Risley blames gov't; Williams worries about flips

To each his own.

John Risley is blaming two successive provincial administrations for actions that led to the breakup of Fishery Products International.

From cbc.ca/nl:

"We're in this situation essentially because of the FPI Act," Risley told CBC News on Monday, after the Newfoundland and Labrador government gave its blessing to FPI's plans to sell most of its plants, vessels and quotas to two competitors: St. John's-based Ocean Choice International and Nova Scotia's High Liner Foods.

Risley said his original plan — to merge FPI with his own, Nova Scotia-based company, Clearwater Fine Foods — would have turned FPI into a powerhouse.

The plan was blocked by the then-Liberal government and the Risley-led board has had strained relations with the governing Progressive Conservatives since they took office in 2003.

"FPI would have become one of the premier seafood companies in the world instead of now effectively ceasing to exist," Risley said.

Meanwhile, Premier Danny Williams apparently spent a chunk of time worrying that the whole arrangement might allow Risley to come in through the back door:

"What we've tried to do is make sure that there wasn't a quick flip on this, and that this wasn't perceived or was a sham for some takeover by John Risley or anybody else, at the end of the day," Williams said.

Maybe this worry about flipping was the reason the provincial government rejected the first buyer, the Barry Group.

It all seems rather convoluted though, given that the provincial government could have just as easily continued the FPI Act and held onto control over all the company assets.

Instead, the provincial government facilitated breaking up the company, changed the FPI Act to make breaking the company up even easier and will now become even more directly involved in operating part of the company through its control over fish quotas. it makes you wonder if the provincial government got itself into the position of smashing up a vertically integrated company by accident or if someone thought that this was a good idea.

The only real mystery around Bond Papers is why there's been all this concern about conniving and secret deals and vague possibilities of something happening in the future that wouldn't be happening had government not interfered in the whole process in the first place?

It's the same sort of concern, incidentally - the appearance of something as opposed to the fact of it - that seems to have hung up the fibre optic deal for an extra-ordinary period of time.

Maybe the Premier is a bit sensitive to the whole issue since he was accused of being party to such a flip, at least once. He says he wasn't; take him at his word.

But other than paranoia, was there ever any evidence that anyone wanted to break up FPI, that is, other than the people who have been currently involved in breaking it up?

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Saving stamp factories aim of government policy

A majority of Fishery Products International headquarters staff will likely be on the streets looking for new jobs employment after the smash-up of the once-proud fisheries company.

The provincial government announced on Monday that it had accepted a deal that would see the company broken up and sold to smaller local companies and with the lucrative marketing arm and FPI's only secondary processing facility sold off to a Nova Scotia fishing company.

Under the deal, the plant operators in Newfoundland and Labrador are required to keep employment levels - much of it heavily dependent of employment insurance benefits to keep people going for much of the year - at current levels for a minimum of five years.

Meanwhile, a majority of FPI's headquarters staff will likely get lay-off notices according to Henry Demone. The High Liner official told CBC Radio he expected a majority of the professional staff in St. John's will be looking for new jobs.

It won't be a good time for those professionals to be looking for work, at least in Newfoundland and Labrador. They'll be handing out resumes in a regionalready hit by a major slowdown in the oil and gas industry. The failure of a Hebron agreement last year cost the province about 3000 jobs and more than $10 billion in provincial government revenue. A squabble with oil companies over a 300 million barrel extension is also forecast to slow growth in the provincial economy and the impacts are being felt in the local job market.

In a news conference on Monday, though, Newfoundland and Labrador Premier Danny Williams heralded the new deal.

Williams told reporters that the agreement announced Monday actually worked out to be better for the province than its original demand.

"We in fact feel that we actually strengthened it," Williams said."I'm not just saying that, you know, to try and basically accommodate for the fact that we didn't get the quotas at the end of the day, but the federal government wasn't prepared to pass the quotas over [so] we got into a negotiation with them and [we] feel that we ended up better off, quite frankly."

The provincial government has been engaged in an ongoing war with the former FPI board of directors. It took over 18 months to review a capitalization plan and only approved after the plan - to turn an asset into an income trust - had become functionally useless. The war has been marked by frequent - and apparently unfounded - accusations that the former board members were looking to break up FPI and acquire the assets for their own fishing companies.

In the end, the only people talking about breaking up the company were the provincial government and the head of the fishermen and fish plant workers' union.

Effectively, the deal ensures that FPI, which likely would have swallowed up smaller operators like Ocean Choice in the highly competitive local processing industry, has been smashed up.

Key assets, which reportedly also marketed fish for smaller local companies, have been sold off to interests outside the provinces.

The only thing guaranteed in the deal announced Monday seems to be the survival of fish processing plants in a sector of the economy already well-past glutted with capacity that cannot be met with supplies of local fish. Increasingly fish plants in Newfoundland and Labrador have come to be regarded as stamp plants, in which employees work for only enough weeks to qualify for federal income support programs.

Survival of the so-called stamp factories seems to have been one of the major objectives of fisheries minister Tom Rideout.

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Islanders bin Binns

Discounted a month ago, Joe Ghiz's son leads Prince Edward Island Liberals to a majority government.

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Harper and Prems' meeting off

Prime Minister Stephen Harper won't be meeting with provincial premiers before heading off to a G8 summit.

The official excuse is that they couldn't agree on a date for the session.

The real reason is anyone's guess at this point. Saskatchewan Premier Lorne Calvert says that relations with the prime minister have been reduced to "megaphone diplomacy".

Around these parts, some would suggest it is actually "smoke signal" politics, with the smoke coming out of Premier Danny Williams' ears.

No matter what one calls it, there's no way it qualifies as diplomacy.

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FPI sold

The official announcement came on Monday, even though the deal has been in the works for a couple of weeks.

The Honourable Danny Williams, Premier of Newfoundland and Labrador, and the Honourable Tom Rideout, Minister of Fisheries and Aquaculture, today announced that the Provincial Government has reached two separate Memoranda of Understanding (MOU) with Ocean Choice International (OCI) Incorporated and High Liner Foods Incorporated for the sale of various FPI assets. The MOUs also outline the terms and conditions that will accompany the successful completion of those transactions and provide the necessary protections for the province’s interests. The sale remains conditional upon the signing of final binding legal agreements between both companies and FPI, which is expected in the coming weeks. The Provincial Government will also approve the sale of The Seafood Company, a primarily independent business unit located in the United Kingdom, which will be sold to interests in Europe.

One of the consequences of this deal is that the lucrative marketing arm of Fishery Products International will be sold to a Nova Scotia-based company. Another marketing asset based in the United Kingdom - which would have been a useful way to market local shellfish in the European Union will be sold to European interests.

"Since 2001, it is clear that FPI has pursued a business strategy that has been incompatible with the public policy objectives of the Provincial Government [sic] and communities that depend on the company," said Minister Rideout. "The agreements we are announcing today hold the promise of finally rectifying that situation, and our approval of this sale is reflective of this government’s confidence in the industry to move forward in a productive way that will serve the best interests of all stakeholders."

Time will tell if the second part of that statement is true. Certainly, the first bit - about the business strategy - is bordering on the completely nonsensical. Rideout has never indicated what the provincial government's public policy objectives are.

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Venezuelan strong-man silences opposition television

Like this is a surprise.

There are those around here who think people should be thrown in jail - literally - for daring to question what the government says.

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Norsk Hydro ponders ALCAN bid

Norwegian energy company Norsk Hydro is considering a bid to take over ALCAN, according to the Globe and Mail.

Norsk Hydro is in the process of restructuring, following a merger last year with Statoil. The latter will absorb all of Norsk Hydro's oil and gas projects, with Hydro to focus on its traditional strengths of hydroelectricity generation and aluminum production.

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Rio Tinto sizing up ALCAN

Mining giant Rio Tinto, which operates an iron ore plant in western Labrador has hired Deutsche Bank to advise on a possible bid for ALCAN, as the Sydney Morning Herald reported in its Monday edition.

Alcan last week rejected a $US27 billion ($33 billion) hostile offer from its US rival, Alcoa, which would create the world's largest aluminium company, and indicated it was in talks with unnamed "third parties".

The Herald understands that several potential suitors, including Rio and BHP, have expressed interest in opening discussions with Alcan's board. Some, including Rio, have already hired investment banks to provide advice on a possible bid.

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Alaska gas pipeline inches forward

From the Alaska Journal, an update on plans to develop a new gas pipeline in Alaska. The article compares the proposals from the former governor and his successor on a number of issues including local hiring and taxes and royalties.

On the latter issue, there's this observation:

One major difference between Murkowski and Palin plans is that while both approaches offer tax and royalty incentives for the producers, those proposed by Murkowski were more far-reaching and more controversial with the public and the Legislature.

Murkowski would have had a 45-year freeze on natural gas production taxes and a 30-year freeze on oil production taxes. Palin proposes a 10-year freeze on gas taxes only. The producing companies say this isn't enough, and it is a key obstacle for them in participating with a pipeline licensed under AGIA.

Murkowski would have solved a big problem producers have regarding uncertainties in state royalty administration, and particularly the state's ability under the current leases to switch between in-value and in-kind royalty-taking at six- to nine-month intervals. Murkowski's plan would have had the state take its gas in-kind for the duration of the 45-year contract.

In-kind would mean the state government would actually receive quantities of natural gas which it could then dispose of as it wanted.

One other difference between the Murkowski and Palin plans is that the former governor would have had the state invest in the pipeline and own as much as 20 percent. The idea behind this is that if the state takes its gas in-kind for a long period, it would, as a pipeline owner, be shipping its own gas and earning profits from that rather than paying another pipeline owner to ship state gas. Murkowski proposed investing about $4 billion in the project for a one-fifth share.

Palin would have no such equity ownership, but instead proposes a $500 million state grant to the pipeline license holder to subsidize early planning and engineering work. The state would get no equity or other repayment from the grant.

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This didn't take long...

Steve Kent, member of the federal Liberal party and now a Dan-didate wannabe.

Nothing like ridicule.

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Update: Did the old ears deceive or did Steve Kent dismiss his Liberal party connections a something confined to trying to get a Liberal nomination a decade ago?

Is that what Kent told a VOCM call-in show audience?

Well, if it is, people will have to wonder about Kent.

Offal News dissected the whole question of Kent's political opportunism when Kent finally announced his intention to be a Dan-didate - six months after he'd made the decisions and six months after Bond Papers outed Kent's switch from federal Liberal to provincial Dan-didate.

You'd be amazed at how many Liberals were amazed at the Bond piece and how many dismissed it entirely. Many of those same people likely believed Brian Tobin was staying for the full second term - right up until he bailed and ran back to the mainland - even though it was an open secret the guy's campaign team was raising cash months before he made the announcement.

But anyway...

At some point, Kent needs to explain his presence at the federal Liberal convention last November.

Was he a delegate?

If so, didn't he have to sign membership papers last summer?

Oh and for those who love the silly pretensions of certain locally-owned newspapers, check this week's Scrunchions over at The Independent. Therein readers will find a lovely precis of the Offal News stuff - printed a week or so later.

Likely Indy editor Ryan Cleary took time from tireless and fearless pursuit of his agenda to read through some old notes for a story he filed for The Telegram almost a decade ago on Kent and his flirtations with the Reform Party.

Beware of junk merchants

A story originally in The Telegram has turned up on the CanWest news service across the country.

It is a short piece that only discusses some of the more outdated and, consequently humorous, sections of the City of St. John's Act that are still on the books.

There's even a quote from St. John's Mayor Andy Wells, who is shown at right in the illustration, along with the Telegram's headline on the story:

The act is the bane of Mayor Andy Wells. "A lot of the content of the act is junk," Mr. Wells said.

[Telegram Photo: Joe Gibbons]

One of the sections Wells thinks to be junk?

The section of the act empowering the province's auditor general to review the City's books and operations.

You have to go to the Telegram version for that:

The auditor general (currently John Noseworthy) - whose reports annually shed an embarrassing light on the provincial government - could turn his attention to city hall if he wanted.

But Wells said there is no need, because the city already has an external audit process which produces reports annually.

No need because an outside auditor - hired by city council - can do the job.

Like we haven't heard that one offered up by politicians before.

That was exactly the same excuse used by politicians who blocked the auditor general from reviewing the House of Assembly accounts during years when millions were allegedly misspent.

Maybe the residents of St. John's should be suspicious of a politician who considers independent review of public spending by an appointed, impartial official to be a problem.

In the meantime, they can give Wells a shovel and have him repair the city's crumbling infrastructure of roads, sidewalks and water and sewer works.

Like this little gem that erupted in the middle of the last municipal election:

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Andy Wells: Not in the public interest

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

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

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

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

Ok.

Maybe it is.

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

Andy Wells shows up.

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

Tons of histrionics.

Not much else.

Public Utilities Board.

St. John's City Council.

Canada-Newfoundland and Labrador Offshore Regulatory Board.

So the questions that we should consider are these:

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

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

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

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

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

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

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

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

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

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

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True Life

Father to nine year old daughter: "So how was school today?"

Daughter: "Pretty good."

Father: "So what did you learn?"

Daughter: "Nothing."

Father: "So remind me again why I send you to school."

Daughter: "No clue."

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How times change, Part 4

From 2003, a CBC Radio report from the provincial general election on the need for better relations with the federal government.

Among the choice quotes, Danny Williams saying this: "There's a tremendous split in the Liberal Party, federally and provincially and there seems to be a lot of internal bickering going on, you there's disputes going on between provincial members of the House of Assembly ..."

The whole thing is surreal - a word normally overused but all too accurate in this case.

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It's going around

From Telegram editor Russell Wangersky's Tuesday column:

Overall, though, there’s one clear point that has to be made: there’s a major difference between disagreeing with someone’s questions, and disagreeing with their right to make them.

There are obviously people who disagree with my point of view — they’re welcome to their positions. The fact is, this newspaper will be printing their letters to the editor long after I’m no longer writing columns.

Disagree with my arguments — perhaps I’ll disagree right back.

But once we get to the point that all dissent is suddenly proof of disdain — or worse, proof of disloyalty to some cause — then we’re in real trouble.

And believe me, there is more written and said now about the fact that some people in our province shouldn’t be allowed to make their positions known than there has been in years.

Unanimous and constant backing of our provincial government? Let’s be careful what we wish for.

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A wealth of knowledge

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

Core samples.

Oil samples.

Gas samples.

A host of paper and electronic records.

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

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

Maybe it's time to make the pitch.

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Fish on the Pill?

Ok.

So Sue and Gus are gonna have to rethink this "it's all Ottawa's fault" theory they've been running on all along.

Turns out all that estrogen pumped down the toilet from women on The Pill has been shagging up icthyan reproduction.

What will they do now that it isn't a giant conspiracy?

Likely blame Ottawa - which regulates prescription medicine - for failing to do complete environmental studies and predict that 45 years after the introduction of the artificial contraceptive pill that it would adversely affect fish spawning.

Yeah, it's all Ottawa's fault Gus' fishing boats broke the law.

And if they didn't? Well, it wasn't the fishing boat skippers who were wrong.

Nor were the company executives wrong for allowing high-grading.

Nope.

It was the feds' fault for not catching the crooks in the first place.

Try that argument on St. Peter, Gus and see how far it gets you on violations of The Big Ten.

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Just askin'...

When will Steve in Kabul not be news?

Maybe Harper's planning to run in the Afghan general election.

He spends more time in Kabul than in Kitchener or Kamloops.

Maybe Canada and Afghanistan could trade. We could pick up Karzai and a local warlord to be named later.

We could send them Harper and one or two provincial premiers with despotic tendencies.

Might be good for both countries.

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Let the lawyers stick to the law

Eastern Health authority listened to its lawyers last year when it disclosed only certain information about problems with its cancer screening tests.

Now the authority is caught up in a series of mea culpa briefings for news media, politicians and just about anyone else connected to this story.

But one of the results of this little fiasco was predictable: bags of publicity for the lawyers leading the class-action suit and, then inevitably, even more people suing the authority over the entire mess.

So one lesson to learn from all this?

Let the lawyer's stick to the law.

'Cause when lawyers start practicing public relations, things have a tendency to get royally shagged up.

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Pollyanna Dunderdale, part I: offshore exploration license trends

Newfoundland and Labrador's energy minister Kathy Dunderdale claims that the offering of a mere five parcels of offshore real estate in the 2007 call for exploration bids a sign of renewed interest in the province's offshore oil and gas prospects.

Specifically, she focuses on the interest in Labrador:

"This year’s Call for Bids focuses on offshore Labrador, which, up to this point has been relatively unexplored compared to other areas of our offshore. Industry obviously has confidence in the prospectivity of these parcels and this puts us on a path of having additional discoveries in this region."

In an election year and in polling season (Corporate Research Associates is in the field right now) any government would have an interest in puffing up good news or trying to create good news where a more sober analysis might lead one to something other than a pollyanna-ish conclusion.

If we take a very simple look at the overall picture, this year's call for bids is nothing to crow about. There are only five parcels in the current bid. Last year, there were twice as many.

Even with the number of parcels offered last year, the experience in 2006 is an object lesson on why we should draw conclusions on the number of licenses issued and facts related to that rather than on the number of parcels offered.

Since 1988 when the first parcels were offered, the Canada-Newfoundland and Labrador Offshore Petroleum Board posts parcels for sale based on expressions of interest from likely explorers. There are rules and conditions attached to the holding of an exploration license. There are also costs associated with all of it. As we can see from the chart, the number of parcels offered is no indication of how many parcels will actually turn into licenses.
Last year, for example, NL 06-2 contained three parcels. Even though a company or companies had expressed interest in them, there were no bids received. NL 06-1 and NL 06-2 contained a total of eight parcels, with bids ultimately being received on six. In other words, only half the parcels offered actually attracted bids.

Check the years before that. There have been a whole bunch of years in which the number of parcels bid were a lot lower. If you look just at the past couple of years, you might even believe that things are getting better. The lines go up and up is good.

Well, maybe yes; maybe no. If we look at licenses (bids) as a percentage of parcels offered, we see some interesting numbers. These really clarify the relationships noted in the first chart. Out of the 16 years in which lands have been offered for sale since 1988, bids matched offers in only five cases or 31%. Another five cases fall above the 60% line. The remainder are below 60%.

If we extrapolate that data, we might reasonably project that at least three parcels will be bid at the end of this whole thing sometime in the fall. That would put this year's land sale at the bottom end of the chart. It's hardly encouraging at all. Even if the entire number of parcels in this sale were turned into licenses, we'd still be in the bottom portion of our license experience.Another way to look at offshore would be a look at the money bid. The next chart shows that over the past three years, that even though there is a minor upswing in the number of licenses issued, the dollar value has dropped.

Dollar values are a gauge of costs involved in exploration but they also reflect the level of interest and competition. In a period of high interest and high competition, bids will increase. When interest is waning or there is relatively little overall interest due to costs, bids decrease.

In the early 1990s for example, when oil prices were low and the western economies were in recession, the bids were low. There were even two years in which no lands were offered. No one was interested.

By contrast, if you look at the period after the basic royalty regime was announced, the dollar bids, the number of parcels offered and the number of licenses issued was high across the board. Even with high exploration costs - those things are pretty much fixed - and a relatively low price for oil with equally low forecasts, companies were interested in the local offshore.

That's not a coincidence. These three points are linked. A globally competitive royalty regime produced interest from the investment community. it's also important to note that in the same time frame, the operators on the last major oil field discovered to date also returned to the Newfoundland offshore and began examining how to get a very costly field into production.

When poorly informed commentators talk about fallow field legislation and mention Hebron, they fail to notice crucial facts. Hebron is heavy, sour crude in heavily fragmented structures. It will be expensive to develop - compared to the three other fields - and it will also get a lower price on the market. Oil prices are publicly quoted based on light sweet. Heavy sour sells at prices lower than than that. Heavy sour is also more costly to refine and produces relatively fewer end products for a given amount of crude at the start.

Add that together and you can see why Hebron was considered non-commercial for most of the 25 years since it was discovered. A combination of factors, not the least of which was a stable, competitive royalty regime and the investment returned.

Is the current land sale a sign of great things to come, as suggested by the provincial natural resources minister.

Not really.

It isn't a sign of good or bad times, necessarily.

In part II we'll take a look at the specific parcels offered in this sale.

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