Wednesday, April 04, 2007

Hebron will get done: premier

It's worth checking out this story in the Telegram today. In it, Premier Williams works to dispel the view that Hebron will come in time and things are OK in the meantime. As an exercise in damage control, it's pretty superficial and falls back on hoary cliches, bombast and semi-facts to ward off public discussions he's keen on tamping down.

Let's look at what he says.

First, as I mentioned yesterday, government is quick to be vague about mysterious "ongoing talks". Formal talks closed a year ago amidst much public acrimony on the province's side and the partners have since been disinclined to carry on under the last set of conditions laid down by government. The Telegram reports:
Williams said Tuesday officials with his government and Newfoundland and Labrador Hydro are in discussions with partners in the project "all the time."

He wouldn't go into details of those discussions.
Interestingly, Premier Williams does not specifically claim that the discussions with the partners have anything to do with Hebron although he does try to leave that impression. In fact, both government and the Hebron partners (who are also the Hibernia and Terra Nova partners: ExxonMobile, PetroCan, Chevron et al) talk all the time over operational issues, Hibernia South and other non-Hebron projects without ever talking about Hebron itself.

So are there talks ongoing all the time about Hebron as the Premier wants people to believe?

The last time government tossed up these kind of vacuous and bland reassurances, media follow-up with the partners revealed that as far as they were concerned there were no kinds of discussions at all; while they were ready to reopen talks, they were very firm that there had been no talks on Hebron going forward since the break-down.

It would be interesting now to go back to the partners, present them with the Premier's quotes and and ask them about the status of Hebron negotiations. As long as the Premier refuses to go into details, he can be as vague and misleading as he wants and that's exactly where his interest lie.

Then there is William's hollow statement that the companies will come back and he notes:
"If we're naive enough to think they're going to walk away from us for 15 to 20 years, then I think we're making a mistake," Williams said.
It may be trite to say that when he calls that statement naive, he's being naive himself but it would still be true. The companies will stay around and maximize their investment in Hibernia South (currently held hostage by government) and White Rose because they can expand that production with little capital or engineering outlay.

But when it comes to a whole new project, especially one at the cutting edge of technology and the marginal end of the economic spectrum (Hebron only makes sense if prices stay very high), there are lots of projects in the world which involve lower capital outlay, more government predictability and higher returns.

In fact, there are more such projects in the world than the major oil companies have people and money to develop them. With 15-20 years considered near-term in the oil majors planning process, obstinance has costs to this province both real and opportunity.

On the matter of the lost jobs and lost opportunities, Premier Williams is caught in a bind. On one side, Hebron represents literally thousands of person-years of work all over the province and $10-12 billion in government revenues. Yet Williams tries to minimize the effects of not having the project through remarks like "St. John's can take the hit" or, as reported yesterday:
"If there doesn't happen to be a job for someone in St. John's in an engineering firm, that's unfortunate. I'm not happy with that. But there has to be some price paid in the short term," he said.
So how unhappy is he with that state of affairs? Clearly not sufficiently unhappy to actually open real talks and do anything about it.

The reality is that we are not talking about one engineer in St. John's, we are talking about hundreds of engineers and support staff in St. John's alone. We are talking about thousands of fabricators in Marytown and Bull Arm, a region that really needs the work. We are talking about uncounted people across the province suddenly getting busy with real and well-paying jobs here in this province instead of out there in Alberta*.

While Premier Williams cavalierly dismisses that one job in St. John's, he pointedly ignores the fact that the oil and oil-related business and associated jobs in the province is province-wide. The Hibernia platform alone, for example, employs people from 90 different communities across the province.

But the most disturbing thing about this story is how Premier Williams casually squanders the one-time limited resource that is oil revenues while proudly using government spending as a substitute for real economic development. Again, as reported in the Telegram:
He said those surpluses are being reinvested into the province's infrastructure.

While things may have slowed in the oil and gas industry, Williams said, paving companies, construction companies and education and health boards are benefitting.

"There's a lot of work going on around the province," he said.
More roads to maintain, more teachers and doctors on salary, and overall more money spent on just maintaining government operations by an administration who can boast a larger public service, in absolute and relative terms, today than when it took office.

At the same time the private sector is in retreat across the province with the latest reports showing that Newfoundland and Labrador will see a decline in private sector capital spending intention and an overall GDP dipping to the lowest in Canada in 2008.

It's the long term spending by private capital that will make the difference in ensuring that this province is a going concern over relating it to the status of a bedroom suburb of Fort McMurray.

And there is still no resource money allocated on an ongoing basis to lowering the provincial debt.

In this interview, Premier Williams is pandering to the 70% who continue to approve of his actions as long as they believe they are paying no cost for them. For the foreseeable future and into the next election, facts will play no role in this debate because of the way this province has divided into two camps.

There are those who don't know or care about the economic impact of this government's actions as long as they can bob along proudly in the glorious wake of Premier Williams' latest jihad.

And then there's those in the real world who have businesses to maintain, homes to keep up and children to feed. And those are the ones leaving for Alberta so they won't be voting anyway.


*And make no mistake - there is an exodus of trained and capable workers out of this province because there is no substantial work for them to do. Empty palliative government programs dealing with a skilled labour shortage cannot place of actually producing jobs to attract and keep those workers. You can put this program in the same bin as the provincial immigration strategy which will fail for the same reason government is ignoring: It's the economy, stupid.

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