Princess Bride Character

*siiiiigh*

Which Princess Bride Character are You?
this quiz was made by mysti

FPI - Don't Breach the Fourth Wall

Listening to a CBC radio story this morning, Mr. John Risley was quoted commenting on the FPI amendments just passed in the House of Assembly.

You might remember that one of the points of the changes was to "dilute the influence" of some directors because government has not been happy with the executive committee. This committee, comprised of Rex Anthony (NL), John Risley (NS) and George Armoyan (NS), has been running day-to-day operations at the company in lieu of a CEO.

The FPI amendments require, among other things, that the Board and all Board committees should be a majority of locals. The operating government theory articulated for public consumption, and for opposition too for that matter, has been that evil mainlanders have been raping the local industry for their own benefit and that we need true-blue Newfoundland and Labradorians (pur lain NL'ers in Quebecois parlance) on the Board to protect us.*

While making my coffee I heard Mr. Risley state that he will appoint more locals to the board as well as to all committees, including the executive committee, to make it compliant with the law.

So far so good. That would have been enough to say but then he went further. He then said that it really won't make any difference to FPI operations and that, in the end, the only effect will be to cost the company money.

That's when he broke the rules of the game and breached the Fourth Wall of Public Communications.

What is the Fourth Wall? The term come from theatre where actors on the stage are supposed to act as if the audience does not exist. In effect, the audience is replaced with a Fourth Wall which goes along with the other three walls on the left, right and back of the stage.

In the case of public communications, breaching the Fourth Wall means saying something which may be true and is clear to an objective observer but is not mentioned in order to preserve a commonly held and accepted convenient fiction.

For example, the government and opposition parties frequently ask their supporters to flood the local VOCM talk shows and the letters section of the editorial page of the Telegram. Sometimes they organize to rig the VOCM Question of the Day.

The commonly accepted fiction is that all these things accurately reflect the sentiment of the public at large. The reality is that they are frequently manipulated for political effect. The media know that and the political class know that.

But you will never hear that said or complained about in public. Breaching the communications fourth wall is in doing just that.

So how did Risley breach the wall this morning? It's simple.

Government (Rideout, Williams et al) already know that these FPI Act amendments will have a minimal, if any, effect of company operations. However, politics demands that they colour their actions as that of industry saviours. And since the Opposition has no power to influence things, all they can do to avoid irrelevancy is to present a harder line than the government.

If Risley knew how to play this communications/political game, he would have acted contritely, told the reporter how the company would comply with the law and then stop talking. That was his role to play in this little drama.

Instead, he said:

"Frankly, having more members on the board I don't think is going to change anything, other than cost the company more money."

He stated the obvious truth: that these Act amendments are effectively meaningless. But now he's now left the door open for government to claim company resistance and impose real draconian measures. These comments can come come back to haunt him.

The lesson here is that public communications is partly theatre and the players are actors on a public stage; play your role to best advantage to your side. If you respect the Fourth Wall, you can use it to your advantage to further your goals.

If you insist on breaching it you do so at your peril.

----------------------------------

*I guess we are meant to accept that NL economics and business practices are somehow fundamentally different in principle from mainland economics and business practices but no matter.

World Trade Center

Devastating. What else is there to say?

Grow up Harper

This site from Chris Dwyer, encourages Prime Minister Harper to grow up, stop acting like a big baby and start dealing with the national press corps as an adult. To push the point home, Chris wants you to send pacifiers to help the Prime Minister soothe his troubles away.

From the site:

"Canadians are always going to have questions. The press is there to ask those questions, to keep any government accountable, and I think it's bad policy when a Prime Minister snubs a body that represents public discourse," said another online participant.

Despite the playful tone of their campaign, the group is serious about their message. They have launched a website, www.GrowUpHarper.net, where they will post photos of all the pacifiers sent by Canadians to the Prime Minister's Office. Anyone who wants to send a soother to the PM should take a photo of it before shipping, and have it added to the site.

As a parent of 2 children and a veteran of many long and late evenings using the said pacifiers as a vital tool of continued existence (mine mostly), I can personally attest to their efficacy to calm a petulant child.

I expect national coverage of this site pretty soon.

NDP - Never All Bad

I've gotten some response to my posts on the NDP convention (before and after) and my political obit of Jack Harris and I want to clarify something: I don't have anything in particular against the NDP.

I hesitate to offer the defense that some of my best friends are in the NDP (although that would be true). I will note, however, that in my humble opinion some of the greatest premiers of any province in Canada at any time would be Roy Romanow, Allan Blakeney and the matchless Tommy Douglas, all of Saskatchewan and all CCF/NDP.

Romanow took over his province after the destructive, corrupt and incompetent reign of Tory Premier Grant Devine who almost bankrupted his province. Romanow's bold and responsible policies brought them back from the brink. (His latest work in health care, though, I found disappointing and thin)

Allan Blakeney made a great contribution to the country through his wisdom and sage advice during the constitutional repatriation in the late 70's and early 80's.

I won't even go into my heartfelt respect for Tommy Douglas - a truly remarkable human being on every count.

Stephen Lewis, the former NDP leader in Ontario has been doing remarkable international work for years on the AIDS/HIV issue and it looks good on him!

On the federal level, the finest parliamentarian the country ever produced was widely respected Stanley Knowles. He was first elected for the CCF in 1942 and retired from politics as an NDP MP in 1984 when he was given the unprecedented distinction of being made an honorary table officer of the House of Commons by Prime Minister Pierre Trudeau. This allowed him to spend his retirement viewing parliamentary debates from the floor of the House.

When Knowles spoke on the traditions and procedures of the House, Speakers and Prime Ministers listened intently.

All of these remarkable people have their origins in the NDP or the predecessor organisation, the CCF, and they are all people who fit neatly into my personal pantheon of great political heros.

I have a confession to make: I have a sneaking and grudging respect for "Smiling" Jack Layton. Although he spent way too much of his book on the issue of bike use in the urban setting, he has the right idea for the leader of a political party - get more seats.

When Walrus Magazine recently ran an article by James Laxer (a hard left true believer in the workers owning the means of production) where he criticized the strategy followed by the Layton campaign last election, I knew Layton had to be a sensible guy by most measures.

From the NDP we always hear the list of glorious past accomplishments (Medicare, PetroCan, this, that and the other thing). But the fact is that very few of them were actually NDP accomplishments. Most were cherrypicked and implemented by other parties and governments (most notably the Liberals).

Just because you might have a bright idea from time to time does not mean that you are qualified to take power. Ideas are cheap and almost everybody has at least a few of them over the course of a day.

The real trick to achieving political power and staying there is in navigating the political shoals, avoiding the jagged rocks and making the compromise.

As hard as it is to believe, political compromise does not equate to betraying political principles. It's the difference between living in the real world and chatting the idle chit-chat in the downtown cofeehouses over a Fair Trade latte.

So far, the local NDP can't seem to ever get out of the harbour and that's why I'm so hard on them. Over the years, they have become smug and self-satisfied with their lonely place in the world. They want to become a successful political movement without actually making the political moves required to get there.

To get political respect, you have to go out of your way to earn it.

But rather than adapt to political realities, they prefer the world adapt to them. Rather than ask questions, they act as though they already have all the answers to fix this cold, cruel world.

The local party has yet to learn that their job is to gain power for the greater public good as they see it. Instead they have become the mouthpiece for an odd collection of self-interested trade unionists and become the home for every advocate of the looney left and well-meaning agent-for-social-change in existence.

Solidarity, Brothers and Sisters, as you march proudly arm-in-arm into the political abyss.

That is the dark side to ideological purity.

(Notwithstanding all the above, I still wish Peg Norman had run.)

NDP Convention - Aftermath

My congratulations to Lorraine Michael on her romp to the NDP leadership. 107 to 5 is a margin of victory which would be envied by any politico.

Now on to the reality check.

First . . . According to the NDP website:

"The Provincial Executive has waived the requirements for Membership under Article 10, Section 3, subsection e for delegates from District Associations; and has decided that where no District Associations exists, the first ten (10) members who register from that District will be seated as delegates from their respective districts."

So, any NDP member where there was no district association (a very good few, I bet) could have flown, walked, driven, crawled to the convention and be entitled to a vote. In theory this means that up to 480 delegates (not including any ex officios or any other voting delegates) were eligible cast a ballot. In the end, only 112 bothered to.

That should be seriously disheartening to all those who fancy the idea of the NDP becoming the opposition, let alone taking the government.

Second . . . Jack Harris' farewell speech and closing advice to the party he "led" for 14 or so years was enlightening. He advised (wait for it) more fundraising and more organizing on the district level. That's pretty solid advice. Sorta makes you wonder what his professional priorities have been for the last decade and a half.

Third . . . Listening to Ms. Michael's interview with CBC this morning, it seems like she is more than ready to follow in the footsteps of her predecessor in passing on responsibility for grassroots organizing to others. She mentioned that the party was ready to go forward and was pleased with the appointment of Rick Boland in executing that role. Meanwhile, she is going to be busy doing other things. "Leader" things, I suppose. But of course she will be at the beck and call and ready to appear wherever the executive wanted her to.

Now I've already braised Mr. Harris for doing exactly that and now it seems that Ms. Michael sees no downside to her do that too.

At the end of the day, if the NDP wants to be a real political party that wants to be taken seriously as a political party, it really has to start acting less like a conscience and more like a political party.

More specifically, it absolutely positively has to cut it's ties from the labour movement. As inconvenient as it might be, the rest of the world views that labour connection as a millstone to the party and an impediment to broader support and not any kind of organisational leg up.

Party leaders need to act as party leaders and understand that the buck stops at their desk and that they have to be intimately involved with critical issues of organization and finance and not just the sexy soft policy stuff which NDP leaders and party officials love so much.

The party itself has to be organized around the goals and objectives of a political party. It has to organize real political campaigns which are NOT the same thing as the sort of union-run "awareness-raising" style campaigns that it's been wedded to up till now.*

The NDP, above all other local parties, have traditionally prided themselves as a group with more experience in "campaigns" of all kinds than any others. The reality is very different and the party refuses to learn and adapt from it's mistakes.

It's easy for the NDP and it's members to disdain the messier aspects of politics as practiced by the other parties in the province. That attitude will assure Ms. Michael a spectator seat in the House of Assembly galleries for many years to come.

--------------------------
* In the last federal campaign one member of the local media who was naturally sympathetic to the NDP told me that "they couldn't run a fax machine" let alone a campaign.

Gerry Reid - Liberal Leader

By way of disclosure, I've know Gerry Reid since 1989 when he was Executive Assistant (EA in the political pro parlance) to newly minted (now deceased) Fisheries Minister Walter Carter and I was a Special Assistant to to Premier Wells.

He was older than many of us. He had a decade on me with a much longer history in partisan politics. We shared many a smoke back when I still smoked and I always liked and respected him. He impressed me as smart, practical and hard when he needed to be. The way he took out Walter Carter in a nomination challenge, relegating this senior minister to a third place finish, is the stuff of local political legend. It showed off Gerry's logistic and political skills to good effect while underlining the weakness of the position in which Carter allowed himself to drift.

Gerry never made that mistake and he's never looked back taking on the ministries of education and fisheries in the Grimes government and managing them both competently and effectively.

Now's he leader of the Party.

While I'm not all that impressed with the way it happened, the party has definitely decided on a good and practical choice under the circumstances. Gerry does his homework and knows how to keep government on their toes.

The big question is if he can take a worn-out, lazy and exhausted caucus and weld them into a team of government-in-waiting that the province can vote for with a clear conscience. I hope that Gerry makes some changes and moves the party into a direction different from the bumpy ruts it's been struggling through.

To move the party beyond benchwarmer status, he needs to think strategically and act tactically. In practical terms he needs to:

• Improve and sharpen it's public communications. Stop playing government-style defensive and start a real oppositional-style offense
• Effectively present the party as a competent and viable alternative to the government in place with well-thought out and well-researched policies - be credible and proactive
• Stop responding exclusively to government actions-of-the-day and start attacking government philosophical underpinnings and assumptions
• "Encourage" some current caucus members to retire and aggressively recruit new faces (avg term in the House for current caucus - 10 years. Last new face elected member was R. Butler in 2001)
• Don't ignore the urban areas in favour of pandering to the rural districts
• Raise money and organise organise organise

We can't have good government without good opposition. It's the way our system works. Let's hope for an opposition that can fully and responsibly discharge it's duty to the people of the province.

Good luck, Mr Reid.

Chicken in the Fisheries

In light of the recent fish symposium/town hall/Premier's meeting/summit or whatever other name you wish attached to this event, I thought it might be appropriate to briefly look what happened and where the province is going now.

By way of review, it might be worthwhile for the gentle reader to reread my post from March 28 (Of socks, lighters, chicken and fish).

Premier Danny Williams, at the close of the meeting, articulated a widely held (and obvious) consensus that there are too many plants, plantworkers and fishers for the amount of fish available. Rightly, but unhelpfully, he stated that the status quo cannot be maintained.

Right on his heels, Gerry (Problem? What problem?) Byrne, the MP for the west coast, offered a dissenting and frighteningly vacuous* point of view. He stated that the real problem was not lack of resource or industry structure; the real problem is all about marketing. "We need to be price-makers, not price-takers", he says, all the while reassuring us that no more plants would close.

Keep whistling in the dark, Gerry. I'm sure no one will be more surprised than you when the plants along the Northern Peninsula start closing. I bet you'll be able to calm your constituents with that clever "price-maker" line.

In a similar vein, but even more self-delusional, was the response from the Honorable Minister of Fisheries and Oceans for Canada Loyola (no need to panic) Hearn. His position was:

1. Don't hold your breath for federal buy-out money;
2. There's no resource crisis, just marketing problems;
3. Some people may have to commute because some plants might close but it will all work out; and
4. People who say there's a resource problem are out of touch and clearly don't have the information that he has.

On that last point, maybe this is not the best time for the practice of Gnostic politics where only the anointed ministers have access to revelations from divine sources while the rest of us have to struggle in the darkness of abject informational ignorance. If you know something we don't, Minister Hearn, fess up and enlighten us please.

I suspect Hearn is more than happy to sit on the issue and just look concerned until the Conservatives form their majority. Then he can explicitly ignore the problem and not even have to act like he might do something. After all, in this case, time is his friend. As more plants close and more workers leave the industry on their own or just retire out (average age for plantworkers is in the mid-50's) his problem gets smaller and smaller all the time.

Meanwhile, the Premier has said that he believes the federal government has not ruled out money for a federal bail-out and that something can be arranged. My advice to the Premier: push Hearn to the wall until he squeals and produces the cash and do it quickly.

But the real result of the summit is the formal start of the game of Chicken in the Fishery. The rules are simple: everybody continues what they were doing and tries to survive the best they can. The players who blink (runs out of money, closes down or otherwise goes under) are the chickens!

So far, FPI and Daley Brothers are the first two chickens. Daley Brothers went out in a spectacular blaze of glory owing the Bank of Nova Scotia $32 million! And make no mistake: they are just the first. Many more plants will close from mountains of debt and lack of resource to process.

In the end, unless the weak plants are closed sooner than later, all operations will be dragged down and weakened. This will continue until a critical mass of operations shut down leaving sufficient resource for the remainder. The question is whether what's left will be healthy enough to survive.

On Open Line on Friday, the Premier made it clear that he wanted a controlled shrinkage of the industry. He said (my paraphrase) that he does not want to see collapses happening willy-nilly where government is left just to follow around and pick up the pieces after the fact.

With all due respect, I suggest that there can be no controlled shrinkage of the industry unless players are bought off or otherwise compensated to close their operations. Even then, if government was to decide who was to close and when, it puts the politicians in the position of choosing which communities live and die through deciding industry winners and losers.

There are two problems with that. First, politicians (and government in general) are miserable at picking winners and losers in any industry let alone the fishery. Second, so far the government has show itself very reluctant to see any plant close anywhere in the province. Every time a plant starts to head that way, government does everything it can to keep it open including throwing money at it (see Arnold's Cove).

So what's the solution? Well, in the western world we already have mechanisms in place to select viable operations from the hopeless ones: the market. All government has to do is stay out of the whole thing and let the weak shops go under. Contrary to the Premier's thoughts, it is Government's job in this case to follow along and pick up the pieces afterward. Government's role is to make sure that people are offered supports to help reach other employment opportunities wherever they may be.

It's a tough thing to do, to stand by and watch commercial operations close with all the resulting collateral social and economic damage that comes from that. It's the kind of situation that can make government the toughest job in the world. However, to economically interfere in the way government already has in this industry for too many years causes even more damage over the long term.

Is the fishery an industrial/commercial sector concerned with viability and growth or a social program engineered to produce the maximum stamps for the maximum number of people? It can't be both.

But when you can decide the answer to that question, then the solutions become obvious.

--------------------------------------
* I've heard some complaints that some officials don't like their remarks characterized as "vacuous". May I suggest, therefore, that you not issue empty and meaningless public statements (aka vacuous) in favour of substantive comments that actually address the issues at hand. Only then will my conscience allow me to retire the "v" word.

NDP leadership convention this weekend

This Sunday the social activist, gender equality crusader and community development advocate Lorraine Michael will be handed the weighty responsibility of the NDP leadership. She will be chosen in lieu of perennial candidate for provincial and federal office, writer and social activist Nina Patey.

Like every other political event, this one comes with healthy dose of public hypocrisy and wishful thinking.

This hypocrisy comes in the form of the clear contradiction put forward by the candidates and party officials in their statements about the current state of the party and the outgoing leadership.

On one hand they say "the party needs to grow, needs to organize, needs to be relevant, needs to recruit, needs to do all the things that a political party needs to do in order to entertain political success". Fair enough! Nobody could argue that all these things and more are the very least the party needs to do to avoid irrelevancy.

In the following breath we hear "what a wonderful leader Jack Harris has been".

Kind of makes you wonder what standards were used to come to that conclusion. Particularly since the NDP party, by almost every objective measure (votes, seats, any kind of political influence) has been an unqualified abject failure in provincial terms.

So what has Harris been doing the last 15 years? Now I've already given my thoughts on the Harris political legacy so I don't want to repeat myself but suffice it to say that these accolades for this dearly departing leader can only be explained by the refusal to speak ill of the political dead.

No doubt Jack will shortly go to his appointed reward thanks to the generosity of the Williams administration in gratitude for the uncritical political support he's given on certain hot issues close to the government's heart (Hebron negotiations and the FPI Act amendments). Stay tuned and wait for it.

So where does the wishful thinking come in? It comes in the form of the dream where the NDP party, under the energetic leadership of Lorraine Michael, will supplant the Liberal party as the Official Opposition.

As ready as I am at any given time to make of meal of my words, I will still go out on a limb and conclude that as divided, weak, ineffectual and pathetic an opposition party as the Liberals are right now, the NDP still has no chance to replace them in the foreseeable future.

The reason is simple: the NDP, without substantial internal reform, will remain a novelty party dominated by self-interested labour unions and self-righteous social activists who share an obsession to avoid the political mainstream in favour of lingering in the political margins with their self-satisfaction to keep them warm.

That paradoxical disdain for political power by a political party comes into sharp relief when one sees and hears the cold reception given to successful NDP or NDP-related political luminaries from other jurisdictions. The vitriol of "sell-out" and "traitor" reserved for the likes of Roy Romanow (former NDP premier of Saskatchewan) and Tony Blair (Labour PM of Great Britain) is heard way too frequently from too many corners of the NDP. Just look at the disrespect given Blair by the federal NDP caucus when he spoke to the House of Commons where he gave short-shrift to the anti-globalization movement.

As long as the NDP would rather be right than win, they will stay a party of conscience with no chance of real power.

Will this change under Lorraine Michael? Sadly, from all I've seen so far, it seems not. Ms. Michael seems to come from the same circle of ernest social activists on which the party has always relied for supporters, workers and candidates. Her selection as leader does not reflect any desire for the party to take this opportunity to expand beyond that narrow ideological base.

Experience so far has shown that this narrow ideological base is no foundation on which to gain seats, and therefore power.

The irony is that the leadership of Lorraine Michael will likely represent a further narrowing of the political base from what it was before under Jack Harris. This only underscores the great missed opportunity represented by Harris: that he was smart enough and sufficiently bland and inoffensive (with that glaring exception of that misadvised personal shot during the mayorality race that was harsh enough to engender popular sympathy for even Andy Wells of all people) to form an effective political coalition by adding to the party's political base. And he didn't.

In other words, expect more of the same, and therefore less, than what we've seen from the NDP so far.

Too bad.

I would have preferred to see Peg Norman in there.

We Feel Your Pain

This video is worth watching. From Microsoft UK, it's a spoof product video.

The premise is simple and elegant to anyone who uses a Windows machine: when your computer causes you pain through lockup-ups, errors or other problems, you can share that pain with the Microsoft programmer responsible for that error. You have the option of issuing a physical jab with a sharp object, zapping them with electricity or otherwise smacking them with the back of their seat.

Check it out and then consider this thought: imagine if you could watch the House of Assembly and had the same control over those lovely green sealskin chairs which grace the posteriors of our elected memebers of the House of Assembly.

Would any of them ever be able to complete a sentence without interruption?

Enjoy!

2 + 2 = 4??

Just when you thought it might be safe to take people at their word, you have this vacuous story in which it is reported that Combined Councils of Labrador "applauded government for taking the lead role in the potential development".

There are two things about this. First, it is abundantly clear that the recent announcement on the lower Churchill was nothing more than a public relations puffery announcement signifying nothing of importance.

"We will go it alone" the government said.

At the same time the government has done none of the preliminary work (environmental, engineering, financial, market research/development, political negotiations) required to make this all go.

Will there be equity partners? Maybe, we'll see.

How will the power be delivered? By seagull, I figure. It certainly seems like the government/NL Hydro has no clear idea they are willing to discuss.

And the big question: who's gonna pony up the C$6-9 billion to pay for it? Maybe if Danny picks enough fights and knocks out enough teeth, the toothfairy might take out bonds.

So with no answers forthcoming on any of the substantive issues, it seems pretty clear that the announcement was a combination Hebron/FPI diversion that just happened to be timed to give the government a lift going into the latest quarterly CRA polling period.

So that brings us to strong and independent voice of the Combined Councils of Labrador. In looking for their press release on this subject, instead I found this gem of an explanation: a release which stated in part:

Government Announces Funding For Combined Councils of Labrador

Monday, 17 Apr 2006 4:29 pm ADT (-0300 GMT)

On Tuesday April 11, 2006 Municipal Affairs Minister Jack Byrne announced that the Combined Councils of Labrador will receive $100 thousand for its 2006/2007 Operating Budget. Government has increased funding to the Combined Councils of Labrador from $60 thousand Dollars in 2005/2006 to $100 thousand in 2006/2007.

The 40% enhancement in its operating budget will allow an increase in office staff, travel, and program delivery for the Combined Councils of Labrador in an effort to work more closely with the 32 Communities it proudly represents. Also, the increase will allow continued planning for its upcoming 35th Annual Socio-Economic Conference and Annual General Meeting.

I guess it's just a matter of knowing which side your bread is buttered on.

In His Words: Natural Resources Minister Ed Byrne Speaks

This is the full text of an interview I did with Ed Byrne for a piece published in the recent Natural Resources Insert of Atlantic Business Magazine. Once again, while the medium of paper is bounded, cyberspace in unlimited so here is the full and unedited peice as originally submitted. Some of the stuff is a little bit dated now (ie the Hebron talks have since tanked) but you can get a sense of the government's thinking from one of the most senior ministers of this administration.

I've been commissioned to do a major piece for an upcoming issue so stay tuned. I'll post it here one it's been published in ABM.

=======================================

For more than a decade, successive Newfoundland and Labrador governments have promised an energy plan that will guide decisions on resource development and enable industrial development. Since last year, the Danny Williams government has been studying the issues and consulting stakeholders, developing the plan that will be unveiled later in 2006. However, neither government nor industry can wait in suspense; things are happening in Newfoundland and Labrador’s energy sector, and Natural Resources Minister Ed Byrne spoke with us about what his government has done to date, why, and what to expect over the coming months.

Overview

Some of the things we’ve been up to will be reflected in the long term in the energy plan. Part and parcel of that Energy Plan we’ll be dealing with the oil and gas industry - specifically on how we incent or entice more exploration.

I think there are two things we need in the province: We need the next development which we’re now into negotiations with respect to Hebron. And we need another discovery. We’re looking forward to the drilling in the Orphan Basin by Chevron and Exxon in the first quarter of 2007. And certainly in the Laurentian and sub-Laurentian Basin, the 3-D seismic work that Conoco Phillips finished up with this past year.

On top of that we are involved right now in coming to a conclusion on a natural gas royalty regime. That’s important for proponents to get a clear understanding of this government’s view on what we expect from the development of that resource, because that’s a lot closer today than it was two years ago.

On another front, from the point of view of the Premier and myself as minister, we’ve seen last week a consortium of companies. They are spending US$7 million of their own money to look at the feasibility of building another refinery of the province with an output of about 300,000 bopd. That’s critical. We believe we need to get into more secondary and tertiary processing.

So, generally speaking, we are excited about what’s occurring in offshore oil and gas.

Onshore in the west coast we are working to improve our understanding of the geology of the area and get that information out to potential exploration companies and proponents. If you look at the type of approach that was used in the past, the Department in concert with MUN did a piece of work on the Orphan Basin that really outlined the potential and size of the structure. It also led to the biggest landsale in our history in 2003 - $673 million.

What’s the status of the provincial Energy Plan?

We have three or four more public consultations that were postponed due to inclement weather. We should have that phase concluded by the middle or end of March. We’ll look forward to a 4 -7 month period after that [when] the plan will be tabled for the people of the province to have a look at.

Will a natural gas royalty regime be part of that?

That is certainly the plan - to have the gas royalty regime in place so that people like Conoco Phillips and others who are into the gas play right now... understand the environment they’re working in. So that (gas royalty regime) will be part of the plan, there’s no doubt about that.

What are the plans for Labrador Gas?

There are proponents who have had licenses there dating back 30 years. We know there are significant gas reserves there. What are the potential changes we need? To look at the way our regulatory system or legislation works or the changes we need to make that will put companies that have significant discovery licenses in a position where they must "use it or lose it" in a certain period of time.

That happens in other jurisdictions and we’re looking at that as we speak but no decision has been made on that.

What will happen to the gas? Pipelines? Gas transport ships? Or brought onshore?

All of that is under consideration in the Energy Plan. From our point of view, we want to add as much value to our resources as possible. The Premier has talked about the potential, down the road, of a secondary petrochemical industry. Bodies of work are being done on gas-to-wires, for example. All of this fits into the provincial Energy Plan.

But also it’s part of the initiative that the Premier is leading with his colleagues across the country through the Council of the Federation for a Pan-Canadian energy plan that will see how Newfoundland and Labrador can be hooked up to the national grid. That’s one of the things we want to accomplish as a public policy objective. We believe that should happen.

What role do you envision for NL Hydro?

Over the last year and a half we have moved NL Hydro and the Department of Natural Resources, particularly the Energy Division, to more of an integrated approach with each other, particularly on the bigger files and the big public policy issues.

We’ve moved Hydro towards an energy corporation that could potentially participate in the oil and gas play, both offshore and onshore.

We’ve invested heavily in Hydro. We have a new CEO who comes from the oil and gas industry (Ed Martin, formerly of PetroCan) and a new Vice-President of Business Development (Jim Keating, formerly of Norsk Hydro Canada Oil and Gas), also with a significant background in the oil and gas industry. Both Newfoundlanders and Labradorians.

At the same time we’ve supplied a significant amount of additional resources within the Department, Energy Division, from a human resource point of view, so we can compete when we are dealing or negotiating with (proponents) so our body of knowledge is strong.

Are you turning Hydro into an oil company?

No, we’ve talked about Hydro becoming more an energy corporation that moves beyond what it has traditionally done in building dams and burning oil.

Like doing seismic work and drilling in the offshore?

I’m not sure that’s where it’s going. But certainly if there’s a legitimate business opportunity that will provide a benefit to the province and revenues to Hydro, and thus to the province, we won’t turn anything down.

But all that is being assessed, and we are at the ground floor of that right now

What is the province’s plan for Hebron?

We’ve received a proposal from the proponents, and we are in the position where we will be responding to that. But negotiations are at a critical stage right now, and we are hoping to find an arrangement that works for everybody.

Do you see Hydro taking an equity stake in Hebron?

That’s a public policy position we’ve laid down that as a province - we’d like to have some equity stake in the emerging oil and gas industry - not unlike what’s happened in Norway, not unlike what’s happened in other jurisdictions in the world. Those are some of the things up for discussion right now.

The government’s position seems to have concentrated on refineries, equity stakes and royalties. It sounds like local benefits are not the same priority as in other projects.

I wouldn’t say necessary say that. Local benefits are extremely important.

Do you want the GBS to be built in the province?

Absolutely. What’s really interesting is that the media has captured that we’ve moved in a direction where no other government has moved in terms of equity share and potentially higher royalties based on where the price of where the price of oil is now.

That should in no way diminish, or lead anyone to conclude that we’ve diminished, the importance of industrial local benefits because that is paramount from our point of view.

Don’t royalties already represent our equity stake?

From our point of view, equity is important from this perspective: it puts us at the table and helps us develop an intellectual capacity that doesn’t necessarily exist within the provincial structure right now. It puts in the seat as a legitimate bona fide partner in developments. It helps us gain further insight, expertise and knowledge into the oil and gas industry.

It has worked successfully as a model in other jurisdictions and there’s no reason to think why it wouldn’t here. Other jurisdictions are both equity partners and royalty partners.

So while there is some legitimacy in saying that equity is represented by royalty, there are other benefits associated with being an equity partner.

That sounds like the original justification for the development of crown-owned PetroCan - as government’s window on the oil industry.

We have no intention of setting up a corporation that’s going to go out and be a proponent of a project at this stage. What we are saying is that as a province and a resource holder and owner, that we want to have an equity stake in projects as they go forward.

How generic is the generic royalty regime if it changes for each project? Is it really generic at all?

Well I think it is. We happen to live in a time when prices per barrel of oil are continuing to rise. Some analysts are predicting it will rise even higher. From our point of view it should not handcuff us in any way shape or form from taking advantage of the environment today.

The regime was developed in 1996. We are now ten years later. Where the prices per barrel of oil then were US$22-23, now they’ve peaked at US$62-63. So we need to look at regimes that reflect the realities of the time we’re living in and that help us take advantage of those realities.

The Steele committee report has presented recommendations for changes to the CNLOPB and has suggested Max Ruelokke as the new Chair. Will that name stand or will the process start over again?

There were a couple of recommendations that the (Steele) panel made. I guess that the process was held up with the federal election. Now there’s a new [federal] minister of Natural Resources who will be hopefully bringing that to a conclusion in the very near future. But it was held up for most of January and part of February simply because of the federal election. Obviously a political discussion needs to take place on that, based on the recommendations the panel made.

We’ll be doing that at the earliest opportunity.

Is the government prepared to accept those recommendations?

No, I never said that. I just can’t get into speaking about it at this point, simply because we haven’t had the opportunity with our federal colleagues to discuss those recommendations. As soon as we do we will be making a decision, hopefully together, and then moving on.

Is this government friendly to business and welcoming to new investors? You don’t think any of these conflicts between levels of government and with industry might frighten them off?

We are dealing with huge multinationals that operate in every jurisdiction on the planet under a variety of different structures and royalty regimes and realities. So they understand the world, as we do, and our view is that we want to make sure that the place is competitive otherwise, if it were not, you wouldn’t see any activity. So there’s a balance.

But at the same time we feel we have an opportunity, because this industry is going to go on for some time, to add greater value to it. And in order to do that we need to be strategic about it and set out certain principles on which we wish to take industry in.

And there you have it: Newfoundland and Labrador’s oil and gas industry is here to stay, and government will be working hard to increase the province’s involvement in its value chain. From the Minister of Natural Resources - in his own words.

Drinking the kool-aid

It's no secret that I've worked in a variety of political environments over the years. And like every other field of human endeavor, there are certain expressions and terms used by veterans of those situations that have special meanings.

When I talk to other people who have worked in those places, we can fall into a kind of verbal shorthand. So, if you overhear us, you might hear us talking about somebody "drinking the kool-aid".

No, we do not mean they have downed a glass of ice-cold inexpensive non-carbonated soft drink that comes in powder form.

What we mean is somebody who has adopted a particular point of view, or supports a person, completely and utterly. They have lost all perspective on the world and their judgment has become both predictable and unreliable. More generally, the term means adopting a religion with suicidal zeal and comes from the 1978 Peoples Temple cult suicide tragedy in Guyana where almost a thousand people died. Many were urged to drink cyanide-laced kool-aid at the behest of their leader, a lunatic named Jim Jones.

I'm not talking about anything quite that dramatic here. But you know the kind I'm talking about. You find that mindset in extreme political partisans or people who have jobs with those weird cult-like organizations like Amway or IBM.

Well, it happens regularly with people who work in or near political offices - both staff and media.

Let me give you an example of what I mean: back in the mid-90's, I had occasion to meet a friend of mine who was working for Brian Tobin. Tobin had just taken office and was still pretty new and untried as Premier. I won't mention my friend's name here but suffice it to say that he was a bright guy who was well educated both here and abroad. While he was still relatively young at the time, he had built up enough experience to get some sense of the world. He was a sharp and clear thinker and definitely not the sort of guy (you would think) who would lose himself in blind, mindless uncritical enthusiasm for some idea, thing or person.

Yet that day he looked me in the eye and told me with a totally straight face that, once Tobin got the hang of the job, there was no doubt in his mind that history would recognize Tobin as the greatest premier this province ever had.

I chuckled - who wouldn't??

Then I realized that he was dead serious and a shiver went up my spine.

My friend had drank the kool-aid.

I was always paranoid about this kind of thing happening to me because I never wanted to lose my ability to maintain a reasonable and objective point of view. If that happened then it would affect my ability to make decisions and provide sound advice to those who relied on me for that.

In hindsight, I can't say that I never let the kool-aid touch my lips but I did try the best I could. I depended on good friends to keep me grounded in the real world.

But I knew lots of people in my position who never cared and were perfectly satisfied to be happy warriors in the cause of 'The Boss'. I'm not sure why some people fall into that hole while others don't but I know they do - nobody's perfect and everybody's human.

In those kinds of jobs, it's all too easy to lose your mental footing. Political history is full of wayward aides and other staff who made horrible mistakes, offered terrible advice or said ridiculous things in the quest for their boss' favor.

Right now I can think of several local politicians whose worst tendencies are reinforced, instead of discouraged, by the advice provided by their staff. Look in the local paper and you can probably guess who they are: they shoot from the hip, make hasty decisions that lead to dead-ends and they spend more time backtracking than going forward.

Part of the problem is their own lack of internal good judgment or political compass. The other thing that leads them astray is uncritical flattery and the monotone point of view they receive that tells them everyday that what they do, whatever they do, is always the right thing to do. After a while they believe it.

That's why it's important to speak truth to power, regardless of cost

And don't think for a moment that there isn't enough kool-aid to go around. A morning, afternoon or evening of talk radio can cure you of that thought. And I don't just mean the callers, either. Listen to the news and read the local papers and you can pick out the stories where the journalists too have partaken in the sugary drink, at least for that day. Nobody is immune all the time.

Don't drink the kool-aid.

Seal Hunt Protesters II

This Penn & Teller video is worth viewing to understand some of the operations of PETA. It also includes some info on their links with Sea shepherd Society, among others.

If you are of a delicate disposition and harsh language offends you, close this page now. Otherwise, turn up your speakers and enjoy. And be dismayed.

Synoposis of Hugo Chavez

This from the April 2006 issue of National Geographic, the 2nd last paragraph of an article entitled "Venezuela According to Chavez".

Oil money and heavy public spending explain what is happening in Venezuela, of course, but in the end only Chavez can account for Chavez. The sheer force of his personality and overwhelming strength of his self-satisfaction, his utter lack of inhibitions, his inflamed nationalism, his obsessive need to cast himself as a hero of the people, forever vanquishing the "demonios" (demons) that conspire against him and the Venezuelan nation, are a hypnotic and unique combination.

Maybe not so unique after all.

BetterManageOurResources - enough already!

How many times in the course of the day do you hear that that the province would be oh-so better off if we could just learn to BetterManageOurResources?

Sometimes it's said about the province having to BetterManageOurResources. Often this mantra is uttered in the context of the feds who have failed to BetterManageOurResources - ie the cod they let go to foreigners, greedy fish companies or hungry aliens.

In either case, the solution is plain - we need to BetterManageOurResources. And if we only our governments did more to BetterManageOurResources, then life would be sweet for all.

Forestry resources, fishery resources, mineral resources, built heritage resources, financial resources, tourism resources, human resources, cultural resources, historical resources - you name it and we have the resource for it. All we have to do is just BetterManageOurResources.

What a vacuous and meaningless contribution to the public debate. It amazes me that we swallow this empty statement as if it actually meant something.

It's the kind of pablum issued all the time by the government of the day. Every government of the last 20 years is guilty of it for sure. And every department of this particular government says it all the time.

Then it's repeated over and over again all the time on the talk radio shows as the solution to all our problems. Echoed back to government, they pick it back up and the cycle continues.

Even the media and local commentators has been sucked into this when they should really know better.

I'm waiting for someone to say how we need to BetterManageOurResources - that's when the fights will start because that's when choices will have to be made.

And that's why nobody wants to go there.

Jack Harris - Good Bye and Good Night

Like many of us of a certain age, I had the period in my life where the ideas of democratic socialism had a certain appeal. And why wouldn't they? They expressed some of the highest ideals of human generosity, belief of control over our destiny and the sense that all people deserve basic fairness. And further, it seemed that all those things were within the grasp of government to deliver.

But then as Aristide Briand said, "The man who is not a socialist at twenty has no heart, but if he is still a socialist at forty he has no head."

Jack Harris, I'm sorry to say, never found his head. Nor did he ever find his calling as the leader of a provincial political party. When you look as his record as a political leader and contributor to provincial public affairs, the best one can say is that he always demonstrated potential.

The problem was that he generally managed to perform way below his perceived potential. On occasion he surprised us all with occasional flashes of true political competence worthy of his inflated reputation. More often he just disappointed us all.

Let me give you just two examples:

I have to be a Party Leader too?

I've worked within partisan organizations and I’ve worked for, and observed close up, several party leaders wildly differing in their personalities and ways of approaching their job. From that direct experience and reading just some of the many thousands of words written on the subject, it turns out that there are very basic principles that all party leaders must live by.

First and foremost is the idea that the Leader is the leader in all and every respect. That does not mean that they have to do everything but it does mean that, ultimately, they are responsible for all aspects of partisan operations. That means policy, fundraising, organization. Being a Leader means taking on that mantle of responsibility and discharging it in a responsible and effective way for the good of the party and the province.

So imagine my surprise one morning, not long before the last provincial election, listening to an interview with NDP Party Leader Jack Harris. He was being interviewed about the state of his party’s readiness generally. Specifically he was asked why his party could not ensure a full slate of district candidates.

His response? He made it explicitly clear that he was not responsible for the party organization and churlishly noted that he was merely the party's political leader. (They ended up with only 34 candidates for 48 seats contested.)

Another highlight of that election was his regular failure to get off the Avalon Peninsula to support other candidates in their campaigns as well as passing on Leader's debates in other parts of the province.

Clearly Mr. Harris missed the day at the office when it was announced that the buck stops at the Leader's desk.

In that election the NDP went on to retain their two seats - one more than they deserved to win.

(I should mention that Randy Collins, Jack’s benchmate, has done yeoman’s service inside the House and outside, for his party and his district. And it’s pretty clear Jack has had nothing to do with either.)

Policy wonk gone wonky

Of course there are the Harris apologists who say that his true strength was never organizational - it was policy.

Then it's too bad that his infrequent public policy pronouncements demonstrated the same conservation of energy as his organizational efforts.

Most recently, upon the Premier’s announcement of the collapse of the Hebron negotiations, Jack reflexively offered his support and that of his party. He stated that if the Hebron partners were willing to offer $8-10 billion in royalties alone over the life of the project, then what were they holding back? Hold out, he said, and things will get better.

In his hasty effort to back his former law partner (who controls appointments to the provincial bench but no matter) Harris took no time to consider the effects of this ill-considered rejection of a perfectly respectable offshore petroleum project development deal.

Those effects include the very real impacts on the provincial royalty revenues in the coming years which provide support for his cherished social programs. Never mind the direct impacts of reduced economic activity on the people who live in the heart of St. John's and right in his very own district.

I hope he goes door-to-door in the next campaign in support of his successor so he can hear first-hand the effects of this decision. Somehow I doubt he’ll make the time.

And anyways: why should any of those deleterious practical impacts get in the way of the People Owning the Means of Production?

In the end, it was that kind of facile, glib, ill-considered and expedient public policy statement that put the NDP where it is today - a distant third, moving fast out of political irrelevance and marching headlong into total obscurity (more on that another time).

Better luck next time

I feel bad for many of the dedicated supporters of the NDP because they have been snookered by a peculiar cult of personality that said that the party must support the aspirations of the Leader while receiving little in return. The NDP, in the latter years, became the Party to Support Jack above all else just as surely as the Liberal party became the vehicle to support Smallwood.

The difference was that Jack just wasn’t very good at it.

Jack Harris has been the face of the NDP in this province for more than a decade. After a brief term in Ottawa as the second elected NDP MP from this province, he rode that lucky political accident (against political opponents like Tom Hickey and Steve Neary, almost any new face would have succeeded) straight into the House of Assembly.

That was a good place to start 15 years ago but the party results since demonstrated a total inability to grow beyond that. What should have been a floor evolved into a ceiling.

He maintained that seat through multiple elections by ensuring that every NDP resource across the St. John’s region was dedicated to keeping him there. Even then he was never secure; he had some close calls most notably when Pete Soucy came withing 175 votes of unseating him.

His brand of superficial Hush Puppy/Volvo/Fabian socialism, while inoffensive and innocuous, never took hold and so he and his party treaded water year after year.

The potential never became real.

If you dedicate yourself to being a party leader then you have to dedicate yourself to putting yourself and your party into a position to take power. A party should never settle for less and the province deserves at least that from it’s party leaders.

Otherwise you really should find a more satisfying hobby for yourself.

Looks like he finally found one.

Our newest charity case

I'd like to want to feel like shedding a few crocodile tears over the demise of The Independent.

But I can't.

I liked the paper when it first came out. I've been an admirer of Greg Locke and his work for a long time and I looked forward to seeing his stamp on things. The original Independent was slightly edgy and fearless in taking a point of view that we badly needed locally. It even took on international issues in a local context and without losing the fact that this province is part of a larger world.

It expressed local pride without smug self-satisfied superiority, an overwhelming sense of bleeding victimhood or that local brand of annoying paranoia that says the world (feds, oil or fish companies, other provinces, historical forces - take your pick) are out to get us and keep us down.

But thanks to the editorial crew and owner that followed - Cleary, Dobbin et al - the Independent took on all those ideological millstones and proudly hung them around their collective necks.

I know I will be swimming against the current when I say that their infamous series on our role in Confederation featuring the in-depth analysis and careful research of Dr. S. Kelland-Dyer was a low point in media contributions to NL public discourse. That series was held out as an objective and respectable research-based product of investigative journalism when it manifestly was not.

In the end, it was the kind of shoddily-constructed misleading political polemic you would find in a third-rate university student newspaper hijacked by a crew of over-zealous freshman idealists out to change the world at any cost and facts be damned. It was thin on sober thought and fat on the purple articulation of long-standing grievance dressed up as analysis.

I feel sympathy for those dedicated journalists and talented photographers who lost their regular paycheck and outlet for their craft because of the closure (and you know who you are). But you will land on your feet because you have something to offer the market and the news reading audience of the province.

Maybe a bad newspaper is better than no newspaper at all. Maybe people will put up with a bad paper in the hopes that it will become better and more interesting to them over time. But clearly the reading market of the province did not think so. After all, "ran out of time" is simply short-hand code for "we couldn't get enough readers to attract advertising at the rates we need to break even".

Clearly their strategic decision to pander to the peculiar market segment they chose was a wrong one. To survive and eventually prosper they had to attract a readership who were interested in more than a political point of view repeatedly outlined in a style of vitriol and bile.

The people of the province want to read about things that are interesting and important to the main part of them and not just to the chronically disaffected.

It's too bad we don’t have more variety in the print media market. And not because the Telegram is a bad paper because it's not. Just in the last year the Telegram has broken more stories and has put more effort and resources into investigations into the provincial government (see fight over Access to Information Act and the buried polling surveys) and into City Hall (salary increases) than you would expect from them if you believed the Independent's claim that we are ill-served by a comfortable monopoly over hard local print news.

Was it the existence of the Independent which precipitated that? Maybe. In that case I hope another paper rises up to fill the role of foil to the Tely.

But that alone does not justify the Independent’s existence. How can a paper build credibility by uncritically accepting every historical complaint or unverifyable grievance as the fact of the week? How do you become truly independent when you regularly turn over the editorial page to government proxies and apologists?

In the end, the Independent was never independent at all. It was just a servile journal to a passing political affectation.

You had the chance to inform us and you blew it.

ooops .. email fixed

Sorry. The contact email I set was wrong; it's fixed now.

Once in a row: Newfoundland and Labrador’s offshore oil generic royalty regime

Here is the second of the 3 articles recently published in the petroleum supplement in last month's Atlantic Business Magazine.

It's pretty self-explanatory on generic royalty regimes. In the days to follow I'll post the article from an extensive interview with Ed Byrne, provincial minister of Natural Resources.

=======================================

Fact vs. Fiction
Does Newfoundland and Labrador's generic royalty regime really work?

Once in a row: Newfoundland and Labrador’s generic royalty regime for offshore oil

As negotiations between the government of Newfoundland and Labrador and the Hebron-Ben Nevis project consortium led by Chevron move forward, a major discussion point is the scope of local benefits to the province. That includes the level of resource rent the province will receive in the form of direct oil royalties.

But doesn’t the province already have in place a generic royalty regime that is supposed to apply to all offshore projects developed since Terra Nova? The answer to that question is yes and no.

When the first projects were developed (Hibernia and Terra Nova), the issues of local benefits and provincial share of revenues were the subject of long and protracted negotiations. In the end, each project was developed under different a royalty regime and different industrial benefit model. In the case of Hibernia, the province opted for more jobs up front, combined with infrastructure development (specifically, the Bull Arm construction site) and a lower total royalty income over the life of the project. For Terra Nova the province chose faster access to royalties, placing less emphasis on local industrial benefits.

But in 1996 Newfoundland and Labrador’s Energy Minister of the day, Dr. Rex Gibbons, introduced a generic royalty regime to bring clarity to the process. The generic regime was intended to ensure a fair return for the province, and at the same time to provide the fiscal and regulatory predictability that would reduce investment risk and promote exploration and development of even the smaller, more marginal fields. With a generic royalty regime, future projects could be developed with a clear understanding of the provincial claim on revenues, leaving only the local benefits package open for negotiation.

But this regime covers oil projects only. The government of Newfoundland and Labrador has repeatedly promised to develop a royalty regime for natural gas - most recently, as part of the current process to develop a provincial energy plan. Industry has cited the lack of a regime as an impediment to gas development. The issue has now come to a head with Polaris Resources Ltd. and Paramount Resources Ltd. launching legal action to prevent CNLOPB from stripping them of their offshore licences for failing to fulfill exploration commitments: Polaris and Paramount argue that without the long-promised gas regime, it has been impossible to determine project economics and raise exploration funds. This matter will be heard in the Supreme Court of Newfoundland and Labrador on March 2, 2006; it is the first time in the history of Newfoundland's offshore industry that any company has mounted such a legal challenge.

Dr. Gibbons says today that the intent was that "the generic system would apply to all future oil and gas development, notwithstanding any oil quality. At the time we evaluated every royalty system in the world, I think. We had a consulting group go out and look at the various royalty systems all around the globe, and then we eventually came up with what we considered to be an appropriate system for this province.

"It gave certainty to the industry and certainty to government, that this is the system under which we are going to look at all developments in the future."

Indications of success came quickly, as Husky Energy made specific reference in its 2001 Development Plan Application for White Rose to the calculation of royalties to be paid under the new generic regime.

That might have been the end of the issue - but then came along Hebron Ben-Nevis. Unlike the other fields developed offshore Newfoundland so far, Hebron oil is mostly heavy crude (18-21̊, compared to Hibernia’s 29̊). Heavy oil is more costly to extract and, compared to the light, sweet crude typically found in Grand Banks reserves and sells at a 15-20 per cent discount in the international market. Compounding the issue is Hebron’s problematic reservoir structure, where the lower-quality oil is easiest to extract while the better oil is located in more fractured formations.

All this makes Hebron Ben-Nevis a higher-risk, more marginal field than the others, and so the pressure is on from the developers - and the local supply and service industry who depend on new developments for ongoing business opportunity - to exempt it from the generic royalty regime.

In June 2003 then-Premier Roger Grimes first floated the idea of modifying the regime for Hebron, with the province taking less money either at the beginning or overall, in order to help get the project moving along. He stated at the time, "If part of finding a way to make that happen is a change or alteration of the regime to make it attractive enough to do without giving up the interest of the province, then you can rest assured that we will enter into those discussions."

The Progressive Conservative opposition, now government, has been consistent in refusing that option. Since taking office, their language has hardened further. If there was to be any change to the regime, Premier Williams made it abundantly clear last April, he wanted to increase, not decrease, the provincial share of benefit. Since then, he has continued to demand richer royalties, in addition to demanding an equity stake for the province.

What is the point of a generic royalty regime, if successive governments want to change the royalty share and royalties become a negotiating point for every new development under consideration?

Dr. Gibbons notes that the current generic royalty regime should not be considered writ in stone, "Would there ever be some tinkering with the systems over time? Absolutely. Any system that’s put in place, you might make minor adjustments over time to make sure you consider things that might have been overlooked or circumstances that might not have existed over time. So a generic royalty system can be modified.

"There might be circumstances come up relative to a particular field, where we say that it [the generic royalty regime] doesn’t quite fit with this one. Maybe we really need to give some thought to whether or not there should be some modification. But I’m still inclined towards keeping, where you can, a generic system and a system that applies to everything."

Certainly, other jurisdictions have established royalty systems - but they tend to distinguish between different levels of risk, oil qualities and project types rather than be generic. In the world of oil, one size rarely fits all. Alberta, for example, in 1996 instituted a royalty regime specifically designed for oil sands production.


As for the application of the generic royalty regime to Hebron Ben-Nevis, the government of Newfoundland and Labrador and the Chevron-led consortium are deep in talks, with both sides inclined, at this point, to say as little as possible. As Chevron point man Mark MacLeod says, "It would be inappropriate for me to discuss this issue while we are in negotiations on fiscal arrangements."

With only White Rose producing under Newfoundland and Labrador’s generic royalty regime, and serious consideration being given to changing it (in some way) for Hebron-Ben Nevis, it seems that the province’s firm and stable royalty environment is more elastic than it originally appeared. This is not necessarily a bad thing. Perhaps introducing a little flexibility is just what the region requires to stimulate upstream activity. One thing is certain: the generic royalty regime for offshore oil is serving as a benchmark in negotiations between the government of Newfoundland and Labrador and project proponents, rather than the last word. The last word for Hebron appears to be coming in April 2006.