Provinces lining up against senate reform package

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

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

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

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

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

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Carter lands book deal

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

Breakwater to publish first book from NTV's Glen Carter

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

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

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

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

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

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

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

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Jamieson to seek father's old seat

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

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

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PAL to train at Goose Bay

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

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

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

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Wow! Green delivers whopper.

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

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

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

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New Hydro Corp; same problem

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

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

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

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

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

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

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

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

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Being Cassandra

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

Fair enough.

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

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

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

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

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

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

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

That is not really the issue, however.

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

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

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

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

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

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

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

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

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

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Your drain on bugs

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

The second one turned up because it exploded.

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

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

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Quote of the week: Loyola Hearn

At the tail end of an interview with The Independent:

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

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

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Premiers push back on senate reform

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

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

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

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

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

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

...

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

...

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

...

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NL behind NS in space race

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

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

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

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

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

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

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MHA/MNA/MLA pay

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

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

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

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

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

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

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

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

This is no reflection on Chief Justice Green.

Far from it.

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

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

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

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The longest quick report in history

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

What work you ask?

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

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

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

When will the rest of us see it?

Ooooooh. Oooooooh

Maybe it will be like the energy plan.

Often promised. Not yet delivered.

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FPI: One Nova Scotian's View

Jim Meek's column in the Chronicle Herald:

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

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

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

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

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

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Investing non-renewable revenues

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

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

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

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

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

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

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Public hearings on Bloom Lake, Fermont, June 19

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

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

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

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Fortis to build new Belize hydro project

From the company's news release on Wednesday:

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

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

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Province to create new energy corporation

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

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

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

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

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Pollyanna Dunderdale Part 2: The Labrador Land Plots

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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BP to ink exploration deal with Libya

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

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

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

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