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Monday, April 03, 2006

Oil Companies and WIlliams Get Tough on Hebron Development

Monday, Chevron Canada, on behalf of itself and its project partners, announced that talks had broken off with the Province of Newfoundland and Labrador regarding development of the Hebron Ben-Nevis oil field off the Province’s coast.

Several companies partnered to develop the potential mega-project including Chevron (28%), ExxonMobil Canada (37.9%), Petro-Canada (23.9%)and Norsk Hydro Canada Oil & Gas Inc. (10.2%)

The companies have been in negotiations with the Province for nearly a year regarding improvements to oil and gas royalties, Provincial involvement in the project and the potential for secondary processing in Newfoundland and Labrador. Premier Williams was quoted several weeks ago saying that he would require movement in at least 2 of the 3 areas in order to allow this project to proceed. According to a Chevron press release the decision to cancel negotiations was made because “significant and fundamental gaps remain on fiscal terms and benefits that would enable the project to proceed in a viable manner.”

Premier Danny Williams, who currently enjoys an unheard of 70% popularity rating in the Province, due in part to his tough “no giveaway” stance on resource development, responded to the announcement by saying that he believed Exxon was holding out and if they wanted to move on he was prepared to take them out of the equation.

On the street in St. John’s today many people are saying that Premier Williams is doing the right thing and he seems to be receiving a great deal of support for holding his ground.

Many in the Province have a long memory for past giveaways such as the Upper Churchill River hydro project, the tying up of Provincial timber rights and a less than stellar Atlantic Accord agreement with Ottawa that saw nearly all benefits from offshore oil leave the Province. Voters also recall the tough battle Premier Williams waged with Paul Martin over that Accord, the benefits of which were clearly seen in the Provincial budget released just last week.

Premier Williams is known as a tough negotiator and many see Hebron Ben-Nevis as a stepping stone to future developments. Much of the talk around water coolers today is in direct support of Williams holding firm. It’s believed that if the Province buckles on these negotiations then it will lose credibility and its ability to play tough on future projects. As one fellow said on the subject today:

“To hell with them, the oil companies are just trying to play hard ball. We own the oil and right now that oil is worth over $65 a barrel. If they want to leave it in the ground they can go for it. At least that way it’ll still be there for my children and grandchildren. I doubt very much though if those guys are really willing to leave that much money in the ground for too long.”

It seems a lot of others in the Province share this sentiment and are squarely behind Premier Williams, meaning this could be a long stand-off, but one most believe will be well worth it in the long run.


MrChills said...

Although I am in no way an expert in Oil negotiations, I for one agree with the Premier in this regard.

Too many times we have rolled over and let our resources slip away without receiving the maximum compensations. Since it seems as though the price of oil has nowhere to go but up, I say let it stay in the ground until we get what we are looking for.

Bottom line, whether it is me or my great-great-great grand children who reap the benefits of this resource, I am not concerned, as long as the people of Newfoundland and Labrador receive a fair deal on it.

BTW: To the mindless people out there who will probably hijack this thread, this post is not about Swiles (or Seals as you may call it), so keep your ignorant comments in the correct place.

no longer proud said...

Since Exxon alone profited $36 BILLION last year, I think we should definitely be holding out for a bigger cut ofthe pie. The resource is ours, afterall... And once the Middle East completely goes to hell (shouldn't be too much longer...), I'm sure those companies will be a tad more willing to negotiate.

JMS-L said...

I remember, when Danny Williams was running for Premier, someone commented that he was a business man and what did he know about politics. Well, at the time I thought that we needed a business man to take charge of this province afterall isn't government a business? The people of Newfoundland and Labrador needed someone to take ahold of the reigns and turn this province around, to keep others from taking advantage of our desperation to become that 'have' province. Danny Williams has shown Newfoundlanders and Labradorians, Canadians and Businessmen/women alike that he is quite capable of running this government, this province, this business. I have always been nonpartisan when it comes to casting my ballot, I have always voted for the person not the party so no one can say I am an obvious Liberal, New Democrate or Progressive Conservative. But I am pleased, very pleased at the way Danny Williams is handling the affairs of the Newfoundland and Labrador peoples. He is a hard negotiator, but fair. He will not stand for someone badmouthing the people or attempting to take advantage of the people. He has my full support and respect, such as it is, when it comes to brokering a deal for our resources be they offshore or on land. Go, Danny, Go!

Patriot said...

Some quotes in the national news services from Williams on the topic:

"I'm sensing there's a majority of the partners in this consortium that actually want to do this project and want to get it going,"

"We've come out very strongly indicating that we can't allow one company to hold up development of this project on an ongoing basis."

With the price of oil currently at $67 US per barrel, Williams said his government has offered to cover ExxonMobil's pre-development costs for Hebron if it would move aside and let the others proceed.

He said his government is prepared to buy ExxonMobil's interest in the project if need be, and warned he could legislate companies to surrender their offshore leases if they don't develop them in a timely manner.

"We will be saying to oil companies in this province that you won't be able to sit on discoveries for five or 10 or 20 years without developing," he said.

"Our motto here will be `use it or lose it.' "

Anonymous said...

Way to go. The oil isn't going anywere until we get a fair deal.

Anonymous said...

Half now half latter

Anonymous said...

As an Albertan who has lived in St John's for 9 months (yes, here with oil) I have to say that I have never in my life seen such a mentality that I have witnessed here. Newfoundlanders follow their Premier like sheep. They defend to the death the seal hunt (who cares?????), they say ra-ra to Danny for "standing up to oil companies" even though he just blew the deal of the century. Get a mind of your

No one but Newfoundlanders care about the Upper Churchill. Frankly I am amazed that with an enemployment rate as high as you have that you let money walk out the door because someone "burned" you in the past. Grow up.

I'll be leaving soon...back to the Prairies where people are very friendly and the weather is bearable. Newfoundlanders are NOT friendly. They are clannish and stick to their own. They treat tourists great but don't move here! You'll be a "mainlander" and outcast forever. Oh Please.
Keep your oil in the ground then. It won't feed your families, or educate your children. It won't help bring you into the 21st century either which you so desperately need to do. Listening to VOCM callers is like listening to a bunch of school children whine about playground rules. Big Oil doesn't need you....but you need them.
And please....keep your seal flippers and cod tongues to yourselves, no one else wants them.

Anonymous said...

To the previous Anon. Good riddance to you. I hope you enjoy your trip back to Alberta.

By the way, all the oil in Alberta didn't do much for your education if you had to leave there to come to NL for work.

Also, of course nobody cares about our issues but us. Isn't that the whole point this site makes.

Also, you are perhaps the only person I ever heard say that NLers were not friendly. It strikes me that your attitude may be a case of you believing the whole world is F'd up but refusing to look at the truth that it's really you.

What's wrong Alberta boy, did your lack of intelligence become an issue with your NL employer and cause you to lose your job? Is that why you're taking your ball and going home? It sure sounds like it.

Anonymous said...

Actually to the above comment:

We were transferred here. I refused to work here and collect less than half the wage I was earning out West. I'm a teacher and yours schools are a mess. I had to put my kids in private school to keep them safe.

Goodbye and good luck.

Anonymous said...

I am from Norway and I came to work on Hebron with Norsk-Hydro Company.

I am sad that Mr Williams destoyed this project and sad for the people here who will not benefit from it anymore.

I am happy to go home soon though.

Anonymous said...

Gee what a surprise. Mr Harper doesn't want to tick off big oil companies who help fuel a large sector of Canada's economy.
Too bad Mr Williams doesn't have the same mental capacity.
Thank goodness he is only confined to Newfoundland or we'd all be screwed.

Anonymous said...

On April 3, 2006 Premier Danny Williams had this to say about Hebron negotiations:

"What it came down to on Thursday night was when there was an exchange of paper late on Thursday evening at about 11:15 I think approximately, and we thought we had reached an agreement quite frankly on the equity interest and the province had reduced its ask for equity in order to try and reach an agreement. As well there was an agreement on what we termed a super-royalty, a tariff-free royalty. When the memorandum came back to us by fax that particular evening, there was a reversion back to the January 26th letter which had been send to us by the oil companies. So they were basically saying we will agree here on equity and we will agree on super royalties but everything that’s in our January 26th letter stands. When you go back to the January 26th letter, what the oil companies were looking for was an investment tax credit of 15% which is something that has never be given here in the province before"

The Premier wants the oil companies to give him an equity stake WHICH THE OIL COMPANIES HAVE NEVER DONE BEFORE!!
Talk about the pot calling the kettle black. This deal will never work as long as Williams is "in power" (in control is more like it)
because he will never listen to anyone else or bargain in good faith. He got greedy. Newfoundlanders got greedy. They think they have all the cards because they have a bit of oil. Hibernia is almost dead, White Rose and Terra Nova are declining. Have fun getting the Hebron oil out of the ground on your own. The only oil you can access is seal oil, and no one wants that.