting any answers, at least without forking over cash.

-srbp-

The Obama-Kinnock ticket

For political junkies, there is no such thing as rehab.

There is only the perpetual fix from news media.  No hit is more delicious and intoxicating than the ones that come from an American presidential campaign. 

Political junkies do not really need their own works.  The entire society is set up to deliver the drug to willing recipient. All news channels gave us something akin to coke. As if that wasn't enough, there came the political blogs, the crack cocaine of political addictions.

None of this, of course, is to make light of drug addiction and the havoc it wreaks on individuals, their families and societies.  It is simply a metaphor.  An apt one too, sometimes, considering what politics can do not only to the people caught up in it but their families and the people around them.

Such is the intensity of the political addiction of millions that way too freakin' early on a Saturday morning in late August, the world learned that Barack Obama- darling of certain media circles, presumptive Democratic Party presidential nominee and an intriguing potential president - selected the 65 year old senator from Delaware, Joseph Biden, as his vice-presidential running mate.

No dysfunctional New Yorker, despite the speculation, the hype and the supposedly sage advice from every corner.

No John Edwards, thanks in no small measure to Edwards' political electoral dysfunction resulting from a pair of old politicians disorder:  philandering and then fibbing about it.

Instead, we have Joe Biden.

The senior senator would add foreign policy depth and experience to the ticket, we are told.

The senior senator also brings with him some baggage of his own and it took not even 24 hours for the political junkies to remind us of Biden's theft - 21 years ago - of a speech by British Labour Party leader Neil Kinnock:

NEIL KINNOCK at Welsh Labour Party conference May 1987:

"Why am I the first Kinnock in a thousand generations to be able to get to university? Was it because our predecessors were thick? Does anybody really think that they didn't get what we had because they didn't have the talent or the strength or the endurance or the commitment? Of course not. It was because there was no platform upon which they could stand"

JOE BIDEN IN Sept 1987 during his first presidential campaign:

"Why is it that Joe Biden is the first in his family ever to go a university? Why is it that my wife... is the first in her family to ever go to college? Is it because our fathers and mothers were not bright? ...Is it because they didn't work hard? My ancestors who worked in the coal mines of northeast Pennsylvania and would come after 12 hours and play football for four hours? It's because they didn't have a platform on which to stand."

This excerpt doesn't give the full text of either speech.  Biden took Kinnock's references to hours of work and football and expanded the time involved in both. 

To the uninitiated, this might seem like trivia.  It may not be.  The revelation of one form of theft - plagiarism is the polite, intellectual name for it - led to digging for others. Altogether, the Kinnock theft scuttled Biden's presidential bid in 1987 once it was discovered and widely reported.

The Kinnock story is already making the rounds of American media and it is only a matter of time before youtube sprouts old video tape of Kinnock in full lyrical, Welsh flight married to the clunkier Biden version.  Political junkies can actually store up past benders and recycle them in a new binge.

Obama's already had a couple of Kinnock moments of his own.  One version is presented below.  There's a more detailed one in another youtube video.  About six months ago, some youtubers posted side by side clips of Obama and Massachusetts governor Deval Patrick.

Now there is a difference in the two cases.  Patrick is a strong Obama supporter and its another thing for two men who are politically tied in the same country to use each other's speeches.  Patrick and Obama might well be seen as merely representing two members of a political movement.

It is a different matter to swipe words from another politician in another country.

In the end, that may prove to be a distinction without being a difference. In a tight political race for the most important political job in the United States and arguably the biggest political job in the world, every possible fault, slip and foible will be highlighted.  Which one takes hold in the popular imagination is anyone's guess.

Incidentally, the Kinnock speech isn't on youtube.  Yet.

But other stuff is.

Like some of the savaging the Labour leader had at the hands of Spitting Image, the satirical television program.

let's see what use someone might make of this sort of stuff.

Williams and Harper use same comms approach

From David Pugliese's blog at the Ottawa Citizen, a description of the way DND Public Affairs has been turned from what Pugliese describes as one of the best media relations shops around to another of the drones.

Does any of this over-loaded, control-freakish information-manipulating, opaque (not transparent) silliness seem the vaguest bit familiar?

-srbp-

Navy support ships canned; Marystown in lurch

The federal government has scrapped plans to build three large supply and support vessels for the navy, saying the bids from two contending contractors were too high.

The shipyard at Marystown was part of one bidding consortium.

While some topsides fabrication for the Hebron project may go to Marystown, the modules likely to be built in the province are small and no where near as lucrative as the $3.0 billion Joint Support Ship contract.

The provincial government seemed to be signaling something was up two weeks ago when the Bull Arm fabrication site - soon to become a subsidiary of the Energy Corporation -  demanded immediate return of two large towers even though Bull Arm has no use for them in the foreseeable future.

Concern in Marystown led to a meeting between town leaders and energy minister Kathy Dunderdale that appeared to quiet the matter. 

Dunderdale used the Hebron project to threaten the shipyard and the community over the towers.  She said that the reluctance to return the fabrication stair towers from Marystown to Bull Arm would damage the Hebron negotiations and the prospect of future work. She made no effort to explain how the two might be linked, especially considering that the provincial government is a partner in the Hebron project and that its Bull Arm facility was the only site in the province where the gravity base structure could be built. 

Dunderdale also likely knew at the time of the public fracas that construction at Bull Arm for the Hebron gravity base would not begin until sometime after 2012.  One oil industry official told news media last week that concrete pours wouldn't begin at Bull Arm until 2013 or 2014.

The towers were originally built at Bull Arm for the Hibernia project at a cost of $8 million dollars. They were used at Bull Arm during outfitting of the Terra Nova floating production and storage vessel (FPSO) and by Marystown on the White Rose project's FPSO.

The Marystown yard is currently bidding on a refit of the Terra Nova FPSO. Bull Arm is apparently also bidding on the work.

In early August, community leaders noted that the government-owned Bull arm site already enjoyed a competitive advantage over the privately-owned Marystown shipyard. Marystown deputy Mayor Julie Mitchell:

suggested should Bull Arm need the infrastructure for a project, the matter might be different but, as of the moment the facility doesn't need the towers.

As it stands, she said companies who lease the Bull Arm site from government already have an unfair advantage over Kiewit when bidding for contracts. They don't have overhead costs, pay only a nominal rental fee and can walk away when the project is complete.

Kiewit has a bid placed on an upcoming Terra Nova project, with other companies that could potentially use the Bull Arm site also said to be in the running.

This week the provincial government also announced plans to convert the Bull Arm corporation into a subsidiary of the Crown-owned energy corporation.  As such,  Bull Arm will continue to enjoy significant cost and tax advantages over its private sector competitors while at the same time being entirely exempt from the public tender act.  It will also enjoy inside connections to the Hebron, Terra Nova, White Rose and Hibernia projects through the energy corporations work on White Rose and Hebron.

The Bull Arm company will be shielded from the province's open records laws under changes made to the energy corporation act in the spring sitting of the legislature.

In the House of Assembly last spring, Dunderdale used the prospect of other construction work - evidently including the JSS contract - to dismiss concerns about how much Hebron work would actually be done in the province once the deal was signed:

MS DUNDERDALE: Mr. Speaker, we are on the cusp of such development in this Province that we have never seen before in our history. We have a number of potential projects lined up here. Any one of them, any one of those projects, will fill up just about every bit of capacity we have in this Province.

As Bond Papers noted, government negotiators appeared to have operated under the mistaken assumption that major construction work in the province was all but guaranteed and that industrial capacity would be fully utilized. That would explain why last week's announcement of the final Hebron deal set minimums for local work rather than include the initial insistence that all work that could be done in the province would be done here.

The cancellation of the JSS contract follows on the failure of the NLRC second refinery proposal in June. The company is seeking investors for its failed bid and is currently operating under bankruptcy protection. A proposed natural gas terminal in Placentia Bay remains a proposal and the prospects of a Lower Churchill development are limited.

Of the projects to which Dunderdale referred, only the Vale Inco smelter-refinery at Long Harbour appears to be firm. Premier Danny Williams and Dunderdale jetted to Brazil last November to meet with Vale Inco officials about the project. 

Under the company's development agreement with the former Grimes administration, Vale Inco is contractually bound to build a smelter-refinery in the province.

-srbp-

Hebron project: less oil, higher cost, maybe less local work from MOU version

The Hebron project announced this week will focus on the estimated 581 million barrels of heavy crude of the Hebron structure itself at an estimated initial construction cost of CDN$5 -$CDN7 billion.

But that isn't what was on the table when the memorandum of understanding was announced a year ago.

The original memorandum of understanding included an additional 200 million barrels of light, sweet crude in the Ben Nevis and West Ben Nevis fields, adjacent to Hebron.

Both estimates of the oil contained in the fields came from official estimates by the Canada-Newfoundland and Labrador Offshore Petroleum Board.  They include both proven reserves as well as other resources which are believed to be present but which have not been delineated by further exploration and which may or may not be commercially recoverable. 

The lighter oil, which commands a higher price on world markets than its heavy relation could be developed by the private sector companies without government participation after the Hebron field is exhausted, and long after the capital costs have been recovered on the gravity-based system with substantial public sector subsidies. That would produce significantly higher profits for the companies, which could be gambling on a different political and global economic regime three decades from now.

That's not the only difference in the project as described in 2007 and 2008.

In 2007, the announcement included an estimated of  "development costs" over the anticipated 25 year life span of the project project as being between CDN$7 billion and CDN$11 billion.

The 2008 announcement only included estimates of between CDN$4 and CDN$6 billion for the construction phase.  It didn't mention the ongoing operational costs of the project nor the delineation and production drilling which must take place after oil is first produced, currently expected to be a decade from now.

In a preliminary assessment of provincial government financial costs for the project as announced this week, Bond Papers estimated the combined operations and delineation costs at CDN$10 billion over the life of the Hebron project.

The project start date has also been pushed back by two full years from the estimate in August 2007.  At that time the provincial government said "[f]ront-End Engineering and Design (FEED) could start within 18 months, meaning construction could commence as early 2010."

Construction is now forecast by the provincial government to start as early as 2012. The private sector companies were reluctant to commit to estimates.

There will also apparently be less work done in the province than originally indicated:

• The 2007 MOU announcement stated that "[a]ll fabrication work will be completed in the province, with the exception of the utilities/process module" with the caveat that the work was subject to "reasonable capacity and human resource availability".  Now the UPM will be built outside Newfoundland and Labrador and the large topsides fabrication components - the accommodations module, topsides drilling derrick and drilling support module - are subject to a "reasonable physical capacity" caveat.
• The amount of detailed engineering work to be done in the province for the gravity base has changed to provide a minimum of 50,000 hours compared with the earlier statement suggesting that all such work would occur in the province.
• Late front-end engineering and design work that must be done in the province is now restricted to those components built here.
• "Most FEED phase" GBS engineering has been changed to set a 50,000 hours.  There is no indication of the total anticipated amount of engineering to be done.  As with Terra Nova, project cost issues could reduce the amount of engineering work done in the province.
• A local procurement and contracting that was initially described as handling all procurement and contracting for the project, similar in concept to Hibernia Management and Development Corporation (HMDC) is now described simply as handling procurement and contracting activities. This could be confined to work done within the province, with other procurement and contracting done elsewhere.
• The project management office in the province must commit only to provide one million hours of project team activity in the province prior to first production.  That would be roughly equivalent to 50 people employed full time for 10 years or 100 people employed full-time for five years.

-srbp-

Welcome to the Hotel California, Hebron version

From the Friday Telegram, two examples of completely loopy comments, namely ones unsupported by fact.

First, the editorial on Hebron which states:

And because the province holds an equity position in Hebron, it will also have the chance to develop expertise in running an oilfield, which means employees won't only be welders and heavy-equipment operators, but will be managers, designers and engineers, too.

Now since the Telly-torialist has been following this project, he or she is aware that the equity interest in the project includes absolutely no management rights;  that is, there are no decision-making rights involved.

If that weren't enough, the managers, designers and engineers will not be employed by the provincial government's Ener Corp subsidiary.  The managers, designers and engineers are employed by the major players or the private sector contractors doing the work.

And if even all that weren't true, the Telly-torialist need only have read a news story which moved late yesterday afternoon and which is a front page story in the print edition of the Friday paper:

The ink has barely dried on the Hebron deal and a change of operators is taking place - ExxonMobil Canada will be the new lead partner among the five companies developing the oilfield.

Managing Hebron is not going to be a job rotating among the interest holders.

Nope.

Chevron was doing that job.

As of yesterday, ExxonMobil is slipping into the lead.

Second, there's a column by Brian Jones, one of the Telly's editors:

The province's political culture has also evolved, along with people's taste in wheels. The offshore oil debate used to revolve around royalties, a word seldom used by politicians in the 1990s. Despite lacklustre leadership, people became aware of the fact that, as owners, the public deserved a better share of offshore oil revenue.

Wednesday's Hebron announcement revealed that the provincial government will rake in about $28 billion, via royalties, taxes and profits.

The government will rake in $28 billion.

No question.

Definitely.

The problem for Jones is that, as he well knows, the $28 billion figure is based on the assumption that from 2018 until the last drop of oil is drained from Hebron, the price of a barrel of oil will average US$115.

With that kind of writing, Pollyanna must be on suicide watch.

Brian needs to check on both the average price of oil over the past 25 years and the typical price of a barrel. Let's just say that the number you come up with in either case is nowhere near one hundred and fifteen bucks.

Perhaps he is thinking the world price of oil will  be expressed in Weimar marks or Zimbabwe dollars, the latter of which has been valued against the American dollar at exchange rates that make the thing literally not worth the paper its printed on.

Such unsubstantiated commentary.

We really haven't had that spirit here since 1969.

 

-srbp-

Risky business: prov gov to increase public debt to pay for Hebron

Serial	Item	Description	Amount	Funding source
1.	Equity interest		$110 million	Paid from FY 2007 general revenue
2.	Capital  Expenditure	4.9% X $6.0 billion	$294 million	Increased public debt
3.	Operating Expenditure	4.9% X $10 billion	$490 million	Likely increased public debt,  at least until sometime after first oil
4.	Liability guarantee	Construction phase only	$250 million	Increased public debt?
5.	Sub-total	Sum 1 - 4	$1.193 billion
6.	Liability	Operational phase	Unknown	Increased public debt

 

Notes (Information on news release, plus media coverage):

• Capital expenditure (capex: construction phase costs) to be undertaken by subsidiary of Ener Corp - called OilCo in government materials - through borrowing guaranteed by public treasury.
• Actual capex is currently unknown, but estimated to be between $4.0 and $6.0 billion.
• The government backgrounder makes no mention of operations expenditures (opex: post first oil operating costs). Presumably these costs will be met through increased public debt.  (Government Ener Corp borrowing, with government guarantee.)
• Original equity interest purchased out of government general revenue. The most likely source of cash to meet all other costs is government-backed borrowing.
• Construction to begin "as early as" 2012 (Premier's remarks to media).  This is a minimum, not a maximum.  Construction may be delayed for currently unknown reasons.  Company representatives discussed firming up capex estimates over next few years.
• The term liability guarantee is unusual in the context of referring to a maximum cost of $250 million. It is unclear what this means. It does not necessarily mean that somehow OilCo and the provincial government have a limited liaibility for costs. If that was the case, then the backgrounder would have stated that the liability was limited to a maximum of $250 million.  This appears to be less an issue of liability than a promise that liability will be assumed/accepted by government, along with some associated fee, deposit or other sum that signifies the guarantee or a fee for providing the guarantee (Oilco to prov gov). 
• Whatever it is, the figure of $250 million is not the only amount associated with liability. The government backgrounder gives very little discussion of liability at all. For example, there is no discussion of liability exposure during the operational phase, for example.

-srbp- 

Buy this book. Feel good. Eat well. Help people.

Recipes of the Labrador

"It's a cookbook in aid of the Children's Wish Foundation of Canada put together by our volunteers in L'anse Au Loup. The cookbook is just $5.00 available at our office and includes many great recipes. The cost of postage and handling is $10.00 if you would like one mailed to you.

The cookbook is in memory of Paula Normore who passed away after a snowmobile accident at age 14."

"Our offices" would be the Children's Wish Foundation, Newfoundland and Labrador.

-srbp-

Hebron announcement notes

1.  ExxonMobil drove the bus.

Well, when it comes to project timings the big player called the shots.

The companies were ready to rumble in 2006 but the disagreement put this project firmly in the pile for sometime after 2012. 

ExxonMobil never wavered from that lead-time.

They confirmed it as recently as March.

2.  How much is that doggie in the window? 

Well, how much is a pig in a poke?

The Telegram and the Mighty Ceeb fell all over themselves today with the supposed cash value of the Hebron deal at $28 billion.  Aside:  Could David Cochrane have been any more excited today hosting "On the Go"? Second aside:  Yes, the Telly's been known to endorse big deals before.

That number is bogus, though, just as Cochrane and all the others well know since - like every other cash comparison figure and any cash valuation of this project (aside from construction costs) - the numbers are pulled from the nearest bodily orifice.

The $28 billion figure tossed around today assumes an average price of crude oil between 2018 (first oil) and 2043 (project termination) of US$112 or so per barrel.  Not even the oil companies are investing based on those sorts of airy-fairy projections.  

The $20 billion figure also tossed around on Wednesday used an assumed price of oil of US$87 over the same time period.

Wade Locke projected $10 billion over the same time span using an assumed price of US$50 a barrel.  And before anyone steps in to note the words super-royalty, let us all be reminded that the super-royalty applies only when oil remains above US$50 a barrel for West Texas Intermediate.

Do the math yourself. 

What is the average price of oil over the past 25 years?

What's been the usual price of oil over that time period, as opposed to the average price?

Now take another look at the Hebron projections.

Put it another way:  when the Hibernia deal was signed in September 1990, oil prices were as low as they could have been foreseen and were foreseen.  Within two years oil was at US$8 a barrel.  Only a few years earlier, it had been forecast to attain and stay above US$100 a barrel.

The project was assumed to be a total loser when it was started;  that is, the government never expected the project to hit payout.  As it is, Hibernia will generate in excess of $14 billion in provincial government revenues over its entire life span.  The government figures today deliberately low-balled Hibernia, Terra Nova and White Rose in order to hype the Hebron stock.

The project is going ahead;  that's good.  What it's worth to the provincial treasury will only be known at some distant point in the future.

3.  A Hebron exclusive they won't discuss.

Hebron is first oil project offshore Newfoundland and Labrador that will start construction four years after a development agreement was reached with the provincial government.

Hibernia, Terra Nova and White Rose all started construction within months of the signing.

4.  So how much work will be done in the province?

Safest bet is the bare minimum committed.

The provincial government negotiating team seems to have operated on the assumption that it didn't need to lock down all possible local construction  - an earlier political commitment - since the NLRC refinery and two other projects would be sucking up the labour pool at the same time.

By the time that assumption was proven to be pretty stunned, it was too late.

The gravity base and its associated piping will be done here, along with a few other bits of simple welding like the helideck, the lifeboat rigging and the flare boom.

By the time this project starts construction - some time after 2012 - there may well be a deepening of the current global labour shortage.  Any local construction workers currently in Alberta will be even more wedded to that economy than they are now making it unlikely the "homing pigeons" will be homing. Four years from now, the labour market locally will be smaller and older than it currently is.

Add it all together and you can see that it's highly likely some shipyard in Mississippi or Korea will be slamming the topsides together for Hebron.

5.  And what about the royalty regime?

Bond Papers already went through it, in spades:

•  The preliminary assessment
•  The second look (it didn't get better)
•  The lower royalty regime
• Wider implications  (As it turns out, the provincial government will be spending cash until 2018.  That's something that never occurred on a project before.  Oil production from the other projects will decline over the next decade, despite expansion of existing fields.  That means lower government revenues. At the same time, an aging population will cause increased pressure on health care spending. The whole thing makes for a difficult strategic mix, one made all the more problematic considering that revenues are tied to the price of oil which turn out to be much lower in the 2020s and 2030s than the assumptions used as the basis for this agreement)

-srbp-

"counter-spinning negativity"

Now, by any logical process, in order for there to be counter-spin, there has to be spin first.

This is not a chicken and egg thing;  very simply put, nothing can be counteracted unless it exists.

And you will likely recall that spin is another word for hype, bullshit and lies.

So if we take this phrase  - uttered by the Premier back in April - based on the meaning of the words, counter-spin would be a positive action in that it is intended to dispel hype, bullshit, lies, half-truths and other forms of misrepresentation and even outright deception contained in whatever spin existed in the first place.

Yet the positive action of dispelling falsehood is somehow negative?

What an odd notion.

And what a truly queer idea:  that a government so overwhelmingly popular might be somehow deflected from its mighty accomplishments by concerns for what must surely be  - given the almighty popularity of the government  - entirely without any impact at all.

-srbp-