Money Talk

1.  From labradore, a post titled “Responsible Government”.

2.  From the Telegram, the editorial follows up on a story from the Saturday edition noting the difference between Jerome Kennedy’s take on the pensions business and that of his immediate predecessor.

It asks a question - So, why the huge difference between ministerial attitudes? – that is worth answering, or at least attempting to answer.

The difference has to do, in part, with the length of time in the job and the amount that one knows about the fundamentals of the job. 

Tom Marshall gave the answer any finance minister might give who understood his job and felt comfortable in the roll. 

The long-term effect of a drop in asset valuation is to force the government and maybe the unions to drop more cash into the fund.  As Marshall noted, over the long haul, the pension fund’s asset valuation has gone up and down yearly but has average over 10% growth since it was created in 1981 [See chart at left].

No big sweat in other words.

Jerome, on the other hand, left the impression huge mounds of cash might have to be dropped into the fund in the next “number of years”.

Big sweat, in other words, since most people would take the tone of his comments to mean more cash was needed in a hurry.

Kennedy’s shown this sort of thing before, this lack of understanding.  His answers to simple questions in the legislature last session – his first as finance minister – were overly aggressive, snarky and condescending.

What else is new, sez the wag in the gallery.  True, but look at the words and you get more the sense of a fellow who is anxious to make sure people don’t realize he doesn’t understand a lot of what he is talking about.

He is covering up, maybe temporarily, maybe as part of a pattern.

Another part of Kennedy’s interpretation versus Marshall’s has to do with the annual budget requirement to find some sort of theme for the farce known as “budget consultations.”  Last year it was a debt clock.  Tom Marshall talked a lot about dealing with the debt but in the end did virtually nothing about it all.  This year, Jerome didn’t have a lot of time to find something to use as a prop, as a theatrical device around which to frame all talk.

CBC’s piece gave him that prop, albeit at the last minute. 

A prop really isn’t necessary though, if any of Friday’s session in St. John’s is the guide.  The Board of Trade – predictably – called for tax cuts for businesses as the way to help get through the coming tough times.  otherwise, government should stay the course.

What that means exactly is unclear, since the current crowd have been spending like there’s no tomorrow and no paying down the public debt to any appreciable degree. Plus, as labradore notes, their entire debt pay-down thingy is merely designed to open up room for more public debt.  That hardly sounds like something the Board of Trade would endorse but yet it does.

The only thing more predictable than the always Tory Board of Trade was the Canadian Federation of Independent Business. Times are good:  cut taxes, says Bradley George.  Times are bad?  Cut taxes, says Bradley George.

Again, no concern for the drain on public resources represented by debt and the odds such debt would increase with all those tax cuts.  How will we pay for everything if we cut taxes and cut them again and then cut them thrice for good measure?

The shortcomings of both the Board and Bradley are evident since neither made any reference to the gigantic shortfall in revenues coming this year. They either do not know or care not to know about the billion or so that has to come from somewhere since it won’t be coming from oil and mining and forestry next year.  It is like the debt:  best ignored except to support action which does not occur.

The size of the “or so”part of that equation by the way would be increased, inevitably, by the size of their tax cuts but this is all of no concern.  The only crowd equal in irresponsibility to the business bunch would be the labour and “social” bunch.  Where the business crowd seek to  cut revenue, the other would boost spending in just about every direction simultaneously. 

The current administration enjoys the support of both business and labour, it should be noted. 

Of course, none of this consultation has to make sense, nor must it bear any resemblance to what is actually going on in the world. The purpose of the consultation farce is merely to allow everyone to recite their scripted lines and if it can be held at the hotel owned by a loyal supporter of the government, all the better.

The whole thing is like the annual Christmas pantomime in grade school.   Everyone must memorise the lines and say them, even if they do make sense only in the fantasy world of the moment.

There’s no requirement that the participants in the entertainment actually understanding what they are talking about either.

That, of course, is both painfully obvious and the answer the Telegram’s question.

 

-srbp-

Verbal Tic (2)

Who:  Bob Cadigan, president and chief executive officer of NOIA, the association representing oil and gas supply and service companies. [CBC ram audio file]

When:  January 14, 2009.

Interview:  With CBC radio’s Jeff Gilhooley about Chevron’s decision to defer drilling in the Orphan Basin.

Score:  19 “you knows” in a 4:00 minute interview, with the bulk occurring in the front end.

-srbp-

Simmonds nabs plea deal for Byrne

Former natural resources minister Ed Byrne pleaded guilty to two of the charges against him resulting from the House of Assembly spending scandal.

He pleaded guilty to a count of fraud and another to a count of fraud against the government. 

The Crown dropped other charges as part of a plea agreement worked out with Bryne through his lawyer, Robert Simmonds, Q.C.

Simmonds’ media scrum outside court is available here in ram format.

-srbp-

Rumpole and the Heavy Heart

Sir John Mortimer, creator of Horace Rumpole, passed away on Friday, aged 85.

-srbp-

Gov pension fund drops $1.6 billion in asset value in 2008

The provincial government pooled pension fund saw its asset value drop by $1.6 billion in calendar 2008, dropping to $5.1 billion on 31 December 2008 compared to $6.7 billion at year-end 1007, according to CBC Here and Now.

Public sector pensions are not in danger of imminent collapse but the story does illustrate the impact the global economic crisis is having on government’s financial position.

The table at left  - taken from the pension fund committee’s most recent annual report (August 2008) shows the annual rate of growth for the funds investments.  The average since the fund was created in 1981 is 10.8%.

The fund manages a varied portfolio of assets, including real estate through a corporation called Newvest.

The asset list, as of the end of 2007, is given in the annual report’s financial statements.

The mortgaged properties include:

• the Bayview Chateau, an apartment complex in White Rock, British Columbia
• 440 Eglinton East apartments in Toronto (right).
• Silver Maple Court, apartment complex in Brantford Ontario.
• Park and Tilford Shopping Centre in North Vancouver
• TD Creekside Corporate Centre, Mississauga Ontario
• 2001 Bantree, Ottawa Ontario
• Thunder Centre, Thunder Bay Ontario, and
• Centre 5735 in Calgary.

Busy Work (3)

Newfoundland Hardwoods is a Crown Corporation established in 1950 to manufacture liquid asphalt and sell chemically treated poles and lumber to meet local needs.

The corporation was privatized in 1995  - that is the assets were sold off - but a board of directors was retained to deal with issues arising from the sale of its assets. The directors are all senior public servants in the innovation department.

Those issues have all been addressed save for one storage tank which has been sealed since there is no means of disposing of the contents within the province. The tank is inspected regularly.

In 2008, the directors issued a six page activity plan for the corporation for the period 2008-2011.

Newfoundland Hardwoods – the corporation with nothing else to do but keep an eye on a lone tank of chemical sludge somewhere in the province – is committed to supporting the innovation department’s mission to “foster regional  and provincial prosperity.”

It will do that by - you guessed it – keeping an eye on the sludge tank.

You could not make this stuff up if you tried.

-srbp-

Busy work (2)

Newfoundland and Labrador Farm Products Corporation is the Crown agency that used to run the chicken processing plant at Pleasantville.

The plant was sold in the late 1990s and Farm Products Corp has had nothing to do since then.

The corporation still exists, however, and cabinet appointed a board of directors for the corporation. 

In March 2008, those directors - all public servants - dutifully filed an activity plan as required under the government’s accountability and transparency legislation.

The activity plan reported that the corporation was inactive.

The plan also reported the inactivity would continue.

-srbp-

Two iconic 1960s actors pass away

Ricardo Montalban, known to most English-speaking fans as either Mr. Rorke from Fantasy Island or as Khan, the villain from the second Star Trek film died Wednesday at age 88.

 

 

 

Patrick McGoohan, the brain behind the legendary television series The Prisoner – and its star as “Number 6” - died at his home in California on Tuesday, aged 80.

 

 

 

 

 

-srbp-

A bit late for crying now

Some people – evidently including the governing Provincial Conservatives, the Liberal Opposition and the New Democrats  - thought it would be better to shut the paper mill in Grand Falls-Windsor than to have it open and employing people if there were fewer people working than there were in 2008.

That’s a choice they made.

Union members in the town acknowledged when they twice rejected any restructuring deals from the company that they knew what might happen if they voted down the proposals.

So why exactly would Lorraine Michael, the province’s lone New Democratic Party member in the House of Assembly, be disappointed that less than a month after voting to shut the mill, the provincial government doesn’t have anything better for workers than instructions on how to collect employment insurance or retrain for other jobs?

“We now have a substantial workforce in limbo, people who are understandably anxious about their futures and those of their families,” she said.

Sure they are, Lorraine. 

But they aren’t in limbo.

They are unemployed, or soon will be.  They need to start looking for new jobs.  They need to start thinking about retraining for other work and maybe consider leaving Grand falls-Windsor and the surrounding communities if there isn’t any other work for them.

Maybe Lorraine  - and every other highly paid legislator who voted to ram through the expropriation bill – should have taken a second to think about what they were doing.  Rather than cheering, they might have considered the consequences of their actions.

Just a thought:  maybe Lorraine could have asked to see the government’s plan before she gave them carte blanche to close the mill.

Former mill manager David Kerr put it this way recently:

"You know what's so sad about all of this? A nanosecond after CEO David Paterson was told about the legislated expropriation, let alone what he thinks of the Newfoundland government, he totally wrote off the mill - lock, stock and barrel. That's the way these guys think. If any door was ajar for negotiations to restart the mill (and it always is no matter what anyone says) it's now slammed shut, bolted and bricked up for good.

I don't know who's advising Premier Williams on this but they have to give their head a shake and go back to timing school. Timing is everything in this business and the time to expropriate was not now - good heavens while the mill is running give negotiations a chance. Expropriate on the last day a roll is dispatched on number three winder, not a second before.

"Also the union is insane. They are going around lauding Premier Williams for doing this great thing while at the same time trying to send a veiled olive branch to the company about getting back to the table. What are they smoking? The company reads newspapers, too. I bet Abitibi pulls the plug before March 28.

"Who in their wildest dreams thought this was the right thing to do now? This is a little like peeing in your pants in a snow storm. It feels good when you do it but wait a while and see."

Kerr made a similar comment on a Bond Papers post before Christmas, particularly in his sentiment that before expropriation there was at least a slim chance some agreement could have been reached. Your humble e-scribbler had written the mill off and – in this case like in a number of others – it would have been absolutely wonderful to be as wrong as Mr. Kerr said I was at the time.

Anyway…

Danny and Yvonne and Lorraine and all the others rammed through the expropriation bill without a second of hesitation and even less time for thought.

There’s a bit too much milk splattered over the floor to be crying about it now.

-srbp-

Make-work projects

On the one hand traditional make-work projects may be in decline:

The knocks against infrastructure are that it is not as labour-intensive as it used to be, tends to employ many more men than women and, these days, requires skills in engineering, technology and architecture that are already in short supply, critics say.

"A lot of this ethos of infrastructure-equals-jobs comes from the 1930s when you put a lot of guys to work digging ditches and shovelling gravel. And we don't do that any more," said Dr. Jim McNiven, professor emeritus and former dean of management at Dalhousie University.

On the other hand, maybe someone has found a new kind of make-work:

Perhaps this is the Canadian way with expropriations. In 1970, another firebrand, Quebec premier René Lévesque, passed a law to take control of Asbestos Corp.

The province wound up owning a business that was soon overwhelmed by a wave of asbestos class-action lawsuits. On top of that, the company was entangled for more than a decade in lawsuits from investors claiming their investments had been savaged by the expropriation.

In countries with developed legal systems, the legacy of expropriation can be years of legal headaches.

That last line should be “years of billable hours” and at least part of that will flow to friends of the government who  - just by coincidence – happen to be lawyers.

There’s make-work and then there’s make work.

-srbp-

Busy work

Otherwise known as shuffling deputy ministers around.

1.  We’d be remiss if we didn’t note that the provincial government’s recycling program – complete with the used tire mess – is now being run, albeit on an acting basis, by the same guy who runs the provincial government’s fire and disaster response crowd.

2.  The acting minister of environment/acting deputy minister combo that’s been in place since last summer has been replaced by an acting minister/confirmed deputy minister.  The guy’s been in the job six months and is only now confirmed as the deputy minister.  Bet a lot got done in that department with all the acting going on.

3.  What exactly is a deputy minister of special projects which, the release notes, includes collective bargaining?  Since when is collective bargaining a “special project”?  Not so very long ago that was handled by the person who is now called the deputy minister of the Public Service Secretariat, which, incidentally, also got a new deputy minister.

4.  That deputy minister came from education which got – you guessed it – an acting deputy minister in her stead.

5.  Jerome Kennedy mumbled something over the Christmas holidays about inefficiency in the public service.  Well, he might take note of his boss’ habits in promoting inefficiency.

Firstly, too many people are appointed to too many positions in an acting capacity.  As such, they have a limited ability to get down to work since they might be shuffled off to some other part of the The Hill before they know what hit them.

Secondly, sometimes people get stuck with two things that are unrelated.  Like Mike Samson, a very capable fellow, who must now juggle bottles and cans as well as fire extinguishers.  One of those jobs is – you are too quick – on an acting basis, so don’t expect anyone to be sorting out the mess of the cans and tires until the Premier gets around to putting a full-time boss at the recycling board.

Thirdly, in his own case, Jerome has reporting to him no less than four deputy ministers where there used to be two.  That’s right. Four people doing the job that used to be handled by two.  That’s four if we include the special projects DM since contract negotiations used to be the responsibility of the person running Treasury Board.

Fourthly, let’s not forget there’s still a staffing thing out there called the Public Service Commission  - as opposed to a “secretariat” - with its own bureaucracy that does a whole bunch of other human resource-related stuff.

Fifthly, let’s notice the number of appointments where people just traded offices.

How confusing is this mess?  Well consider that Jerome has been in finance/treasury board/OCIO/public service secretariat since well before Christmas.  His name appears as the minister responsible on the index page for the Public Service Secretariat space on the government website. 

Scan down the page, though, and you see this tidbit:

The Public Service Secretariat is headed by Deputy Minister David Gale who reports to the Minister of Finance and President of Treasury Board, Hon. Tom Marshall.

Now Gale just got shifted so the web-nerd for finance or treasury board or the public service secretariat or the office of the chief information officer (Knuckles Two) can be forgiven for not being right on the ball.

But Marshall?  He’s been gone for months.

It would all make you laugh if it wasn’t your own cash supporting it.

-srbp-

Chevron postpones Orphan Basin drilling

Chevron has decided to postpone an exploration drilling program in the deep water Orphan Basin, according to The Telegram and CBC, due to higher than expected rig costs for 2009. 

Chevron regional manager Mark Macleod said the estimates were higher than the costs for the first well.  According to some reports, the first exploration well cost twice as much as anticipated.

In late 2007, the company committed to drilling a second well during 2008 but those plans didn’t turn into action. Rig availability  has been a consistent factor in drilling decisions since high demand has driven up costs accordingly against a relatively short supply of rigs capable of operating in deep water, difficult environments.

Chevron likely expects that demand will lessen for deep water drill rigs as the price of oil makes deep water plays less attractive. 

In addition, as the Telegram reported:

"As well, we felt we needed to do some additional technical work to re-evaluate all the prospects in the basin from a risk and cost basis," MacLeod said. "So, we've got a bit more homework to do to be ready to drill, hopefully, in 2010."

Late last year, Chevron and its partners consolidated eight Orphan Basin exploration licences (ELs) into four.
Those ELs give the companies the right to explore the seabed.

Under the consolidation, the companies will keep four reconfigured ELs until 2013. MacLeod says that consolidation didn't delay drilling.

"It's allowed us to more carefully focus on the best parts of the basin."

At the same time, Chevron is likely also looking closely at its bottom line.  The company warned investors last week that fourth quarter profits in 2008 will likely be lower than those in the third quarter. Chevron blamed the lower price of crude and natural gas.

-srbp-

Freedom From Information: Bull Arm

From The Telegram, the latest exploits of the supposedly most open accountable and transparent administration in the history of mankind: 

A fire that caused $323,000 damage to an offshore fabrication site operated by the provincial government’s energy corporation. Revealed through exemptions to the public tender act filed six months after the fire.

Jeers: to keeping things quiet. Here's something you might not have known: the Bull Arm fabrication site had an electrical fire that needed repairs costing more than $323,000 - and it didn't happen yesterday, either. The fire was in July. We'd be none the wiser save for a line in the public tender exemptions filed in the House of Assembly just before Christmas. Funny how everything from exemptions to the public tendering act to appointing judges to turfing out members of Memorial University's board of regents seems to happen either late on a Friday afternoon or else during the Christmas doldrums.

-srbp-

Rumpole and the Minister’s Choice (Part Two)

Why exactly did Tom Marshall, justice minister, attorney general and experienced lawyer, select Don Singleton to be a provincial court judge?

Bear in mind he did so without knowing any of the information on drunk driving charges and the conviction in 1990.  With that issue to one side, Marshall did pick a fellow who met the bare minimum time at bar as laid out in the Provincial Court Act, 1991.  The release announcing the appointment is noticeable for its brevity and for the generality of the comments offered about the appointee.

For the sake of comparison here is a list of Provincial Court Judges appointed since 1998 showing the year of appointment and the date in which the appointee was called to the bar. The list was compiled from news releases  available on the provincial government website. [text continues after figure]

Judge	Year Appointed	Year called to bar	Years in practice at appt
Gloria Harding	1998	1979	19
Wayne Gorman	2000	1983	17
William English	2000	1976	24
Patrick Kennedy	2001	Not given	27
Colin Flynn	2001	Not given	18
Harold Porter	2001	1986*	15
Catherine Allen-Westby	2002	1986	16
Timothy Chalker	2002	1971	31
Lynn  Spracklin	2002	1970	32
Bruce Short	2003	1992	11
Michael Monaghan	2006	1970	36
John Joy	2006	1978	28
Jacqueline Jenkins	2008	1990	18
Donald Singleton	2008	1997	11

On the face of it, Singleton would have been one of the most junior in terms of years in practice appointed in the last decade. 

Of the two with less than 15 years practice, Short was appointed to Goose Bay.  A check of the releases will note a consistent issue with finding judges for Goose Bay.  There appears to have been a fairly consistent turn-over and a problem in finding judges to sit there.  While Singleton practices in Goose Bay, he was appointed to fill a seat in Grand Falls-Windsor.

Placentia – if memory does not fail your humble e-scribbler – has been without a Provincial Court Judge for a least couple of years.

The other shortie is Harold Porter, currently in Grand Bank.  Porter is trilingual and has argued cases successfully in the Supreme Court of Canada in both official languages. That may well have had some influence on the decision to appoint him given the need to have at least a couple of bilingual judges in the province.

The remaining appointments all involved people with at least 16 years at bar, but typically closer to or over 20 years.

There are three with more than 30 years service.

The short ones really stand out, don’t they?

Starred Update:  * An e-mail received on Tuesday proved some accurate information for this post. Judge Porter was called to the Bar of Newfoundland in 1986, not 1988 as earlier noted.  That increases his time at bar before becoming a judge from 13 years to 15 years.  As well, he served for a time as a prosecutor in Quebec.

Placentia has been without a full-time judge for six years when the incumbent retired.  No replacement has been appointed;  Placentia is now served by a judge who sits there once a month or so to handle the cases that arise there.

-srbp-

Rumpole and the Minister’s Choice

For the record, here is the section of the Provincial Court Act, 1991 under which cabinet appointed Don Singleton to be a Provincial Court Judge.

Remember:  the Judicial Council didn’t make the appointment.  Tom Marshall – justice minister and attorney general – picked Don singleton from a list of applicants some of whom were highly recommended and others of whom, including Singleton were “recommended”.

Appointment of judges

5. (1) The Lieutenant-Governor in Council, on the recommendation of the minister, may appoint persons to be judges of the court.

(2) No person shall be appointed as a judge unless he or she

(a) has been a member in good standing of the bar of one or more of the provinces of Canada for a total of at least 10 years; and

(b) is at the time of the appointment a practising member in good standing of the Law Society of Newfoundland.

(3) No person may be recommended by the minister under subsection (1) without the recommendation of the judicial council under paragraph 18(a).

For comparison, here is the section from the old act, circa 1974 and amended in 1978 and 1988,  on appointment of judges:

Appointment of Provincial Court judges

6. (1) The Lieutenant-Governor in Council, upon the recommendation of the minister in consultation with the judicial council, may appoint, by Commission under the Great Seal, those persons that the Lieutenant-Governor in Council considers appropriate and necessary, to be judges of the Provincial Court of Newfoundland.

(2) A person appointed as a Provincial Court judge shall be a member in good standing of the Law Society of Newfoundland.

(3) A Provincial Court judge shall be paid, out of the Consolidated Revenue Fund of the province, a salary fixed by the Lieutenant-Governor in Council by regulations made under section 25.

(4) The terms of the appointment of Provincial Court judges shall be judicially noted.

(5) Where a new Provincial Court district is made under section 14 or where a Provincial Court judge dies, resigns or is removed from office leaving a Provincial Court district without an appointed Provincial Court judge, the Lieutenant-Governor in Council may appoint a new Provincial Court judge to that Provincial Court district.

-srbp-

Rumpole and the Nose Puller

As CBC’s David Cochrane reported this evening Don Singleton had not one but three run-ins with the law for impaired driving in the 1980s over the course of three years. The first two never amounted to anything - one dismissed, the other dropped - but on the third one, Singleton blew one and a half times the legal limit and lost his license for six months. He also received a fine of $700. [corrected from two and a half times the limit in original]

The erstwhile provincial court judge took his name out of contention after inquiries turned up the impaired driving conviction.

Singleton claims he forgot about the conviction when he applied to be a judge last fall.

The court records for the three charges are available online, courtesy of cbc.ca/nl. Cochrane’s debrief can also be found there in ram audio file format.

The records turned up on Friday following an inquiry by a local reporter for records of any convictions against Singleton. The first search turned up nothing, apparently due to data entry errors - different birth date and address - in the database.

The inquiry prompted Chief Judge Reg Reid to search further. That second search turned up the conviction and two earlier charges. Interviewed by CBC’s Deanne Fleet, Reid said that, although he was the presiding judge in the 1990 conviction, there was nothing that made Singleton stand out at the time such that he remembered him.

Thus far, public comment is focusing on the need for a background check on all applicants for judicial appointments.

That ignores the fairly obvious question of why justice minister Tom Marshall plucked Singleton from a list of upwards of 30 applicants. Junior at the bar – barely past the minimum requirement for time in practice – Singleton didn’t seem to fit the same pattern as some of the appointees over the past decade.

Marshall also said he asked Reid to change the judicial committee's policy on background checks.

"I've asked him to review their policies and procedures and to implement a mandatory police search and provincial court search for every applicant," Marshall said.

While he’s at it, the justice minister should also change the policy for background checks on appointments to quasi-judicial panels as well. Singleton was appointed to the labour relations board in 2005 around the time of his conviction on the tax and import charges.

-srbp-

Rumpole and the Doddering Old Man

Don Singleton won’t be sitting on the provincial court any time soon.

He withdrew his application, declined the nomination -  whatever is the right word – after information turned up that not only did Singleton have a conviction for impaired driving on his record, he’d neglected to tell the panel that reviews applications for the judge jobs.

Driving while intoxicated is a criminal offence in Canada.

Turns out Provincial Court Chief Judge Reg Reid did a bit of checking and turned up the conviction.

Marshall has a the better part of a box of extra large farm fresh on his face for picking any old name off the list without considering the applicants any more deeply than that. 

Singleton may have passed the basic review of his application, but if the committee reviewing the applicants didn’t rank them – as one suspects they didn’t – the justice minister wound up making a major blunder.

That’s an important point to keep in mind as the spin machine busily tries to lay the blame for this one on the committee and on Reg. Certainly that’s the tone of the interview Tom Marshall did with CBC’s David Cochrane last night and the way Cochrane’s debrief is running as your humble e-scribbler writes this.

The fault here is with the minister responsible who could have seen – on the face of it – that a guy with a mere 10 years at the bar might not be your first pick for a plum job.

Reid – known to most as Reg, not “Milton” as CBC has been calling him – likely took it upon himself to double check Singleton’s background after the most unlikely of names wound up being named as a judge. After all, the existing bench is chock full of senior former barristers, including a bunch of former Crown prosecutors. A guy with a decade under his belt would hardly get a look in without some sort of extra juice, like say a partisan connection.

If you didn’t know this about the current benchers,  the crap about no sitting judges with criminal convictions might make it seem like it’s been a fluke thus far the system worked.  But the system has worked because everyone involved, including the justice minister, looked carefully at the applicants.

In this case, they evidently didn’t.

Well, at least Tom didn’t.

But in any event, good on Reg.

The Doddering Old Man turned out to be not so old and not so doddering after all.  Reg preserved the integrity of his bench.

Maybe They Who Must be Obeyed will take learn a lesson from this and take some advice from now on. They don’t know everything.

-srbp-

Old Harry: Jurisdiction dispute holding up oil exploration

According to Deer Lake Oil and Gas, a small oil company headed by former Peckford and Moores era advisor Cabot Martin, exploration of promising oil prospects in the Gulf of St. Lawrence is being held up by a dispute between Ottawa and Quebec City over jurisdiction of the underwater resources.

Halifax-based Corridor Resources holds exploration licenses for one of the most promising structures, called Old Harry.  The Canada-Newfoundland and Labrador Offshore Petroleum Board website shows Corridor holds Exploration License 1105 which covers the area.  The company website states that Corridor also holds exploration licenses from Quebec for the portion of the Old Harry structure in the disputed area.  The company has conducted 2D seismic investigation but to date no drilling has taken place despite strong signs of oil presence including a number of seeps.

In 2003, Hydro Quebec Oil and Gas farmed in on the Quebec licenses on Old Harry.

-srbp-

Whose line is it anyway?

In this case a transmission line for the Lower Churchill.

A couple of weeks ago, former Premier Roger Grimes took issue with a comment by noob finance minister Jerome Kennedy that the Lower Churchill transmission line would be a good project for federal infrastructure spending.

The Telegram story - not online - quoted Grimes:

"There has been no routing actually planned for a transmission line,"says Grimes. "If they have a transmission line already planned, already designed ... then why don't they tell us where it is?"

He was reacting to Kennedy who the Telegram quoted as saying:

"That's something that we could start immediately, it's something that
we wouldn't have to wait for the environmental assessments because, essentially, we'd simply be building a transmission line," said Kennedy at the time.

Kennedy said Transportation Minister Trevor Taylor delivered a similar
message to federal Infrastructure Minister John Baird just days before.

Similar comments were made by [Premier Danny ] Williams in a year-end interview with The Telegram.

Williams did mention the Lower Churchill in that year-end interview.

Williams also took issue with Kennedy’s comments in the Telly story on Grimes’ comments saying that Kennedy had spoken out of turn. There would need to be an environmental impact assessment. Williams also said that Grimes simply didn’t know enough about what was going on:

"Poor Roger is talking through his hat. He doesn't have the background,he doesn't have the information," says Williams.

"We've been working on this plan for a long, long time, we've a lot of
engineering done," says Williams.

Of course, Grimes and Williams have been at odds over the Lower Churchill for years and of all the province’s politicians, Grimes seems to have a unique ability to get under Williams’ skin.

But that’s not the only talk of transmission lines since the New Year. Emera president Chris Huskelson told the Halifax Chronicle Herald that without a line to Newfoundland, it made no sense – presumably economic sense - to try and ship power directly from Labrador into the Maritimes.

"Newfoundland decides to bring energy to the island, it makes perfect sense to bring energy further to Nova Scotia. If they decide not to bring energy to the island, it won’t make sense to bring it to Nova Scotia."

Then to cap it all, Ed Martin, president and chief executive officer of NALCO(R) and Hydro told the Chronicle Herald that shipping power across the Cabot Strait to Nova Scotia is one of the options Hydro is looking at for the Lower Churchill. Hydro and Emera signed a memorandum of understanding a year ago to explore the possibility of shipping power from the Lower Churchill to Nova Scotia. But as Martin said this weekend:

"It’s looking like somewhere in the Sydney area would be an excellent landfall for us," Mr. Martin said of the proposed undersea cable.

"Not only is it distance-wise one of the closest points to Newfoundland, but it’s close to the Lingan plant, which is a significant emitter for Nova Scotia (Power) . . . but nothing is final yet."

Nothing is final yet.

Well, nothing is really clear in all of this. As labradore noted in a post on Sunday, not so very long ago, Martin and Hydro were talking about shipping electricity into New Brunswick from Cap St. George on Newfoundland’s west coast. That was certainly the option examined in 2005, as reported by both the Telegram and Stephen Maher of the Chronicle Herald. Sea Breeze Power of British Columbia was proposing an underwater line from the coast of labradore to Prince Edward Island or Nova Scotia.

This isn’t a new idea. As Bond Papers reported in 2007, the idea of underwater transmission lines for Lower Churchill power goes back to the 1970s although officials were quick to note that it wasn’t an attractive proposition:

For one thing, according to Vic Young, president of Newfoundland and Labrador Hydro, the 77-mile cable across the Cabot Strait is an extremely poor prospect. Although a study two years ago stated it was technically possible, its capital and maintenance costs would be enormous. The electricity delivered would cost about twice what it would if brought down overland.

But all this talk of transmission lines and environmental assessments gets really curious when one looks at the Lower Churchill proposal which is now in the hands of a joint federal-provincial environmental assessment panel.

The only transmission lines mentioned in that proposal are for two running from Muskrat Falls to Gull Island and then a single line back to Churchill Falls. From there, power would head into Quebec through the existing interconnection.

The project is described very straightforwardly in the agreement between the federal and provincial governments on the environmental review panel:

The Proponent proposes a project/undertaking consisting of hydroelectric generating facilities at Gull Island and Muskrat Falls, and interconnecting transmission lines to the existing Labrador grid.

…

Interconnecting transmission lines consisting of:

• A 735 kV transmission line between Gull Island and Churchill Falls; and,

• Two 230 kV transmission lines between Muskrat Falls and Gull Island.

The 735 kV transmission line is to be 203 km long and the 230 kV transmission lines are to be 60 km long. Both lines will be lattice-type steel structures. The location of the transmission lines is to be north of the Churchill River; the final route is the subject of a route selection study that will be combined on double-circuit structures.

No proposal has been presented publicly for any other transmission lines related to the Lower Churchill. There’s nothing in Quebec or New Brunswick and Nova Scotia. In Both Quebec and New Brunswick, Hydro has simply filed an application for wheeling - moving power through the existing grid - but there’s no discussion of new transmission lines.

While Danny Williams might claim Roger Grimes isn’t up-to-speed on the project, existing public information suggests the Premier and his finance minister aren’t exactly coming clean on the whole thing either.

In fact, Grimes might well be closer to the truth given that if a new transmission line – say through Quebec – is being contemplated there’s been nothing done to make it possible within the next couple of months.

As Grimes noted – and the Premier concurred – a transmission line would have to go through an environmental assessment. That idea would be a wee bit more complicated politically if the line through Quebec was expressly intended to carry power from the Lower Churchill through Quebec to another market.

If there’s another line Kennedy was thinking about, like say across to eastern Newfoundland, there’s still a provincial environmental process that would at least have to be considered. The major problem there is one of cost. Figure on a project costing upwards of $2.0 billion by the time it is done.

The cost of that little make-work venture would be borne entirely by the ratepayers of eastern Newfoundland who, it should be noted, don’t really need all that extra power and certainly wouldn’t get it right away, anyway. Hydro just expropriated over a 100 megawatts of generating capacity from AbitibiBowater and there is surplus power in the grid since the Abitibi Stephenville mill closed in 2005. The Inco project at Long Harbour will suck up some of the juice but there is no great demand for power on the island in the near term.

As for timing, those lines – even if they were built over the next couple of years – would be more than a decade old before any Lower Churchill power coursed through them. The Lower Churchill project will take nine years to complete. The proposal in the environmental review called for construction to start in 2009 with first power in 2014 and the completion of the whole thing in 2018.

But even if the environmental assessment is finished this year it would be well into 2010 before anyone would start digging dirt in Labrador.

Even 2010 would be an optimistic start-time these given that Hydro doesn’t have a single customer for the Lower Churchill power and the money markets are a wee bit skittish these days what with the shortage of capital in the markets.

Heaven forbid that work might start without those contracts in place and with the work being funded out of the public treasury or whatever cash the energy corporation might have laying about. That’s what happened last time with BRINCO as some people are only now realizing. The company borrowed cash and started work in the mid-1960s. Hydro Quebec took maximum advantage of the BRINCO foolishness and with the latter in a financial bind managed to secure the sort of contract concessions it had been seeking from the start.

All the bluster at the time about running power down through Nova Scotia was just a tactic to improve the bargaining position with Hydro Quebec. Ditto the talk of running a line through Quebec with federal backing. There’s no evidence the request was ever made, even though many people insist on repeating the story. In the end, Hydro Quebec got everything it was looking for from the start and then some.

Maybe what we have here with all this talk of transmission lines is the same sort of bluster and political posturing we saw 40-odd years ago.

Certainly there is nothing in the public domain to suggest that anything Kennedy referred to is real.

Maybe Roger Grimes knows a lot more than Danny Williams will ever give him credit for. And when it comes to contracts, it’s not like the two haven’t been at odds before with Williams having to change his position when the facts were in. Anyone remember Voisey’s Bay?

-srbp-

Sunday Morning Horror Flick

This may look funny, but it isn’t.

It is all too close to the reality of modern business and government.

Some of you will recognise people in this video.  Some of you will put yourself in the place of the creative person. Not nearly enough of you will be able to correctly identify who is the creative person in this in the first place.

What would happen if a modern corporation – or government – had to develop a stop sign?  [H/t to Lee Hobson, Shel Holtz and a raft of others if you follow the links.]

Creating A Stop Sign - Watch more Free Videos