Tuesday, May 08, 2007

Who will we blame then?

Just a few days before the Rally for Danny, it's worth considering the hothouse environment we have created here. When Greg Locke talked about the weight lifted off his shoulders when he got off the ferry in Sydney, and at the risk of putting words in his mouth, I think he meant the relief from the increasing intensity of local politics.

It's an environment which has inspired the True Believers of the point of view that we have been screwed, we are being screwed and we will always be screwed. This self-righteousness provides the license to attack anyone in any way no matter how crude or irrelevant.

Vicious umbrage is taken at legitimate alternative points of view. That is when anybody dares to risk the ridicule and attack that might come with raising an alternate legitimate point of view.

The radical neo-nationalist local ideologies are becoming mainstream. The rhetoric, even from those in responsible positions who have a responsibility to know and do better, has been ratcheted up to intense levels.

Those who dissent are disruptors, traitors, sellouts.

Every issue, every point of difference and every negotiation has become the opportunity for civil war. The other side must be humiliated to achieve our tribal goals. All this furious local activity takes the time, space and resources that could be better put to the good of the people of the province.

In the meantime the world goes on, business goes on and life goes on. In the end we don't and won't feel better for all the shouting. And we won't be better off for it. We will be spent, exhausted and hung-over wondering what happened.

Then it will be time to pick up the pieces and repair the damage we have done to ourselves.

By that time our children will have taken the plane to Alberta leaving behind bewildered parents who will never know their grandchildren except as Christmas visitors on alternate years.

Who will we blame then?


Williams' plan a tough sell for Big Oil - Premier's attempt at equity stake may leave province out in the cold

by Claudia Cattaneo, Financial Post, Tuesday, May 08, 2007

Danny Williams, premier of Newfoundland and Labrador, sent shivers through the country when his government served notice in a Throne Speech two weeks ago of its intentions to be "masters of our own house."

Mr. Williams was reinforcing this message: His province will no longer be bullied -- in his view -- by outside interests, whether by the federal government, which cut its transfer payments, or the likes of oil companies, fishing for unfair deals on its offshore deposits.

It is a popular message in a province where the perceived inequities of the past continue to loom large.

Yet what is becoming increasingly obvious is that control of Newfoundland's future is slipping into the hands of Alberta, largely because of Mr. Williams' unrealistic expectations and the market's dispassionate behaviour.

Canada's two top oil-producing economies are developing such a strong symmetry they are becoming either/or situations in a skills-challenged reality, to the point it may take a big downturn in Alberta for Newfoundland to get a shot at benefiting from its offshore riches in the future. Three reasons: - Oil is badly needed, but labour and brains to produce it are now needed even more. Newfoundland's people and oil services companies are moving to Alberta in large numbers. The exodus is so large that Newfoundland's business community fears the province no longer has the workforce to build a new project, even if one were announced tomorrow. It also worries it cannot compete with Alberta wages, making any attempt to lure its people back futile.

The high-unemployment province has been a supplier of talent to the rest of Canada for generations. However, that outflow picked up a year ago, when the premier and oil companies failed to nail terms on development of the fourth major offshore development, $6-billion Hebron Ben Nevis.

Other potential projects, also worth billions, from exploration programs to an extension of the Hibernia South reservoir, are on hold as industry waits --and worries --about Mr. Williams' long-awaited energy plan.

The result is that for the first time in 15 years, Newfoundland does not have an offshore energy project in the pipeline.

Alberta's policies encourage energy development, while Newfoundland's are guaranteed to push it away.

Mr. Williams is expected to release an energy policy before the next provincial election in October, making it mandatory for the government to hold equity stakes in all future oil and gas projects.

In an interview with the Financial Post last week, the premier said the province would demand stakes of more than 4.9%, the amount it negotiated for the Hebron. The province is also likely to demand a high level of local investment by oil companies and super-royalties that would increase with higher commodity prices.

The terms would result in a high degree of government involvement that is likely to be unacceptable to oil companies. In addition, the fiscal terms would make Newfoundland uncompetitive with Alberta, where the government has not owned a piece of the oil industry since it sold Alberta Energy Co. (the predecessor of EnCana Corp.) 20 years ago; its royalty rates, while under review, do not escalate with higher commodity prices; and there is no requirement to invest locally, other than a preference by the government to keep as much heavy oil upgrading in the province as possible.

Most companies with interests in Newfoundland's offshore now have ambitious oilsands plans. In fact, those plans have escalated since Hebron talks failed, making a return to the East Coast a hard task: ExxonMobil Corp. is a partner in the Kearl Lake project and has taken a larger role in the management of the Syncrude mining consortium; Petro-Canada is priming its Fort Hills project for takeoff in the summer; Chevron Corp. is a partner in the Athabasca Oil Sands Project, which is expanding aggressively; ConocoPhillips has its hands full with a major oilsands partnership with EnCana and interests in two other oilsands projects; Husky Energy Inc. just bought a major refinery in the United States as part of its own oilsands strategy.

Even Norsk Hydro, the Norwegian oil company that has been taken over by Statoil ASA, made a big leap in the oilsands two weeks ago when it purchased North American Oil Sands Corp. and now plans to become one of its largest operators.

The bottom line: While Mr. Williams now tries to revive Hebron discussions and says he is optimistic its partners will accept a deal, warning terms will tougher with his new energy plan, his province is sitting out the biggest boom in the commodity's history, while Alberta is milking it for all it's worth.

He will need to beat Alberta -- not live in the past -- to get in on the next round.

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