NL in national news

Three pieces in the Globe and Mail today highlight different aspects of local events as long as the only local events which interest you are the oil industry and the Premier's snit of the day. It seems that if it were not for the NOIA annual conference, there would be little news at all because it has been generating a flood of news stories with national circulation, even days after the close.

Shawn McCarthy has two pieces. The first, When a boom goes quiet, re-covers the old ground of the local adjustments made made by local business in the wake of having no further oil developments in the works. It's become such a common theme that even the Premier felt obliged to address the issue in his opening NOIA address.

The Globe article opens with:

Greg Gulliver is one of Newfoundland's fortunate sons - making good wages as a project supervisor at the Orphan Industries Ltd. fabrication mill just a few kilometres from his St. John's home.

More often than not, though, the marine launch and recovery systems he works on are being fashioned for overseas markets - the Gulf of Mexico or offshore Angola - rather than for the oil and gas fields located a few hundred kilometres off the Newfoundland coast.

Mr. Gulliver, 40, joined Orphan's parent company, D.F. Barnes Ltd. six years ago, and has prospered along with the St. John's success story. From a 10-person operation just four years ago, D.F. Barnes has grown to 320 people today. Revenue has climbed to $1-million a week from $1-million a year.

But with the recent slowdown in offshore oil activity, the company has followed a well-trod path that so many take in this province - finding work in booming oil fields around the globe, including in Alberta, where a third of D.F. Barnes' work force is located.

The concept of local companies shifting to fabrication for clients out-of-province was also covered in a piece, Jobs out east, that I wrote some months ago for Atlantic Business Magazine.

McCarthy's second, Oil rises, Canada's take doesn't is an interview with Graham Kellas, Wood Mackenzie's vice-president for petroleum economics. I saw Kellas' presentation at the NOIA conference and it was pure gold. If I could have one petro-economic mind on my desk in a jar with a speaker attached for communicating, it would be his. He was complete and throughly informative.

After his presentation, I asked him why developing countries were able to charge such high royalties and why corporations were willing to pay the price. The answer was partially about those nations' utter dependency upon that resource for revenue and their inability to collect more generalised spin-off revenues.

In short, the situation was more complex than this provincial government's tendency to hold these nation's actions up as examples for us to follow would lead you to believe.

But this article focused on only one small part of the presentation, Canada's reduction in our take of oil revenues due to reduces corporate taxes. McCarthy writes:

In the past five years, Canada is the only significant oil and gas producing country to actually reduce its share of oil revenues, the British consulting firm Wood Mackenzie says in a new study.

Many other oil-rich jurisdictions, including Britain and Alaska, have significantly increased their share of the revenue pie generated by rapidly rising global crude prices. But as a result of cuts to federal corporate tax rates introduced by the former Liberal government, oil companies have seen their tax bite reduced, relative to their overall revenues.

“What you've seen in a number of countries is that they have introduced additional taxes for oil companies, to get more of a share of the recent price upside,” Graham Kellas, Wood Mackenzie's vice-president for petroleum economics, said in an interview Monday.

“But what's happened in Canada is that . . . the tax rates that the companies face today and into the future are lower than they were when prices started to rise.”

There was actually a whole lot of other things in that presentation and many of them were much more interesting and relevant to what is happening here. I'll see if I can post more on that.

Finally, at the usually sociable gathering of Eastern Canadian premiers and New England governors, things are not so pleasant. Shame.