Aussie oil and gas production to jump

Australian oil production may rise 15% in 2007, with gas rising 22%, according to the Australian Bureau of Agricultural and Resource Economics.

The full report includes some interesting observations about trends in the oil and gas industry globally that have echoes in the local political environment. For example:

Increased costs

Costs of developing new projects and production have increased universally across the world’s minerals and energy industries over the past four or five years. Increased costs have been associated with an almost unprecedented increase in the demand for a range of inputs, such as equipment, materials, skilled labour and mining services, required to bring on new capacity. In some cases the available supplies simply cannot meet demand and the associated delays add further costs, reducing production and delaying the start up of new projects.

Political and security risks may impede supply growth

In a number of oil producing countries, sovereign, geopolitical and security risks have the potential to adversely affect supply. In 2006, it is estimated that 10 per cent of production capacity in Nigeria was lost as a result of attacks on production facilities.

Sovereign risk, which includes significant changes to government policies or political interference, also creates uncertainty for oil supply. Recent examples include national governments changing agreements with oil companies or nationalising industries. For example, in the Russian Federation, Royal Dutch Shell and its partners, Mitsui and Mitsubishi were obliged to sell a share of their stakes in the Sakhalin project to Gazprom, the Russian government owned gas company. In Venezuela, the government is converting previous agreements with foreign investors into joint venture agreements in which the nationally owned PDVSA is required to hold a minimum 60 per cent interest. In addition, royalties and corporation taxes applied to the oil industry have been increased by 33 per cent and 50 per cent respectively. Such unpredictable changes to the regulatory and fiscal environment represent an important risk and have the potential to compromise foreign investment and limit significant expansions of supply. [Emphasis added]

ABARE also notes a decline in exploration over the past decade. In 2005, 10% of wells drilled globally were exploration wells, compared to 20-25% in the 1990s. Interest is being focused in a smaller number of exploration projects which have higher comparative exploration costs.

In that context, this trend will make it much more difficult for Newfoundland and Labrador to attract new investment for exploration. Costs of operating in the North Atlantic are already high, thereby reducing profitability. Coupled with the costs of what ABARE calls "sovereign risk" and the general increase in exploration costs, government policies may well lead to a dramatic decline in exploration offshore in the next five to 10 years.

Alberta pitches oil patch; O'Brien to pitch tent in desert

Here's the difference between a booming economy and one forecast to plateau for a while.

Representatives from business and government in Alberta are in the United Kingdom looking for investment. They have as a foundation the tremendous success of a booming economy and a province that is widely known to welcome investment from anywhere.

Meanwhile, Kevin O'Brien, the Minister of Business will be packing up his trade show booth and heading to Qatar and Japan, of all places, to explore what are vaguely described as "opportunities."

He has as his foundation the province's well-deserved reputation as a place where the government makes it damn hard to do business. O'Brien will likely find he is as successful in peaking interest in his province as Albania was in the 1980s.

The plain observation here is that O'Brien has no leads, no contacts and nothing of consequence to accomplish. He is just going to do an old-fashioned junket: attend a few meetings, visit some trade shows and - at the end - pronounce on all the marvelous possibilities that exist out there. We've all seen it a thousand times and it typically produces exactly squat when it comes to meaningful results.

Of course, real business opportunities would be developed by the private sector businesses in the province, not by a provincial government minister. Consider, for example, that Fortis just cut an amazing deal to expand its portfolio without any help from O'Brien or his colleague Trevor Taylor.

This administration needs to recognize its economic development value consists entirely of creating the right climate for business development. Sadly, there seems to be an insistence that it - i.e. government, alone - is the engine to do anything.

Throughout the 1990s, the province's economy developed and diversified based on a simple understanding that government does not create jobs. By 2007, Newfoundlanders and Labradorians have come to realize that their government has taken a leap away from ideas that have shown their value at home and abroad to return to policies from the 1980s that were known even then to be disastrously wrong.

What we have is an economy that remains underdeveloped and will remain so for some considerable time.

In the meantime, the best the provincial government has to offer is yet another cabinet minister on yet another publicly-funded trip to yet another bevy of exotic locales to explore yet more vague "opportunities".

The only ones who seem to get anything out of these safaris are the ministers and their retainers, who get to see the glories of thriving economies - everywhere else, of course - and the travel agents who book the passage.

Dunderdale slags Big Oil

That should come as a shock.

The issue is a recent court decision on rules on local investment set by the offshore regulatory board in 2004 and challenged by the oil companies doing business in the province.

The courts ruled against the oil companies who will seek leave to appeal the decision to the Supreme Court of Canada.

Notice that at no point does Dunderdale say anything positive about the offshore board which implemented the new levy before Danny Williams decided the whole crowd in the Duckworth Street offices were not looking out for the best interests of Newfoundlanders and Labradorians.

Williams thought the board needed Andy Wells to get it right.

Apparently not.

NL hostile to business investment?

From Canadian Press, story gaining national attention on Monday, the idea that the provincial government's actions on several prominent business files is discouraging investment in the province.

"For the rest of business in Canada, Newfoundland is a somewhat distant and not very well understood place," [business professor Joseph] D'Cruz said.

"I suspect that the rest of Canada also believes that the hand of government is very heavy in Newfoundland . . . that government is also quite involved in business decision-making in a way, for example, that the Ontario government is not."

From the St. John's Board of Trade comes a comment so general and bland as to confirm the substance of David Cochrane's recent speech to that body.

No wonder Mr. Cochrane's remarks are garnering such attention.

Boeing may cut off C-17

Boeing may shutting down production of the C-17 long-range airlifter due to a shortage of orders. The company has taken the first step by cancelling parts orders with its supply chain.

Based on the Conservative Party's defence platform - reportedly drawn up by retired general and former defence industry lobbyist Gordon O'Connor before he was appointed Minister of National Defence - Canada is buying four of the massive aircraft at a cost of $1.8 billion plus an additional $1.6 billion.

Canada's order won't be affected by the Boeing decision, unless the country were to try and buy more C-17s.

If this guy ran Hydro...

The Lower Churchill would have been built already, employing Newfoundlanders and Labradorians in the process, providing plenty of power to markets at home and abroad and making money to boot.

As it is, Fortis' expertise in large energy projects is being directed at development outside Newfoundland and Labrador.

That's all fine and good, but it makes one wonder what might have been if things had turned out differently 15 years ago.

CP = Completely pollyanna

Apparently, a few simple, routine platitudes - like congrats on your anniversary and gee, my job's tough, what must yours be like? - are enough to convince Canadian Press that Danny Williams, right [Photo: Greg Locke] is trying to thaw out relations with Prime Minister Stephen Harper with a charm offensive.

The Prime Minister apparently responded cordial - as one would expect - and made this comment on Equalization:

"As part of its commitment to restoring fiscal balance, my government will put equalization and other federal transfers back on a long-term, predictable and principle-based track, while respecting offshore accords," Harper wrote.

Donnez-moi le break.

For decades, Canadian Press has been known for its solid rapportage and commentary. It never involved pollyanna-ish stuff.

Until now.

Stephen Harper's response to Danny Williams is consistent with the rumored plans to implement some variation of of the O'Brien panel's recommendations on Equalization.

Given the date of the letter, Danny Williams' fluffy correspondence might have more to do with a pro forma exercise on behalf of the Council of the Federation than some sort of slackening of Williams' anger at all things west of the Port au Port peninsula. Look at the date on the letter for cryin' out loud.

NL and NS governments sharing same economic brain?

From the front page of the Saturday Halifax Chronicle Herald - known affectionately to some as the Chronically Horrid - is proof that Nova Scotia and Newfoundland and Labrador are sharing the same political genius.

Nova Scotia finance minister Michael Baker is warning Nova Scotians that the Progressive Conservative's $1.0 billion in election promises might not be fulfilled right away. Baker is blaming it on Stephen Harper:

Mr. Baker said the province made those commitments because Prime Minister Stephen Harper had promised a new equalization formula that would have boosted Nova Scotia’s bank account. That hasn’t happened yet.

Meanwhile, in this province, Premier Danny Williams has pledged a $2.0 billion capital works program and coverage for multiple sclerosis drugs under the province's drug plan. That's in additional to personal income tax cuts promised last year by former finance minister Loyola Sullivan and reaffirmed by his replacement.

Williams had likely planned on spending a bundle this year anyway, in advance of the general election this fall. He will still make the spending commitments but he'll head into the election fighting with Ottawa as a political bonus.

In 2008, when the bills show up and the economy slows down as predicted, Williams will be singing a different tune on public spending, but then he'll be following the Nova Scotia lead and
blame Ottawa.

Welcome to the New Approach.

Soviet intelligence expert gunned down in DC?

The headline on this story in the Globe says "Soviet" but the lede says a fellow who specializes in Russian intelligence services was shot near his home in suburban Washington.

It appeared to be a robbery.

Yeah, right.

That's what it is supposed to look like. Looks like the boys from the old Department V are at it again.

PQ on the way down?

From Reuters, an article on the Quebec general election that notes the results of the latest Leger poll.

The Liberals are leading the Parti Quebecois, 36% to 29%. Action democratique is at 25%. Among francophones, the Liberals and the ADQ each have 28%, with the PQ holding 33% of francophone voters. Non- francophone respondents indicated overwhelmingly in favour of the Liberals.

And from le devoir, coverage of Jean Charest, including this message to the Prime Minister from Charest:

"Les Québécois s'attendent à ce qu'il y ait un progrès significatif et concret dans le dossier du déséquilibre fiscal. Le gouvernement fédéral a en main tout ce qu'il faut pour prendre ses décisions."

The Great Blue Hearn on Credibility

Contrary to what some may believe, your humble e-scribbler has a lot of time for Loyola Hearn. [left, why is that finger sticking out? Photo: Greg Locke].

Hearn is an experienced and capable politician who has shown, over the years, that he can take and give a punch.

Danny Williams could take a few lessons from the wily fellow from Renews.

Once in a while, though, Hearn displays the kind of chutzpah that only a veteran could risk and keep a straight face.

Like Friday, for example, when Hearn issued a statement from his ministerial office tackling Liberal member of parliament Scott Simms for his little stunt about German boar hunting as a retaliation for a likely German Bundestag bill that will ban the importation of Canadian seal products:

Even today's motion plays directly into the hands of the anti-seal hunt movement. Instead of defending the hunt's standards, and putting forward the facts that the hunt is both humane AND sustainable, the message Simms is putting forward via the media seems to be "At least, we're not as bad as so-and-so."

Simms has fallen into the activists' trap and his irrational reaction can only hurt our argument regarding sustainable and humane hunts for a multitude of species. We will work with the EU on ensuring their members' hunts - including Germany's deer and wild boar hunt - are at least as sustainable and humane as our seal hunt.

Part of cabinet minister Hearn's problem has less to do with Simms' lack of input on legislation and much more to do with the fact that Simms [right Photo: Greg Locke] is taking a leaf from opposition politician Hearn's playbook. Simms is being extraordinarily successful when it comes to gaining popular support in Newfoundland and Labrador for his little escapade. Radio talk shows over the past few days have been filled with callers praising Simms' initiative.

Hearn is incommunicado, apparently, but that is really his own call or that of his comms people.

Hearn meanwhile is left with issuing this statement - days after the story broke - that commits to working with the European Union blah blah blah. It's hardly as dramatic. It's hardly the stuff to get you interviewed on Newsworld. It's hardly the stuff that made the name "Loyola Hearn" a legend among the crowd on Open Line.

That is, before he went from being Mister Hearn to Minister Hearn.

Hearn went off the chutzpah scale - he long ago fried the Bond Papers' Cred-o-Meter - though with his last comment:

What sort of credibility do they think they'll have the next time their party says that they want to seriously deal with issues in the fishery?

Let's just say that the Liberals will have as much credibility as Hearn. This is the guy after all who made a huge deal about having his party declare its unequivocal, unflinching and irrevocable policy that, should it form a government, it would immediately take control of international waters outside the 200 mile exclusive economic zone and manage fisheries in the region in a form called custodial management.

Hearn [left. Official ministerial portrait] took great pride in a private members motion on the issue in 2004 and earned accolades from his provincial brethren for his efforts. Hearn used to rail against NAFO, the international fisheries association, claiming it was dead, useless and any other negative adjective he could think of.

That was before he became the fish minister.

Scarcely a month after being sworn to the Privy Council and getting the ministerial car and driver to boot, Hearn was pledging his unwavering support for exactly the policies he used to condemn. NAFO was getting better, said the guy who declared it dead. This wasn't much of a surprise to Bond Papers' readers, though. They had seen the unmistakable signs here, here, here. Heck just go back to the archives and read anything on Hearn between December 2005 and March 2006.

Hearn's credibility is likely to take a severe blow with his statement today on Simms' boar war. It was a noteworthy gaffe from a crafty old politician who, until now, has been able to avoid answering for the discrepancies between the old Loyola and the new one.

It's easier to do that when you avoid interviews. For some reason, though, Loyola decided to stick his head up on this one today with a pissy statement. Maybe the rumours are true.

Maybe something does happen to you when you get to be a regional minister from Newfoundland with a thing about fish.

Separated at birth 3

Boar warrior Scott Simms, left, [Photo: Greg Locke]







and Scott Evil, right, [Photo: not Greg Locke]

"I have a gun, in my room, you give me five seconds, I'll get it, I'll come back down here, BOOM, I'll blow their brains out!"

Ball's in play

The recount is done.

Dwight Ball is the new member of the House of Assembly for Humber Valley.

By seven votes.

Equalization: We'll huff and we'll puff...

and we'll hold our breath until we turn blue.

Well, deeper blue.

Maybe purple.

And if that doesn't work we'll stamp our feet.

The provincial government of Danny Williams has such an effective relationship with Ottawa that its operatives must resort to leaking correspondence to the Globe and Mail's Brian Laghi in an effort to get anyone to pay attention to them.

All that it nets is the repetition of the same old lines from the provincial government:

- Stephen Harper won't confirm he plans to live up to a commitment he made during the last federal election.

- Losing federal handouts "would very seriously undermine the progress we have made and our prospects for the future."

Then there's the old chestnut:

"It would electrify the electorate," a provincial source said of how such a move would play in a federal election.

Maybe the unnamed source on this one is the same source that told Danny Williams that pulling down the Canadian flag was a dandy idea. We all know what a magically delicious mistake that was. Even the Premier's own pollster couldn't demonstrate that one was overwhelmingly popular even her in Newfoundland and Labrador.

Anyone following this issue knows full-well that the federal government has moved off its campaign commitment in favour of something else. Even Danny Williams has moved off his own position at the time. The exact impact of the federal Equalization changes will be known when they come.

But here's the thing: as much as Williams may try and throw another tantrum over the whole thing, his own political potency is weakened and the current federal government will know exactly how to deal with him. The unnamed source who muses about "electrifying" the electorate is taking poor lessons from history.

Bond projection: The only thing likely to get electrified to any serious degree will be the seats in the PMO waiting room. That will only be done to keep the Premier's personal representative from hanging out to get a chance to meet with anyone in the PMO as he or she walks out to their car to head to a meeting with someone the PMO is actually paying attention to.

Ireland mission leads to MOU...again

Premier Danny Williams' business mission to Ireland netted another memorandum of understanding with the Irish government.

This one will focus on ocean surveillance technology.

Try and find any reference to Danny Williams, Newfoundland and Labrador and the MOU here on Irish natural resources minister Noel Dempsey's personal website or on his departmental one.

No luck?

Try the website for the Department of Environment, Heritage and Local Government.

Still nothing current?

How about the aggregator website for the entire Irish government?

Keep looking.

Scientists call for end to fishing fuel subsidies

A team of international scientists is calling for an end to government fuel subsidies that allow commercial fishing fleets to move to deeper and deeper water.

"The bottom line is that mistakes made now could take over a century to recover, if they are at all reversible," says [Krista] Baker. Baker and Richard Haedrich of Memorial University in Newfoundland looked at the complete deep-sea fish fauna of the North West Atlantic – one of the first attempts to do so. They found that 40% of the deep-sea species for which data are available, are in decline. "This is a steady decline, just down and down until the cupboard is almost bare," says Baker. "Given the documented declines and the lack of life history data to know what recovery times would even be, conservation measures in the deep-sea are urgent now."

Gushue to run for Tories?

Brad, that is, not John.

It would fit the pattern for the current administration.

The Olympic gold medalist was asked by Canadian Press about politics being in his future. The reply, as carried by the Edmonton Sun:

"Well, there was a rumour going around that I was going to be running in the next (provincial) election," he said with a chuckle. "Maybe down the road, but not in the near future.

"I had three media outlets in Newfoundland call me requesting an interview because they heard I was running in the election and had been promised a (cabinet) minister's position."

Gushue might not be running but the Golden Boy of Mount Pearl will. That's the Bond projection and we are sticking to that one.

Steve Kent will run for the Tories in Waterford-Kenmount to replace Harvey Hodder.

Quebec election comms

From la presse blogeur Stephane Laporte, a critique of campaign advertising thus far.

Even if you don't speak French, take a look at the television spots linked in the article. The Parti quebecois ads are funky. They have a guerrilla advertising feel to them with a little humor. The PQ site is pretty much up-to-date with current fads. There is a blogue section which is actually a blog. There are podcasts, labelled Radio PQ.

The Parti liberale spots are pretty conventional in look and content, emphasising that public priorities are Liberal priorities. There is a pretty simple use of technology in what are labelled blogues but which are actually just little videos featuring prominent cabinet ministers speaking on major issues.

China boosts oil incentives

In an effort to secure additional energy sources, China announced Thursday it was adding nine countries to its list of economies where its companies can gain incentives to invest.

Chinese companies can get tax breaks or other incentives for investing in oil and gas industries in Kuwait, Qatar, Oman, Morocco, Libya, Niger, Norway, Ecuador and Bolivia, according to an announcement by China's top planning agency, the National Development and Reform Commission.

Progress on passport initiative

Three Canadian premiers, in Washington to push for alternatives to proposed American border controls, found a powerful ally Wednesday in House rules committee chair Louise Slaughter (D-NY).