Energy plan as political plan

Looking at the Globe and Mail story on the Newfoundland and Labrador energy plan, it gets easy to see just how out of touch the Globe is with what's going on outside some very narrow confines.

There isn't anything in the story that qualifies as news.

For example, the provincial government has been saying for some time what local politicos have been figuring, namely that the energy plan will be a key part of the Williams administration's nationalist platform for the fall general election.

The energy plan isn't about economic development any more. It's about politics.

That's the news in the piece, but the Globe seems to have missed it.

The energy plan will be framed as a battle between Newfoundland and Labrador and Big Oil. It will be about hanging tough and looking for what is "reasonable."

Dunderdale merely repeated to the Globe what Danny Williams has already said: Big Oil better come back to the table because once the energy plan is released, the oil companies will have to pay a lot more than they would have a couple of years ago.

It's talking smack and talking tough for domestic political consumption.

But as both Williams and Dunderdale both know already, the oil industry is taking the view expressed by Paul Barnes local manager for the petroleum producers association in the Globe piece. Equity is fine if the provincial government wants to farm in and shoulder the costs - a la Statoil and Norsk Hydro - but anything else is likely to discourage outside investment.

Predictable positions on both sides. It really doesn't matter which one is right. The energy plan is now pure politics. Pure talk.

Take, for example, the Globe referring to the tough document that will demand "at least" a 5% equity position in all future oil and gas projects in the province. By some comparisons, five percent is actually pretty small, and that's likely why the number is being tossed out there: it sounds innocuous.

But, the Globe needs to do its homework.

The real number is likely to be 10%. Word from the oil patch and other places has it that the draft natural gas royalty regime has already been handed back to the provincial government with the polite advice that the government's plans would scare away investment. That's because the 10% equity position would come on top of the considerable share of cash flows the provincial government already receives.

The chart at right shows relative shares of cash flows for the local offshore, as presented by MUN economist Wade Locke in a public presentation last fall.

All things considered, it gets fairly obvious that the Great Battle Against the Foreign Demons of 2007 isn't really the same battle of 25 years ago.

What we are talking about today are fairly fine shifts of cash that look tiny. However, those fine adjustments of cash may tip the very sensitive investment balance against exploration investment in the local oil patch for some period of time.

If the equity demand will be applied to every new development, as the Globe reports, then we may also see impacts on existing significant discoveries. Hebron is already off the table until sometime in the next decade. Hibernia South: ditto.

Small developments like Norsk Hydro's West Bonne Bay would also be affected, especially if the results of Norsk Hydro's exploration program on the field shows oil reserves are much larger than current estimates.

Even White Rose would fall under that sort of requirement. Husky Energy has been working hard to cultivate a strong, positive relationship with the Premier. However, if White Rose turns out to be larger than currently estimated, that is, if there is an opportunity for the province to get more, then that relationship could change dramatically.

Delaying those developments aren't really important as the energy plan morphs into a political document. The government's real issues are bigger and look ahead over longer time spans.

The new energy corporation is likely to become the focus of export energy developments, some of which are tied to oil and gas. It wouldn't be surprising, given the corporation's mandate, to see it take control of the Lower Churchill project which may be generating power before the middle of the next decade. Part of that project will likely be the construction of the transmission infrastructure - sub-sea cabling - that would carry electricity to markets in the United States.

The new energy corp might well be the license holder at the end of the bid for Labrador parcels next year. With some exploration work - potentially carried on by the energy corporation on its own - the natural gas available from the Gudrid, North Bjarni and Bjarni fields could double in size. That gas, as much as eight trillion cubic feet (8 tcf) including the three existing significant discoveries, could be brought ashore and used to generate electricity in a new facility on the coast of Labrador. The power would be sold down the Lower Churchill lines to markets in the United States.

None of that would really be affected by the equity issue.

That bit on the energy corporation is speculative, of course, but it certainly fits with public statements by provincial officials. It also fits the Premier's concern about shipping natural gas directly to market without some form of added local value.

All of these plays or possible plays are well in the future, of course. In the short- to medium- term, the provincial government knows that it will have significant cash flows from existing oil production. There's no risk in the rhetoric. There may not be an economic gain either, even in the longer run, but the energy plan is increasing something other than economic development.

There really isn't any risk for the provincial government in using part of the energy plan for political purposes. Whatever consequences come will come so far in the future as to be irrelevant to any of the politicians currently making decisions or likely to make decisions on these issues over the next decade.

But to give credit where credit is due, the provincial government's posturing on oil and gas - with all the distortions and misrepresentations about revenues to date and who makes what - is a masterful example of framing a discussion in a way that can't be counteracted simply by anyone, political or industrial.

It will produce the political effect desired in October.

As a political plan, the energy document is already working its magic.

As an economic plan?

Well, that remains to be seen.

-srbp-

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."

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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."

-srbp-

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."

...

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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?

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

Promise made? Promise knee-capped

From Saskatchewan comes a simple statement of the case against the federal Conservatives and their verbal dancing over language, promises and caps on offshore offsets:

During the House of Commons finance committee session Monday, here's what the Calgary backbench MP said to Calvert: "There was no mention of an (equalization) cap when this was discussed in (Conservative) election rhetoric, but there was no mention that there would not be a cap, either." This isn't quite the case. In fact, the Conservatives were absolutely clear -- at least with one part of the country -- that there would be no equalization caps.

"The Conservative Party of Canada believes that offshore oil and gas revenue are the key to real economic growth in Atlantic Canada," then-federal opposition leader Stephen Harper said in a mailout directly to Atlantic voters, ironically headlined with the Gaelic proverb "There is no greater fraud than a promise not kept." "That's why we would leave you with 100 per cent of your oil and gas revenues.

"No small print. No excuses. No caps." The problem with Ablonczy's remark is you simply can't promise voters in one part of the country "no small print, no excuses, no caps" and then tell the Saskatchewan premier "there was no mention that there would not be a cap, either." That would be a lie.

That last sentence just about says it all.

-srbp-

Connies dump another election commitment

The Harper administration will be locating 6200 federal jobs in Quebec, a move that will involve relocating about 4000 existing employees and adding another 2200, according to CBC Ottawa.

Infrastructure Minister Lawrence Cannon noted that the cost of office space in Gatineau is 20 to 30 per cent lower than in downtown Ottawa.

"So we're doing this for the Canadian taxpayer as well as, of course … respecting the long-standing policy that's been in place [since] back in 1994," he said.

That policy sets as a goal a ratio of 75:25 between federal office space in Ottawa and Gatineau. Right now, the ratio is 77:23, the government says.

Of course that policy on how to distribute workers within the National Capital Region doesn't square very well with the Conservative campaign commitment, as contained in Stephen Harper's letter to Danny Williams during the last federal election campaign:

There is an over-concentration of certain federal government services in some areas of the country and an effort must be made to ensure that there is a fair distribution of the federal government presence across the country.

It will be interesting to see how local Conservatives react to this news. Federal presence was a major issue for the Conservative team, including provincial Progressive Conservatives. An incomplete assessment by the Harris Centre at Memorial University was used by both candidates, the provincial government and Conservative supporters at the time, like members of St. John's city council as a political issue during and after the election.

Now the whole issue of federal presence was a partisan crock wrapped up with all the nonsense of looking at public spending as a matter of pure pork. That's been the Bond position, whether it's been about federal jobs or provincial government jobs. It's just laughable to see all the posturing that went on during the last election from federal Conservative politicians, backed by their provincial friends only to see the issue all but vanish from their collective minds. Sure it gets a mention once in a while but it hardly gets the shrill attention it used to get, that is before the federal administration changed hands.

Face it. There was as much commitment to the federal jobs thing as there was to custodial management or Loyola Hearn's call in 2004 for the federal government to hand over its Hibernia shares to the provincial government. Nothing stopped Hearn from pushing that and then running twice for a party that specifically rejected the idea.

Newfoundland and Labrador's federal cabinet representative Loyola Hearn made quite an issue of saving a single position originally to be relocated from St. John's to Montreal. In a news release issued at the time, Hearn was obviously proud of 14 new positions shifted to Newfoundland and Labrador and about the relocation of public weather forecasting to Gander from Dartmouth. Hearn, of course, did not note that marine and aviation forecasting remained in Montreal. Weather forecasting was moved from Gander to the two other locations in a move widely criticised in Newfoundland and Labrador.

"Despite commentary in the media last week, this position will continue to reside in St.John's. I would encourage everyone to gather the facts first, before jumping to conclusions."

"People who know me know that federal presence in our province has always been a key issue for me. Whenever it makes sense to have federal jobs in different parts of the country, I will push for that."

"Since we've taken power, we've put 14 new Fishery Officers on Newfoundland and Labrador waters, we've reinstated the Gander weather office, and we've protected this position."

"Newfoundlanders and Labradorians should be encouraged by this trend during our first eight months in office."

Hearn subsequently announced the relocation of Coast Guard jobs from Dartmouth to Newfoundland, but thus far promises to locate hundreds of military personnel remain unfulfilled.

Of course, none of that addresses Hearn's comments just before he was appointed to cabinet. CTV quotes Hearn as saying something about the need for increased federal presence in the province to promote growth of the local oil and gas industry:

"Newfoundland and Labrador requires a federal presence capable of promoting the province as a fantastic place to do business and to address the industry's requests to streamline regulations," Hearn says in a written statement on his website.

"We need someone in the province, not a faceless bureaucrat thousands of kilometres away, that industry can approach to deal with the day-to-day issues stemming from all the significant oil patch business being generated."

While there's no indication about the departments receiving the 2200 new employees, if any of them are employed by Natural Resources, it looks like the Newfoundlanders and Labradorians will be dealing with thousands of what Hearn once thought of as "faceless bureaucrats" thousands of kilometres from where the work gets done.

The whole move to abandon the federal presence issue just fulfils the point noted in this Bond Papers post from February 2006. Then treasury board president John Baird vowed at the time to stop any plans to relocate federal jobs outside the National Capital Region. Bond wasn't alone.

-srbp-

Separated at birth: the reader input version

There's Normand Lester and Robin Philpott.

Ya got yer Leandre Bergeron, your Pierre Bourgeault, and the other sovereignists.

Who would be the Newfoundland and Labrador equivalents?

Any suggestions, serious or otherwise are welcome.

-srbp-

Anti-federalist witch hunt comes up short

The results of a detailed investigation into alleged irregularities has turned up about $500, 000 in spending that was not reported by the "No" campaign during the 1995 referendum in Quebec.

The official news releases from the Quebec chief electoral officer can be found here and here, and the entire report can be found here.

The secrets of Option Canada "alleged that Option Canada received $5.2 million from Heritage Canada to promote linguistic duality, but the money was used to pad the No committee finances instead." The book was authored by Normand Lester and Robin Philpot. Philpot, a Parti Quebecois candidate in the 2007 is the author of a controversial book on Rwanda.

-srbp-

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?

-srbp-

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.

-srbp-

Islanders bin Binns

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

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

This didn't take long...

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

Nothing like ridicule.

-srbp-

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:

-srbp-

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.

-srbp-

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."

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

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.

-srbp-

That's Riche

riche (n): an overwrought use of an inappropriate analogy, based on the writer's obvious and complete ignorance of world and local history; to repeatedly display ignorance by persisting in the use of said inappropriate analogy; to confuse fiction with fact.

Alternately, to believe a work of fiction is actually a documentary.

As in: "That's riche" or "He pulled a riche" or "Of course, Confederation was a plot. Didn't you see Secret Nation?"

As in this letter to the editor of the Telegram from Ed Riche.

-sbrp-

Andy Wells to run?

Steve Kent decided around Christmas to run for the House of Assembly.

He didn't formally declare until yesterday.

A week after he spoke at the Rally for Danny.

In the meantime, he had a few things, including a boundary dispute, to keep his profile up there as a fighting Mount Pearler.

Follow so far?

Good.

Mayor Andy Wells.

Being his usual annoying, abrasive - and uninformed - self.

Behaving at the offshore regulatory board the same way he used to carry on at the public utilities border 20 years ago. Insulting people with terms that could be better used to describe himself.

Same boring stuff.

Someone leaked a letter to CBC Radio from the chair of the offshore board complaining about Wells. Wasn't the federal minister. Likely wasn't the provincial minister. Definitely wasn't the offshore board.

Who's left?

The same guy who leaked the story of his failed nomination for the top job at the board in the first place?

Good guess.

You see the same letter wound up in the hands of the Independent along with a marvelous, long-winded interview full of quotes.

But here's the thing.

The whole issue didn't need to pop up in the public domain right now. After all the letter was written almost a month ago and the incident involved goes back months before that.

So it gets the thoughts flowing.

If one mayor in the region is running for Danny, maybe the other big mayor will be running for him as well. Maybe this is just another one of those cheesy little stunts to keep Andy Wells' name in the news. Lord knows fixing the streets wouldn't be quite as newsworthy as Wells calling someone a hack, a word incidentally which describes the mayor to a tee.

So where would he run?

In Kent's case, both his intentions and his seat choice were wrapped up in a neat little bow, right next to the "it's all about leadership" crap that he would use to explain away what appears to many to be a track record of political opportunism.

In Well's case - if he were to run - there are actually a couple of options.

St. John's East is a safe Tory seat. It's currently held by intergovernmental affairs minister John Ottenheimer. Now Ottenheimer - surely one of the finest cabinet ministers in a while in this province - is not expected to run again.

But Andy doesn't quite fit the St. John's east profile.

That's a seat better suited to say, Dean MacDonald.

(Now there's an announcement that wouldn't surprise anyone. All that would be left to complete the set after that is a seat for Ken and job for Mel. Call it Cable Newfoundland and Labrador. An unregulated political monopoly. But I digress.)

Anyway, the seat most likely to suit any ambitions Andy might have would be the one currently held by the New Democrat leader, Lorraine Michael.

So there you have it. Speculation of the week. Andy Wells will be running for Danny in Signal Hill-Quidi Vidi.

And some smart bunny out there will undoubtedly connect up the rest of the political dots federally and provincially on his or her own.

The follies continue: yet another two week delay in the spending scandal report

The report by Chief Justice Derek Green into pay and benefits for members of the House of Assembly has been delayed three times so far.

It has always been promised within two weeks.

It's delayed again.

And yes, you guessed it.

It should be delivered within two weeks.

At the same time, the Premier's Office is not committing to implementing the report before the next election.

You see this is what happens when people get involved who pay no attention to the existing law and past practice.

Chief Justice Green's little investigation is a completely bizarre - and unconstitutional? - effort to circumvent the established process and place control of pay for the legislature in the hands of the executive branch of government.

It is a dodgy constitutional proposition even if it isn't outright unconstitutional.

There was already a mechanism established and used for decades to handle pay and benefits. The same process was used in 1989 to set up the Morgan commission, It worked. There were tight rules and definitions that were followed.

Immediately after a general election, the House of Assembly would appoint a commission with the powers of a public inquiry to establish pay and other forms of remuneration for legislators. The commissioner would report within 90 days.

As set out by law, in black and white for all to read and understand.

That system worked until 1996, when the current Premier's stylistic predecessor and his colleagues tossed it out the window.

They decided to make the rules up as they go along.

And basically, that's what the current Premier is doing.

Making the rules up as he goes along.

And that is wrong.

There was never any legitimate reason to appoint Chief Justice Green to this little project.

That is, unless there was some reason to be concerned what would turn up if someone had the powers of a public inquiry.

Chief Justice Green was deliberately denied those powers by the Premier and the rest of cabinet.

And so we wait yet again with no commitments to act on the highly improper report even when it is received.

because there are no rules.

And that's been problem in the House of Assembly since 1996.

Everyone thinks the rules apply to everyone else.

But him.

-srbp-

Background: The Internal Economy Commission Act.

Inquiry re salaries, etc.

13. (1) The House of Assembly may by resolution appoint, upon those terms and conditions that are set out in the resolution, an independent commission of not more than 3 persons to conduct an inquiry and prepare a report respecting the indemnities, allowances and salaries to be paid to members of the House of Assembly.

(2) The persons appointed under subsection (1) shall have all and may exercise all the powers, privileges and immunities of persons appointed as commissioners under the Public Inquiries Act.

(3) The persons appointed under subsection (1) shall complete their inquiry and deliver their report containing recommendations to the speaker within 90 days of the commission's appointment.

(4) The speaker, upon receipt of the report containing the recommendations of the persons appointed under subsection (1), shall refer the recommendations to the commission as soon as possible following the receipt of them and the commission shall implement the recommendations with or without the changes the commission considers appropriate.

(5) [Rep. by 1999 c14 s2]