Danny's latest pissing match

From the December 19 Financial Post, comes a commentary by Claudia Cattaneo, the Post's Calgary Bureau Chief. There's a link to it, but for posterity, we are reproducing the whole thing below.

After that, you'll find Danny Williams' rejoinder published in the January 3 edition of the venerable Canadian business journal. It's pretty interesting to read Williams' letter since it actually doesn't address the points Cattaneo makes. There are a few Bond Papers' comments in square brackets but don't let those distract you from the main articles.

Or his sentences.

Fragments actually.

Lots of them.

Danny Williams [left, not exactly as illustrated] must have kidneys of superhumanly freakish size for all the pissing he does.

Cattaneo's comments are accurate, reflecting an understanding of Williams' position, recent comments by one of Hydro's senior officials and - to be sure - the view of the oil and gas industry with whom Williams would have to work if offshore oil and gas resources are to be developed. Unfortunately, Cattaneo's understanding doesn't conform to the Premier's year-end puffery. So he claims she is uninformed and in the back pocket of Big Oil.

We've heard it all before.

Anyway, for the record, here's the original article followed by the Premier's comments, all part of the Premier's latest pissing match.

One last thing: Danny Williams' is right about one thing: inaccurate, selective and uniformed commentary is completely unproductive and does a disservice to everyone. Too bad the Premier is most often the one providing such comment.

You could've been a contender
Comment
Claudia Cattaneo, Financial Post
Published: Tuesday, December 19, 2006

Right about now, if Danny Williams, the Premier of Newfoundland and Labrador, hadn't played Russian roulette with Big Oil -- and lost -- the Hebron Ben Nevis heavy-oil project would be hiring hundreds of people and writing cheques with nine zeroes.

The Hibernia offshore oil project, Newfoundland's first and mightiest, would be looking forward to many more years of steady production volumes, thanks to the discovery of an extension in the southern edge of the field. [BP note: see, for example, "Waiting for the other shoe".]

Yet partners are facing a rapid decline next year, apparently handcuffed because the Tory Premier wants a better deal on the new reserves.

It's a similar situation with Husky Energy Inc., which were it not for Tory obstinance, would now be beavering away to develop the 2.3 trillion cubic feet of gas reserves associated with the White Rose oil project. [BP note: This comment is a bit overblown. A natural gas royalty regime has been under development since the late 1990s. In April 2006, Husky indicated it would be shelving plans to develop White Rose gas until the gas royalty regime is issued.]

Instead, thousands of Newfoundlanders are leaving to work in oil projects in Alberta. The exodus is so huge the shock to the provincial economy has been compared to the collapse of the cod fishery.

But Mr. Williams continues to stick to his guns. The province is expected to unveil an energy plan early in the new year that will bring back government ownership and control of oil and gas resources in Canada for the first time since the 1980 National Energy Program.

One the greatest fears is that the plan will mandate equity ownership in oil projects by the province without contributing capital. The plan may also include a generic natural-gas royalty regime. Depending on the terms -- and there are few hints on what they may be -- it will either encourage production of vast natural-gas finds, or keep them idle. [BP note: The Premier has stated several times over the past year that the energy plan will include a natural gas royalty regime.]

Mr. Williams' approach has wide appeal in Newfoundland, where bashing arrogant Big Oil garners votes and the common view is that the province got a raw deal on Hibernia, as oil companies underplayed its potential to squeeze the best possible terms.

Mr. Williams believes the plan will turn his province into an even greater energy producer by putting the government in the driver's seat and ensure it gets a fairer share. Most likely, it will keep Newfoundland an energy wannabe.

A presentation last month by Jim Keating, vice-president of business development at Newfoundland and Labrador Hydro Corp., the provincial Crown corporation through which Mr. Williams is expected to drive his oil-and-gas agenda, is seen by Canada's oil industry as signalling where the Premier is going.

The presentation notes:

- That many other governments get a bigger share from their oil riches than Newfoundland.

- Government-controlled entities are common in the sector globally, with 88% of reserves under government control.

- The global trend is for a greater government take from oil and gas projects and highlights energy- producing countries such as Russia, which has increased royalty and export duty rates; Algeria, which has introduced a windfall profits tax and is increasing state equity; Venezuela, which has increased royalty, tax and state equity rates; Ecuador, which has introduced a windfall profits tax; and Bolivia, which increased the royalty rate and nationalized assets.

The speech, given at Memorial University in St. John's, praises the benefits of government ownership and control, such as ensuring greater knowledge and influence over the industry while ensuring development of long-ignored resources. [BP note: Several people who attended the session and some who heard a similar speech delivered by Hydro chief executive officer Ed Martin at the St. John's Board of Trade offered an observation similar to Cattaneo's.]

It's hardly the type of thinking that makes oil types want to drop what they are doing and flock to the area. Already, their experience with Hebron, and now expectations that a new standoff is brewing with the province over development of Hibernia's south extension, has dampened any enthusiasm they had left.

Global trends such as increased government take and ownership have largely scared off foreign investment, increased government corruption, and frustrated oil-and-gas sector development.

In Canada, past government ownership of oil and gas resources, through entities such as Petro-Canada, is widely seen as failed government policy that cost taxpayers dearly.

With estimated reserves of 2.7 billion barrels of oil and 10.2 trillion cubic feet of natural gas buried off its coasts, Newfoundland has significant holdings. Yet they're modest by world standard and hard to get to.

Mr. Williams' confrontational style doesn't make him the type of partner oil companies would welcome.

If Mr. Williams moves forward, the predictable outcome is that exploration activity will remain significantly below potential despite high energy prices, there will be no new projects and current daily production of about 300,000 barrels of oil a day will start to decline next year.

The sad part is that Mr. Williams is so popular that Newfoundlanders -- at least those who haven't left for Alberta -- seem to be buying into his views. He should let them know that his high-risk strategy could cause their oil industry to unravel, and that they would be the big losers, not Exxon Mobil Corp.

Financial Post ccattaneo@nationalpost.com

-30-

We will not be bullied
Financial Post, January 3, 2007


Re: You Could Have Been A Contender, Claudia Cattaneo, Dec. 19.

The uninformed, superior attitude of certain commentators never ceases to amaze me. Claudia Cattaneo's article entitled "You could have been a contender" is condescending to the people of my province, to me personally, and frankly your readers should be equally insulted. Her complete lack of understanding of the facts is somewhat astonishing, especially considering she is generally quite knowledgeable on the facts of the oil-and-gas industry. But perhaps her proximity to the oil companies in Alberta has skewed her objectivity. I certainly hope this is not the case. In any event, let me correct some of the impressions left by her unfortunate commentary.

First of all, I would like for Ms. Cattaneo to explain to me how "Tory obstinance" is blocking the development of Husky Energy's natural gas development. This government is in the process of consulting with industry to implement a fair and reasonable natural gas royalty regime. I make no apologies to her for ensuring we do this in a proper, timely fashion. I do not have the luxury of having no one to answer to -- rather, I have many future generations of Newfoundlanders and Labradorians relying upon our government to ensure we get a fair return on our resources. [BP note: The natural gas royalty regime has been under development since the late 1990s. It was supposed to be released, along with the energy plan last year. That would hardly qualify as "proper, timely fashion."]

Furthermore, Ms. Cattaneo's assertion that our government is looking for equity without contributing capital is wrong. During our negotiations on the Hebron development, we were quote willing to pay for our equity position. And a minor equity position at only 4.9%. A very fair and reasonable position, considering some other jurisdictions regulations. [BP Note: Premier Williams deliberately confuses his claims about what was involved in the Hebron discussion with Cattaneo's references to what some people believe may be in the energy plan.] It is ironic that on the very day this "commentary" appeared the news reported the merger of Stat Oil and Norsk Hydro -- the Norwegian government will hold 62.5% of the merged company, and its Prime Minister said he would seek parliament's approval to increase the state's share to 67%. I don't think there will be an exodus of companies leaving the Norwegian shelf as a result of greater government ownership. Fine for Norway, but I guess Ms. Cattaneo doesn't see such benefits as befitting Canada or my province. Which leads to another point.

Ms. Cattaneo selectively uses excerpts from a presentation made by an official from Newfoundland and Labrador Hydro. In so doing, she tries to paint our government as comparable to Algeria, Bolivia and Russia. What she fails to point out is that in fact we are looking for a greater return on our projects, as other jurisdictions have. Her selective examples are the extremes. She conveniently fails to mention the other examples of increasing fiscal terms that are closer to home-- the United States, the U.K., Norway and, yes, Alberta. We are seeking arrangements on the development of projects on a just and reasonable basis. [BP note: Bond Papers has previously noted the misrepresentations repeated here by the Premier. For example, the American offshore taxation regime on some properties, even after increase, would still not be as lucrative as the Newfoundland and Labrador regime. In Alberta, the province is seeking a modest increase in its royalty on tar sands. For a discussion of some factors affecting Newfoundland and Labrador's economic future see here.]

Inaccurate, selective and uninformed commentary, such as provided by Ms. Cattaneo, is completely unproductive. It does a disservice to the people of my province, and indeed to the people of Canada who as well will all serve to benefit greatly from our offshore development. But I can assure Ms. Cattaneo and the oil companies she so valiantly supports that our government will not be bullied into making decisions that are not in the best interest of our people. We are not unreasonable; we are not selfish or irrational. We are, in fact, looking to work together for everyone's mutual benefit and develop our industry in a manner that returns to the people some of the benefit they so richly deserve.

Danny Williams, QC, Premier of Newfoundland and Labrador.

RCMP Conduct Questioned

Royal Canadian Mounted Police may have apologised to a woman held naked for two days in a detention cell, but media reports today give no indication the national police force understands the gravity of the problem.

Inspector Greg Bursey did apologise, telling CBC:

"I'm sorry she felt that she was mistreated in any way or put through any undue hardship, but certainly there was no intent," Bursey said.

"I'm satisfied that within reason that it shouldn't happen again."

The woman was held in a cell stripped of mattress and bedding pending her court appearance and after the woman had reportedly threatened to harm herself. The secure holding room at the hospital in Happy Valley-Goose Bay was occupied and the RCMP constable involved in the case elected to take the woman back to the RCMP cells rather than admit the woman to hospital.

But take a close look at Inspector Bursey's comment. He is sorry the woman felt she was mistreated; he wasn't sorry she was mistreated even though - on the face of it - she was. It is unconscionable that anyone under any circumstances would be detained by police under such conditions for any period of time, let alone 48 hours.

It is irrelevant that the individual involved was a woman. Being held in custody naked is unacceptable, full stop.

Other means could have been used to ensure the woman could not harm herself while under arrest. It may well be that the constable in question did not intend to cause the arrested woman harm or difficulty however, there seems to have been a complete lack of consideration given to the circumstances in which the woman was being detained.

If there was no intent, as Inspector Bursey states, there was certainly an unacceptable consequence that came as a direct result of the Constable's actions or inactions. The constable's apparent indifference, lack of compassion, thought or insensitivity seems as much a cause for concern as it would have been had she taken a baton and beaten the woman unconscious.

The police have considerable powers and once an individual is taken in custody, police have an equally considerable responsibility to provide for the care of the detained individual.

The people of the province are owed a much more substantive explanation than the one offered thus far by the national police service on this matter.

We are also owed a more detailed accounting of what has occurred and what steps have been taken to ensure police officers employ some common sense when on the job. Your humble e-scribbler knows a goodly number of police officers and has always found them to be competent and professional. The actions here seem highly unusual. Nevertheless, the public are owed a full explanation.

Asked about the potential of such an occurrence two years ago, Inspector Bursey might have said that "within reason" it shouldn't happen at all. Clearly, telling us that "within reason" it is not likely to occur again is no comfort at all.

It is little better than a five dollar surplus army blanket tossed to a naked prisoner in a cell.

When all else fails, start a new blog

Another moment of trying to keep from putting the car in the ditch this morning as Open Line Show host Randy Simms chatted with talk show maven Sue about her new blog.

That would make four at last count, two of which are deader than 286 processors. The rant-fest that seems to have lasted the longest of the lot features heavily-censored comments as part of the great dialogue. Of course no comments get through that criticize her conclusions or point out the wild inaccuracies of some of her claims.

But I digress.

Randy called Sue to talk about her blog which will supposedly focus on the upcoming federal election. Sue claimed one of the big issues will be the so-called fiscal imbalance. As she built her argument, Sue claimed that Stephen Harper was busily trying to placate Ontario and Quebec.

Now that's where things got hilarious and your humbler e-scribbler had to wipe the tears of laughter from his eyes all the while keeping the car on the road.

During the last federal election, Sue was shilling for the Connies, especially Loyola Hearn. She even turned up on Harper's advance bus at one point, but she spent most of her spare time calling every open line show available.

Part of her great rationale for loving Steve Harper was that the Conservatives would not have the bulk of their seats in Ontario and Quebec and therefore provinces like Newfoundland and Labrador would have greater sway.

Here at Bond Papers, we pointed out that this was nonsense.

We also pointed out that Loyola Hearn - currently the federal fish minister - had a nasty habit of saying one thing in order to get elected but would sing a completely different song once he was safely sworn to the Privy Council.

We stand by our observations.

On a completely different note, Simms' latest ratings numbers are worth checking out. His show is solid and he suffers no fools gladly, all of which goes to explain to the high numbers Open Line has been pulling. Liberals claim he's a Tory; Tories claim he's a Liberal.

People who listen to Randy Simms know that he is both knowledgeable and fair.

The fact he pisses everyone off equally is testament to that.

Ultimately, though, who cares since Randy's numbers are such that Harry Steele would be nuts to change the show one bit.

______________________

Update: Keeping track of Sue blogs would be like trying to keep track of which political parties she's supported over the years.

Let's see:

There's Sue's Rant which still raves on. There's the new election blog which may or may not last until the writ is dropped. Since most political commentary happens on established blogs, it would be kinda strange for everyone to suddenly switch to yet another site to discuss things already being discussed somewhere else.

Then there's Sue's News which looked like it was supposed to replace the Rant. That struggled through August, September and October before it finally expired. You can still find it listed on the NL Blogroll.

Shortly after the last election, after she figured out her political prognostication was piffle, Sue tried a recall Harper blog. That died much like the entire recall campaign since, in Canadian politics, there is no recall mechanism for politicians at the federal level. Of course outside, Newfoundland and Labrador, no one had heard of Sue so there was no particular reason for the nonsense to get any traction.

Before that, there was a Lower Churchill blog that died after one extremely long meandering post dated in September 2005. It too still sits out there on the blogroll, collecting comments, mostly anonymous or automated ads. Suitably enough the first comment it received was a spam about gastric bypass.

That would make five, if we have accounted for all the incarnations that have been out there.

That doesn't include the odd anony-blog that looked suspiciously like Sue's style. Like say the Pink, White and Green which has been dead since last September after only a couple of month's of Sue-esque potshots.

Do they think before they speak?

1. Loyola "Rain Man" Sullivan, trying desperately to crush rumours that he and Danny had a tiff: "I haven't had any, you know, pressures or interferences in doing my job from the premier or anybody in there."

A finance minister that just went to work, did his job and never felt any pressure from anyone on anything.

Utter nonsense like that claim can hardly dispel the rumours, caused by Sullivan's own "f u" to Danny on the way out.

How many times have they been on completely opposite sides of issues now, including the day Loyola walked?

2. Liberal party president Danny Dumaresque, commenting on getting ready for the next provincial election. vocm.com attributes this to him: "He says the Districts of Kilbride and Ferryland have been in Tory hands for more than 30 years. Dumaresque says even when the Liberals were in power, there wasn't a lot of interest in those areas."

Even if it was true, you wouldn't admit it.

Since Dumaresque said something completely different only a few weeks ago, this line just fuels the Tories' confidence. It fuels the perception that the Liberals don't stand a chance or worse, that the party executive has already written off a raft of seats.

Look for the Other Danny to quickly move to dispel any misperceptions resulting from comments he shouldn't have made.

'007: Year of Bond

Thanks to Ted Blades of CBC Radio's On the Go for that little gem.

He was referring to James Bond.

Around here, we'd have a different idea.

"Bond. Robert Bond."

But hey, we like the sound of it: The Year of Bond!

Since January 3 marks the second anniversary of Bond Papers (1560 posts later), Ted's observation came just in time.

Christmas money

In December, the provincial government announced cash for a number of projects.

1. Public Service Pension Plan. Then-finance minister Loyola Sullivan announced the provincial government borrowed $400 million to address the unfunded liability in the provincial public service pension plan (PSPP). The money was borrowed at 4.5% interest over a 30 year term.

The news release on December 6 mentioned another unspecified amount would be borrowed before the end of the fiscal year (31 March 2007)

It will be interesting to see if the provincial government carries out the planned borrowing and, if so, what the amount will be.

2. Economic development. InTRD minister Trevor Taylor announced money on December 28 for economic development, disbursed from a $5.0 million fund already established.

About $12, 000 will be spent to conduct a test fishery on shark-catching as a tourism venture. This sounds great as a tourism idea but as an environmentally-sensitive project it seems a bit dodgy. Shark fishing may attract anglers, but there is no indication if the sharks are dumped - inevitably dead - back into the ocean or if there has been any thought given to use the shark flesh for any type of subsequent commercial use.

Taylor also announced the province would drop the princely sum of $1875 - yes, that's all the digits, Virginia - into a study on using water from Gisborne Lake as a source for bottled water. As the release put it:

The [local development] association hopes that by making available details of the lake and the surrounding infrastructure, local development officers will be able to use the study as a prospectus to attract businesses to the area to develop a local water bottling industry.

Like no one has thought of Gisborne Lake for such a purpose before. The last time out, a private-sector venture foundered over concerns about impact exporting water in bulk from Gisborne Lake would have on water under the North American Free Trade Agreement. The federal government eventually banned bulk exports of water in 1999. The provincial government joined in but talked about lifting its own ban in 2001.

The general characteristics of the lake are well known, so one must wonder why the provincial government must spend any cash at all on this venture. In 1998, then-opposition critic Tom Osborne questioned the bulk export proposal but indicated his party favoured bottling water for export.

Fair enough.

But there just doesn't seem to be a demand for exporting bottled water. If there was, surely someone would have invested in it by now.

If that wasn't enough, there are always the environmental and ethical issues now being raised about bottled drinking water.

Maybe there are good reasons why the provincial government is investing such a paltry sum. Of course, that still wouldn't explain the tardiness of the Williams' bunch from bringing forward the sustainable development act mentioned in the infamous Blue Book. The new legislation was to be a major accomplishment of the first term.

Back in 2003, Danny Williams believed there was "a brief window of opportunity to legislate a balanced development strategy for this Province that protects water resources, assures fair benefits for the Province, and provides a hospitable and competitive environment for investors."

Williams categorically rejected bulk exports but did commit that:

We will legislate a water resource development strategy that adheres to the following principles:

* Sound management and sustainable development of fresh water resources.

* Development of a fully integrated water resource industry, which includes value-added processing in the Province.

* A fair regime for assessing royalties and taxes, procurement of goods and services in the Province, and first consideration for Newfoundlanders and Labradorians in employment and related training.

* Promotion of local ownership and local investment in the development of the primary resource and related industries.

When these policies are enshrined in law and their intent expressed in every government-industry agreement to develop our water resources, this Province and businesses in this Province will have the opportunity to become global players in what may well become the most important resource industry in the world.

There is still time. If Danny and his cabinet get busy they have 10 months to deliver.

Sullivan spec update

As one might expect, New Year's parties across the province were abuzz with speculation about Loyola Sullivan's surprise resignation on Friday.

The one thing everyone agreed on: his official reasons are bogus.

The weekend spec ranged from Loyola is running to replace Norm Doyle as Connie member of parliament in St. John's North to spec that Loyola will be replacing the Other Loyola in St. John's South Mount Pearl.

Possibly... but there was no reason to resign so abruptly if that was the goal. If - and it is a big if - Rain Man wants to head for Ottawa, he'll do that as a separate issue from his surprising resignation from cabinet and the House of Assembly.

Some other speculation held that Loyola's name will turn up prominently in future House of Assembly reports.

Again, possibly.

But that issue wouldn't require his resignation in the middle of the holidays.

Nope.

So far, the speculation hasn't been able to come up with a plausible explanation for the dramatic departure which even Danny Williams admitted caught him by surprise. Yes, the man who stated relentlessly that he respected Loyola got one up the political back passage. And on the other side, the guy who insisted his relationship with the Boss was great, managed to leave office in the way calculated to fuck up The Boss big time.

Yessirree. A phone call at 10 o'clock the night before to say little more than: "Danny, boy... I am blowin' this popsicle stand and you have less than 12 hours to figure out how to cope with it".

Sod you, mate.

Surprised Loyola didn't flip Dan the electronic finger via crackberry, in the manner common among young people these days who find their current relationship has lost its pizazz.

"Deer D, f u. Luv Rnmn"

Handful of characters.

Broadband, so it would appeal to the fibre-optician in The Man.

Instantly delivered.

Around Bond Papers, where we consider a five year old cell phone to be cutting edge technology, the stories making the rounds - including the ones offered by "The Panel" on Into the Fog Here and Now - just didn't cut it.

Maybe it was what Loyola said it was?

Yeah. Right.

New address

To start the New Year,a new e-mail address for Bond Papers.

Predictably, it is bondpapers@hotmail.com.

Don't be surprised

if Danny spends the weekend persuading Jerome Kennedy to join cabinet as the unelected minister of justice and attorney general.

Danny did muse today about attracting "new blood" into politics. Kennedy is the only blood coming forward to indicate an interest in joining Williams' team. Constitutionally, Kennedy can take on a job in cabinet without a seat.

Kennedy could wait until the October general election to seek a seat in Carbonear where he reputedly had wanted to run instead of Signal Hill-Quidi Vidi.

Williams spreads thin, thinner

In the wake of Loyola Sullivan's sudden resignation, Premier Danny Williams issued:

- this short political good-bye note; and,

- this announcement of changes to the ministry.

Tom Marshall moves to head finance and treasury board.

Tom Rideout [left] becomes acting minister of justice and attorney general in addition to being deputy premier, minister responsible for aboriginal affairs and minister of fisheries and aquaculture. The deputy premier thing got left out of the release.

The Canadian Press version of the Sullivan story doesn't shed much light on Sullivan's motivation. No fault of CP; Sullivan was pretty cryptic. The CBC online story has a bit of added information but it, too, doesn't shed light on Sullivan's motivation beyond the unusual answers Sullivan offered.

The explanation Sullivan offered is unusual since none of the points he made necessitated an immediate resignation today.

In a scrum today, Williams apparently spoke of his looking forward to injecting new blood into his party and cabinet. Sullivan didn't really leave him much of a chance to do that; Williams learned of the resignation on Thursday night around 9:00 PM, according to Sullivan.

The hurried departure means Williams will have to call two by-elections early in the new year. One will be to find a replacement for Ed Byrne in Kilbride. The other will now be held to replace Sullivan whose old seat in the legislature abutts Byrne's riding.

Breaking: Sullivan surprise resignation

Loyola "Rain Man" Sullivan stunned Newfoundland and Labrador today by announcing his immediate departure from politics.

Sullivan - who was minister of finance and president of treasury board - submitted his resignation this morning. Premier Danny Williams will be available to meet with reporters at 1300 hours today. No word yet on a cabinet shuffle

Bond Papers will update, as information becomes available.

Danny Williams resignation: Bond Papers news story of 2006

While many stories vied for contention, Danny Williams' resignation is Bond Paper's news story of the year for 2006 and Danny Williams is the newsmaker of the year.

Williams announced his resignation - actually that he would not seek a third term in 2011 - in comments made to VOCM and then repeated in subsequent year-end interviews.

Williams' resignation, likely to come in 2009 or 2010 after a decision on the Lower Churchill, comes at the end of a year of continued set-backs for the premier who has been in equal measures petulant and posturing.

His announcement will further limit his ability to accomplish anything of substance on his own agenda in his remaining time in office. His cabinet and caucus will be reluctant to implement major initiatives that would limit harm their political fortunes and as government members begin to jockey for the leadership, government operations will slow.

Hebron fails

The past year marked a turning point for the Williams administration. The first setback was the collapse of negotiations on the Hebron oil field. After achieving an apparent agreement on January 26 covering royalties and local benefits, Williams introduced new conditions for a settlement including a 4.9% "equity stake" and so-called super-royalties that would see the province collect additional royalties as long as oil prices stayed above US$50 per barrel.

Bond Papers attributed the failure of the Hebron talks to a combination of a miscalculation by the Premier and a fundamental conflict of interest in the negotiations that saw the future equity partner sitting as the province's chief negotiator on benefits and royalties.

The economic impact of the Hebron failure was immediate. Housing prices in the St. John's area dropped dramatically, with some reporting a 25% decline in higher end properties. Oil companies drastically reduced their local offices. Chevron, for example, redeployed the 60 or so staffers working on Hebron, leaving behind a skeleton crew of five or six to oversee Chevron interest in existing production.

In April, Husky Energy's John Lau said the company would sideline its reported interest in natural gas exploration pending release of the province's gas royalty regime in the fall of 2006. By the end of 2006, Williams delayed announcement of the royalty regime and the province's energy plan until sometime in 2007.

The local oil and gas industry looked forward to starting construction of a major new field at Hebron. Construction was expected to pump the better part of $2.0 billion into the local economy and the royalty projections held the provincial government would receive between CDN$8.0 and CDN$10.0 billion in royalties over the life of Hebron production. Industry insiders anticipated the positive mood resulting from a Hebron deal would boost exploration which had recently seen increasing interest.

Instead, activity is likely to shrink with no construction at all and drilling programs. A decision on developing South Hibernia's 300 million barrels of light sweet crude has been delayed, with insiders speculating that the Williams administration will veto any approval of the project by the offshore regulatory board. A recent land sale by the board saw three parcels receiving no bids. In another sale, six of eight parcels received bids with the work commitments being primarily for seismic research. Delineation drilling on existing fields is largely completed and the only exploration drilling planned for 2007 is a pair of wells in the deep waters of the Orphan Basin.

More slipping and sliding in the oil patch

Williams met the Hebron failure with threats of expropriation, a tactic he tried with Abitibi Consolidated and its Stephenville operation. When Williams tried to elicit federal support for so-called fallow field powers, he was rejected flatly by Conservative Prime Minister Stephen Harper. This was one of several examples of Williams' inability to gain support in Ottawa.

Williams was also shut down in efforts to install St. John's mayor Andy Wells as chairman and chief executive officer of the offshore regulatory board. The federal government under Paul Martin was prepared to appoint Wells as chairman of the board, but Williams rejected the offer in favour of an effort to have Wells occupy both positions. An independent arbitration panel rejected Williams' choice in favour of a candidate who met all the provincial government's agreed upon selection criteria.

The successful candidate was forced to take legal action to secure his appointment. Williams fought the action, inventing a definition of one clause of the Atlantic Accord that was soundly rejected by the province's Supreme Court.

Lard of the Rings

In year-end interviews, Premier Danny Williams described the House of Assembly scandal as his single greatest regret of 2006. The province's auditor general alleged that some $4.4 million had been inappropriately spent by the legislature between 1997 and 2005. The accusations - which included members in all parties - cost Williams one of his senior ministers and cast a pall over the entire legislature.

But the handling of the scandal suggests Williams may be unwilling or unable to address serious problems. The Auditor General's reports account for less than half the overspending during the period. Williams has been contradicted by his finance minister - Loyola Sullivan [left]- on at least one occasion, namely the question of recovering money allegedly misappropriated. Williams favoured waiting until all investigations and reviews were finished; Sullivan moved to recover money from five current and former members of the legislature immediately.

In a broader sense though, Sullivan's continued handling of the file suggests problems within the administration that speak directly to the Premier's inability to control his administration or his reluctance to do so. Either way, the problems are deep.

Sullivan has been a member of the legislature's management committee for much of the period currently being investigated by three separate agencies. As well, he has been minister of finance since 2003 and has such has been or ought to have been aware of overspending. Bond Papers demonstrated that some of the most significant overspending occurred in the years after the October 2003 election.

Yet Sullivan remains as finance minister and cabinet has approved investigations and reviews which specifically avoid looking at actions by the legislature's Internal Economy Commission. As finance minister, Sullivan received the reports from Auditor General John Noseworthy [right] that alleged misappropriations and overspending.

The existence of this fundamental conflict of interest suggest that the premier is either unwilling or unable to take decisive action. The ease with which Sullivan won the fight over repayments suggests Williams is increasingly impotent within his own cabinet.

Sullivan's power: the clash over Equalization

This is not the first or most example of Sullivan's ability to contradict his boss in public and win. In the 2004 federal election, Sullivan endorsed the Conservative's Equalization plans while Williams publicly declared their impact could not be calculated.

In 2005/2006, Williams declared that the provincial government officially favoured inclusion of all provincial revenues in Equalization calculations as part of an overall reform of the major federal transfer to the provinces. Sullivan endorsed Harper's proposal.

By mid-2006, Williams was picking fights with Ottawa but based entirely on the position Sullivan had favoured. Sullivan's political partner, federal cabinet minister Loyola Hearn praised Sullivan as being the best negotiator on behalf of the province. This was a direct and calculated slap at Williams who bills himself as built a reputation for negotiating good deals on behalf of clients and avoiding bad deals.

Williams' political impotence likely to grow

Bond Papers selected Danny Williams as newsmaker of the year for the obvious and significant impact he had on the province and its economy in 2006. That impact will continue in 2007. The full - and likely negative - impact of the Hebron failure will be seen in the years beyond Williams' planned departure. In the same way, the full impact of Williams' announced departure from the premier's office will have an increasing impact on public life over the next three years. For that reason, Williams' resignation is the news story of this year.

By his own calculation, Williams' last years in politics will be focused on developing the Lower Churchill. A "go/no-go" decision is expected in 2009. It is possible there will be a flurry of activity in the months leading up to the fall 2007 general election and immediately after, but experience suggests otherwise.

Williams' administration has been characterised by extreme slowness in implementing even the most simple of initiatives. It took six months after his first cabinet was sworn in to find names for his departments. His own department - Business - languished for three years without staff appointments. The energy plan - inherited from previous Liberal administrations - has taken a further three years to develop under Williams and is slated for release some time in 2007.

An accountability act that was supposedly the centrepiece of Williams' ethics agenda sat un-proclaimed until December. It was only proclaimed after public criticism from the province's auditor general but even then departments and agencies have been given a further two years - until 2008 - to comply.

Typically, though, lame duck first ministers are unable to implement major initiatives the closer they get to leaving office. The reason is simple: those who will carry on, especially his likely successor won't want to take political hits on his behalf. The new leader will want as free a hand as possible to bring in his or her own agenda once in office.

The period from Brian Tobin's departure in October 2000 to Roger Grimes' swearing-in in early 2001 was a period of near complete inactivity within the provincial government. As a general election grew closer, Grimes' administration was unable or unwilling to implement any major initiatives that would likely draw public criticism. Senior public servants grew tired of complaining of the impotence of cabinet collectively.

The same thing occurred in 1988/89 in the period after Brian Peckford announced his resignation. It also occurred in 1979 in the wake of Frank Moores' departure.

The growing leadership fight within the Progressive Conservative party will be one of the other sources of friction within an administration already known for gear-grinding tardiness. Prospective leaders will devote increasing amounts of time to luring political support. Even if Williams requires declared candidates to resign from cabinet, political attention will inevitably turn increasingly away from governing and towards leadership issues for 12 to 18 months before Williams departure.

None have declared yet but early speculation suggests several current ministers will look to replace their current boss. Loyola Sullivan is a former party leader with a strong power base. Tom Rideout [left], currently fisheries minister and deputy premier, is a former premier who has longed to get his old job back. InTRD minister Trevor Taylor has potential.

Williams may shuffle his cabinet early in 2007 to change assignments. In the current cabinet configuration, any leadership fight involving Sullivan and Rideout - for example - has the potential to paralyse cabinet with two senior ministers jockeying for advantage. A change of assignments would also allow Williams to shrink from public scrutiny and focus on the one thing that may be his legacy: a Lower Churchill deal.

No matter how you assess the situation, there's no escaping the conclusion: Danny Williams' resignation is not only the news story of 2006, it will be be at the heart of news for the next three years.

-srbp-

Kingsley quits

Except for the fruit loops at the National Citizens Coalition and the other fruit loops who believe there are Liberal conspiracies in the media, in the bureaucracy and in the atmosphere just floating around, the sudden and cryptic resignation of Jean Pierre Kingsley as chief electoral officer for Canada is a bad sign.


[Right: Local planted Connie caller sits on hold waiting for Randy to return to the air on Monday morning, so he can explain why Kingsley was a kitten-eating alien Liberal agent.]

Law firm name of 2006

Atlantic regional law firms Patterson Palmer and Cox, Hanson, O'Reilly, Matheson announced in March that they would be merging effective in August.

Ok. Well, it's December and the firms are still operating separately if their separate websites are any indication.

But that's not the important bit.

The new firm will need a new name, since PPCHOM or some combination of those letters will be just too much for any letterhead to bear.

According to some sources, the firms have apparently settled on a new name for the merged firm, once it finally springs fully formed from the broodings of way too many corporate anal-retentive lawyers.

The name they've reputedly settled on: Cox, Palmer.

The stories Bond Papers has been getting could be apocryphal - the polite word for bullshite - but then again, you never know.

Over in the land God gave to Lucy Maud, the authorities were seriously considering naming a new post-secondary school the Samuel Holland Institute of Technology until someone wrote down the new acronym.

You may note that the two firms hired a Halifax-based ad agency - the cleverly named Extreme Group - to carry out the branding exercise for the new creation once the lawyers have finished the due diligence piece.

Whistling past the graveyard?

Maybe Danny should be paying attention to Bond Papers.

His comments on oil and gas to vocm.com run directly contrary to every indicator as Bond Papers posted just this morning. The petroleum industry globally is looking pretty well anywhere except Newfoundland and Labrador.

If we wanted to say it politely, we'd say the Premier is whistling past the graveyard.

The Venezuelan ideal

Danny Williams sorta likes the comparison to Hugo Chavez.

Danny's ersatz oil and gas company executives like to talk about how much of the world's oil and gas is run by state-owned enterprises.

Well, here's another view of the Venezuelan model, courtesy of the Washington Post.

"This [artificially low gasoline price] is something that really does not benefit the public," said Eddie Ramírez, a former state oil company executive who believes poorer Venezuelans shoulder much of the burden because they do not own cars. "It helps the privileged. But it's a theme that has always been taboo."

Gas demand drops

Demand for natural gas is forecast to drop in the United States next year and analysts say interesting in natural gas exploration is dropping.

In Newfoundland and Labrador, a natural gas royalty regime remains elusive. originally talked about in 1998, it has languished under successive administrations. The most recent policy dithering under Danny Williams has seen the policy largely ignored for the better part of three years. It will now be included in the energy plan - due sometime next year, having been proposed several times in 2006 and delayed inexplicably each time.

Local CBC names AG top newsmaker

Ok.
We can all buy the rationale.

But at what point will local media start looking more closely at Noseworthy himself and the management of the overall story?

There's a lot more to the House scandal than meets the eye.

Maine gas plant files for regulatory approval

DownEast filed Friday for certification of a US$500 million facility in Maine that would re-gasify 500 million cubic feet of natural gas per day for the American market.

The environmental certification application is likely to be opposed by environmentalists in New Brunswick.

Think of it this way

Will Gill Deacon be filling in for Mansbridge?

So then why...?

You know what I am driving at.