A Closer Look at Reid's Questions on Hebron
What follows are a number of questions presented in a letter from the provincial opposition leader to Premier Danny Williams. It seems that after much internal discussion and planning the Liberal party has finally come up with an official list of questions surrounding the Hebron memorandum of understanding (MOU).
It’s unfortunate for the Liberal party that in taking so long to put their list of queries together most of the questions have already been asked by the media, pundits and analysts but at least these questions are now being asked in a quasi-official manner, even it some of them are clearly intended to score political points rather than inform the public.
Personally, I’m impressed with the fact that the Premier has moved the Hebron project forward, but with that said, there are indeed questions that should be answered.
I suspect some of those questions, as presented in the following letter, cannot really be answered at this point in time. They will likely have to wait until the final agreement is ironed out. Others asked by the Liberal leader are purely political in nature. There are few however that can and should be answered to the satisfaction of the public.
Here are the questions asked by the Liberal leader (with a few of my personal comments added for good measure of course.)
1. Why is your government refusing to release the MOU?
Patriot Comments: Purely a political question intended to score points. A response on why the MOU is not being released would not answer whether or not the MOU is a good one. It would simply add ammunition to the Liberal election machine. Not a good start Gerry.
2. Why did you agree to freeze the royalty rate paid by the oil companies at one percent until payout?
Patriot Comments: An answer to this question would be nice but I think everyone has already settled on what the answer is, everyone except Mr. Reid of course.
Essentially one of the big stumbling blocks to the negotiations was the equity stake the province wanted. Since one or more of the partners had to give up 4.9% of their equity in order for the province to get a share. It’s likely this step was taken to offset investor concern and help mitigate the risk by ensuring a faster return on investment. I’m not sure if I agree with the approach or not but that’s most likely the reason. I don’t see any big mystery there.
3. How much money has been left on the table by compromising on the royalty regime and allowing a one percent payment until payout?
- If the generic royalty regime with an increasing royalty rate from 1% to 7.5% until payout is applied, similar to White Rose, hundreds of millions of extra dollars will flow into the provinces coffers in the early years of production. What impact will your compromise have on the amount of money that could have flowed into provincial coffers in the first ten years of production?
Patriot Comments: This is not only a bit of a loaded question, it’s a fully loaded one.
I agree that we should all be made aware of the expected difference between what provincial revenues would be under the old regime and under the new one but that’s not what Gerry asked.
He began the question by pre-supposing that we would lose money. Notice the phrasing, “How much money has been left on the table”.
He then asks the difference to provincial coffers in the first ten years. That number could be very misleading to the public rather than serving to clarify the real numbers or the government’s position.
Clearly revenues will be less in the first few years, during the payback period. 1% has to bring in less revenue than 7.5% but that doesn’t necessarily mean that over the life of the project the province won’t actually come out ahead. The enhanced royalties at the end have the potential to recoup that money or even provide additional revenues. It’s all dependent on the price of oil.
By loading the question the way he did it’s clear what is motivating Mr. Reid here and it isn’t a quest for the truth.
4. What will the province lose in royalties if the price of oil, after payout has been reached, is less than $50 a barrel?
- There has been much discussion regarding the Upper Churchill contract and the exclusion of an escalator clause. If only people knew when that agreement was signed that the price of electricity would jump so dramatically during the 1970s; however, analysts did not predict such an increase in the price of electricity and the province has lost significant revenues ever since.
Your Hebron MOU proposes a super royalty regime that kicks in once oil reaches $50 a barrel. However, should oil decline below $50 a barrel, the companies do not have to pay this royalty.
The province has stated that to achieve this super royalty, sacrifices had to be made on the generic royalty and hence a one percent frozen royalty payment until payout. What safeguards have been built into this MOU to protect the people of the province should oil prices drop?
Patriot Comments: Finally, a valid question, it looks good on you Gerry.
Industry analysts predict that the days of cheap oil are over and reserves around the world are shrinking. They also predict that the reduction in supply will drive prices higher not lower. That being said, anything can happen.
Prices could drop before the enhanced Royalties kick in.
Over the next decade or so peace could be declared in oil rich nations, dictators may change their minds about big oil, new discoveries under the melting ice caps of the north could increase supply or the worlds newly discovered interest in “green” technology may cut the demand for oil. With these factors at play there is some risk to waiting until the tail end of the project for enhanced payments.
Perhaps the real question should be: How much of the expected $16 billion actually falls into that risk area?
5. When will the project reach payout?
- With so much of the royalty revenue dependent upon when this project reaches payout, what time frames has your government used in its calculations? We all know that this is somewhat dependent on the cost of developing the project and the price of oil, but could you provide a breakdown on the criteria government has used in making this projection?
Patriot Comments: Two good questions in a row. If you keep this up you might win me over yet.
Although this may not be the most important point to be addressed, in my opinion, it’s likely one that’s at the front of most people’s minds and one that deserves an answer. Who wouldn’t want to know when the royalties will be flowing in?
6. How much will government have to invest in up-front costs related to the 4.9 percent equity position?
-Government announced an investment of $110 million to purchase the equity stake and an unknown amount in go-forward development costs. Some have pegged this cost at as much as $300 to $500 million for construction and development related costs, bringing the potential total cost to upwards of $600 million. Can you provide the actual figure and the analysis that government has completed to get its figure?
Patriot Comments: Sorry Gerry but you almost had me with the two previous questions. Now you’re losing me again.
The project was initially pegged at between 5 and 6 billion dollars. It’s easy for anyone to figure out what 4.9% of that amount is. As for any further estimates of cost, they would be highly speculative right now.
Now that the project is back on track the Hebron partners have made it known that they are re-evaluating the cost model, until that is done not even the developers can put a precise number on the project.
Everyone knows the province will have to contribute 4.9% of the cost. Providing you, as the leader of the opposition with numbers like 200 million or 400 million, that would essentially have to be pulled out of thin air, only serves to provide you with a political football to kick around.
Until the new cost estimates are in place you know as much as anyone.
I’ll tell you what, why not just do what everyone else is doing. Multiply $5 billion by 4.9% and then double the result. Somewhere in there you’ll likely come across the number you’re looking for.
7. How long will it take for government to recover its up-front investment?
- An estimated $600 million is a lot of money to put forward in up-front costs without any immediate return on investment. How long will it take to recover this investment before any real money flows into the provinces coffers?
Patriot Comments: This is a sad and repetitive question. In question 5 you already asked when the payout of costs is expected to happen. Clearly, as a partner in the project, the province will recover its investment costs at the same time the other partners will. An answer to question 5 will answer this as well. There is really no need to even ask this question.
8. What risks has the province been exposed to related to liabilities such as environmental clean-ups or cost overruns because of the equity position?
- The province has a 4.9 percent equity stake in this project and will be responsible for 4.9 percent of the overall costs. This would include 4.9 percent of any cost overruns or 4.9 percent of any liabilities, such as an environmental clean-up if there was an oil spill. Has government included any of these factors in deciding the profitability of an equity stake, or is this a decision that accepts risk and hopes that nothing goes wrong over the life of the project?
Patriot Comments: Once again Gerry another sad question.
I think it’s clear to everyone by now that by owning 4.9% of the project the province shoulders 4.9% of the cost and risks.
Nobody has tried to hide that fact.
The reality with any project is that the developers work to limit risk as much as possible. With that done, if something happens you deal with it.
Should the province have taken on that risk? That’s more of a political question than one about the MOU itself and I believe in your subtle way the point you’re trying to make here is that it shouldn’t have. Clearly you are not trying to ask a legitimate question.
On a brighter note (not that an environmental incident could really have a bright side) but even if some sort of environmental disaster cost $100 million dollars to clean up, and those are very rare indeed, the province would only be on the hook for 4.9% of that, or less than 5 million dollars.
Considering that some analysts expect the cost of production to be around $3.90 per barrel and the market is currently in the $70 range there is wiggle room to be had.
9. Apart from the GBS (which is captive to this province and will be built at Bull Arm),what percentage of other fabrication work will be completed in this province?
- At your press conference, you refused to put a figure on how much work will be completed in Newfoundland and Labrador. During White Rose, government stated up front that over 80 percent of the total work would be completed in this province. At the end of the project, over 85 percent of work that could be completed in this province was completed in Newfoundland and Labrador. Can you provide a concrete figure on the work percentage for Hebron, the breakdown of the calculation, and if not, why not?
Patriot Comments: You’re winning me back again Gerry. Not a bad question.
We should find out how much work will take place here, if our yards and local companies have the infrastructure, capabilities and manpower to step up to that work we should know if it will be done here, although it may still be far too early for “concrete figures”.
10. How much of the FEED (front-end engineering and design) and other detailed engineering work will be completed in this province?
- In the past, we have heard vocal critics such as Mayor Andy Wells state that no FEED or other engineering work should be done outside the province. This announcement certainly hints that a significant majority of engineering work will be completed outside Newfoundland and Labrador. Can you please provide the percentage of FEED work that will be completed here; provide a breakdown of how this calculation was done; and why we are allowing a significant portion of this work to be done elsewhere?
Patriot Comments: Oh Gerry, you sneaky little so and so.
Once again you’ve presented a loaded question that draws conclusions and then builds on them.
Your question is based on what you call “hints” in the MOU announcement. You then use those “hints” as fact and make the leap of asking why a “significant portion of the work” will be done elsewhere.
I agree that if the work can be done here at a reasonable price then it should be. I, like most people, would like to know how much of it will actually be done here, but you have presented the question in a way that pre-supposes, based on “hints” that a significant portion won’t be.
Be careful Gerry, your political agenda is starting to poke through again.
11. How large will the Gravity Based Structure (GBS) be in comparison to Hibernia?
- We have spoken with some industry analysts who state that the GBS to be completed for this project at Bull Arm will be one third the size of that for Hibernia. Is this true, and if so, will only one third of the workforce be required? Can you provide an analysis that shows the true size and work requirement to build this GBS? How many work hours will be required and what will be the peak years?
Patriot Comments: Not a bad question, I’ll give you 75% on that one Gerry.
The question about work levels needs to be answered but I'd bet it's far too early to give precise numbers.
Where you fall down in your question (and I’ve heard you make similar comments to the effect in the media) is in your supposition that a GBS one third the size might only require on third of the workforce. That’s likely not true.
If it takes a woman nine months to have a baby does that mean nine women can have a baby in one month?
12. How much of the topsides work will be completed in this province and where?
- You stated at your press conference that more fabrication tonnage will be completed in this province than either the White Rose or Terra Nova projects. Both White Rose and Terra Nova were floating vessels, whereas Hebron-Ben Nevis requires a GBS. The weight of the concrete alone would satisfy this requirement, but certainly does not provide any work commitments for topsides fabrication.
- While the smaller GBS will be built at Bull Arm, there does not appear to be any commitment for all the topsides work to be completed in this province. You have already stated that the major process module will be built outside the province. Can you provide a breakdown of what percentage of the topsides work will be done in Newfoundland and Labrador and where? What is the estimated tonnage of the topsides? How many person hours of work will be required? What percentage will be within the province? What components?
Patriot Comments: Once again, some of these detailed questions may not be answerable at the moment but questioning whether the MOU calls for the topsides to be built here is a valid and very important question that should be answered.
It might well be too early in the process to identify exactly where in the province that would happen or the exact amount of work it would generate but I suspect I know why Gerry asked for specific locations. I’ll clarify that during my comments on the next question.
13. How much work will Marystown get?
- We know Bull Arm will get the GBS work, but there is no real commitment to topsides work anywhere. What percentage of work will be undertaken in Marystown? What percentage will be undertaken at other sites in the province, e.g. St. Johns Dockyard?
Patriot Comments: Again, I suspect information around precisely what work will go to what yards is not even available yet. I assume that determination of this sort of detail will require discussions with management at these facilities to determine if they have the capability to do specific work, if they have other obligations that would prevent them from taking part and how much they would charge. This latter point, the cost, is something that would require a detailed project plan and the preparation of estimates for a yard to even make a guess at.
I would think that a simple answer from government confirming that pieces of work X, Y and Z will be done in the province should be enough of a response to answer any concerns the public might have.
The only reason I can imagine that Gerry is looking to get information on specific yards and what they’ll be doing is if he hopes to sway voters in those areas that may not be slated for Hebron work at this point.
As a final note:
Gerry, I give you credit for at least getting a few solid questions out there but in the end your political biases have once again shone through. By the way, I know it’s silly, but why 13 questions? Couldn’t you have come up with at least one more? Better yet, you could have left the repetitive and politically motivated ones out altogether. Or was the decision to go with 13 a subtle attempt by you to wish some sort of bad luck on Williams, the MOU or the project itself? Naw, you can’t be that desperate can you?
25 comments:
Purely a political question intended to score points.
A perfectly valid question.
Danny Williams complained that there wasn't enough detail in the Voisey's Bay Statement of Principles from June 02, an 18-page document.
Now, we have a ZERO-page document.
Danny and his apologists better be prepared to take flack, after what they did on the Voisey's Bay issue.
And Danny should also explain why he was so quick to acquiesce to the oil companies' demands for secrecy. What, is he their Buddy or something? I though Danny was going to "stand up" to them, and "fight"?
From Today's Telegram:
Grits are late to the game
The Telegram
A rearguard action is usually described as “an attempt to prevent or delay defeat.” It’s also described as “to try very hard to prevent something from happening when it is probably too late to prevent it.”
Welcome to the provincial Liberals, and their 13 written questions about the proposed Hebron oilfield deal.
More than a week after Premier Danny Williams announced a deal to develop the Hebron oilfield, the opposition Liberals released a letter to the premier, asking for the answers to a series of questions about the deal.
The 13 questions they’ve put forward are thoughtful, some are quite valuable, but the fact is that they’ve been overtaken by time.
There are questions like “How long will it take government to recover its investment?” and “What risks has the province been exposed to related to liabilities such as environmental clean-ups or cost overruns because of the equity position?”
It’s valuable stuff: after all, we should know what we’re on the hook for now that it appears we’re going to be oilfield owners as well as oilfield regulators and overseers.
There’s a lot of information that’s missing at this point, information that will hopefully be made much clearer before a deal is actually signed.
So the Liberals have a point — but unfortunately, it’s a point that will only be above water for, at most, a day or two, before being buried by every other newsworthy thing that happens in a week.
The Liberals may get a response from the premier; they may not. But, boy, they’ve been awfully slow off the mark. If their plan was to keep the issue of government secrecy on the deal in the public eye, they’ve missed the boat big time.
In news terms, their reaction time has been positively glacial.
When Williams announced the project, you can be sure that he and his team calculated the expected effect of refusing to release the memorandum of understanding. As part of that, they certainly factored in the virtual certainty that the opposition would squawk about the proto-deal one way or another.
Then, Williams and company went ahead and refused to release the document anyway, and will almost certainly block any release of the document for as long as they choose. If the government responds to Reid’s letter (they probably will, just to prevent new bleats about government secrecy), you can be sure that the response will create even a quieter splash than Reid’s original letter.
The Liberals themselves are probably wondering why their careful, thoughtful work didn’t get more of a bang — and, as often happens, they’ll probably blame the media, saying we’re too onside with the premier, or too lazy, or too partisan.
A poor carpenter blames the tools.
With all due respect, the Liberal questions are too little, too late.
An earnest opposition is a wonderful thing.
But without the benefit of a sense of political timing, they’ll be fighting rearguard actions forever.
THE QUESTIONS SHOULD BE ANSWERED.
The questions Gerry Reid put forward are very pertinent and if we are to judge whether a potential contract which might result from what is contained within the Memo of Understanding will be a benefical one to the province of Newfoundland and Labrador, we need to have the questions answered so we can digest the contents.
We demanded that Roger Grimes release the details of the Voisey's Bay Statement of Principles and we have to demand that you, Premier Williams do the same on the Hebron MOU. While I know that Premier Williams can construct a good contract, the question remains did he cave in to too many demands from BIG OIL AND OTTAWA, and therefore any contract that results will give too much away to other jurisdictions?
I wouldn't place face value on any politician ever again. What I have learned of the values of today's politicians on how they toe the Ottawa line, Big Industry line and instead do what is right to move themselves forward, instead of doing what is right for their constitutents when it comes to resources development, makes them very undependable in my mind. The blind faith era is over for me.
So Premier Williams do what is right and please release the contents of the Memo of Understanding so that we know what is in them. I supported you Premier Williams on your request for the release on Voisey's Bay Statement of Principles and I am now supporting Gerry Reid in his request for information so that the electrorate can be informed on the HEBRON MOU. It is a symbol of 'good governance'.
Please do what is right!
Patriot, all the news reports and the Premier's statement said the cost for the project was more than what you said.
Would you start giving us links to see where you get your information? It would help a lot if we knew where you were getting some of things you say.
Blogerwoman is right. The Premier should release the MOU.
As Always Myles,another excellent piece of writing.
"Nan always said that if you have a talent ,you must use it.If not ,the devil "Wins"
Its nice to see that you are capable of using yours.
In regards to what Mr WJM is saying Patriot,
"What, is he their Buddy or something? I though Danny was going to "stand up" to them, and "fight"?
I think the attuide of Canada has finally sunk into Mr Williams.Like canada said you want it ,fight your own war.He Did and he won.Why continue to fight when you get what you want.
To quote the Prime Minister of Canada,"what we are seeing here is Confrontation for the sake of Confrontation."
It must be a Mainland thing Myles.
"Ya knows dat crowd on da mainland,gets a few drinks an all da wants is a rackett."
"Long Live The NRA",............
Hi all, especially the anon who said, "all the news reports and the Premier's statement said the cost for the project was more than what you said. Would you start giving us links to see where you get your information?"
No big secret Anon. The numbers being bandied about for the last few years and in the media today put the cost at somewhere between 5 and 11 billion. In my commentary I mentioned using 4.9% of 5 billion and then doubling it as an estimate of the provincial cost. I figured it was in the range.
I also agree with you, and Blogerwoman that The Premier should release the MOU.
HMMMMMMMMMMMMM,............some of the great minds do not sometimes agree.
What may I ask would this governement be,if it did not protect the rights of private companys and Privacey.
Does one now have to accept from the Governement of Newfoundland and Labrador,that any deal createed on its behalf must have 100% clarity ,before its people .
Nonsence!!!
The premier himself used the figure $11 billion so it isn't really 'bandied about".
Why would you take a low number and then double it to come up with something. What was your reason for doubling the number when you had a high end and a low estimate right in front of you.
The MOu should be released. I just don't agree with your comment that even if the thing is a give away its a done deal and we can't do anything about it.
"even if the thing is a give away its a done deal and we can't do anything about it"
Patriot ,if people read this agreement I think it points out a great many safety-nets for the people of Newfoundland and Labrador in regards to income and rising prices.
It is not like other agreements that the province has made with the help of Ottawa that has crippled us as a Province.
What may I ask would this governement be,if it did not protect the rights of private companys and Privacey.
Which rights would those be?
And wasn't Danny going to stand up for "our rights", not those of "Big Oil" that he railed against for years?
It's amazing to see the flexible standards of the DannyFans. The crucified Grimes over the Voisey's Bay agreement - which was made public from the get-go, pretty much - because Danny told them it was bad.
Now they don't need to see the Hebron deal - which Danny won't release, anyway, because he cozied up to Big Oil like he said he wouldn't - because Danny Williams says it's a good deal and they don't need to know anyway.
Pathetic. Hero-worship. Smallwood all over again.
USSR disagreed with my comment that: "even if the thing is a give away its a done deal and we can't do anything about it"
I follow your train of thought to some degree USSR but, while we may be able to protest and get the public up in arms (if it's a bad deal) in reality, with a majority in the house there is really nothing we can do to stop it. That's my point.
I support the Williams government (though I am not normally a PC supporter or a Liberal or NDP) but the fact remains that we don't know enough and, while it may well be a great deal, if it isn't, can you tell me how it can be stopped after the election?
Anon said, "The premier himself used the figure $11 billion so it isn't really 'bandied about"."
He or she then asked why I would recommend using 5billion as a base then doubling it to get a range of how much the cost would be.
Well, first of all, if numbers are thrown out, by the premier or anyone else "bandied" about is a reasonable term since we don't know the details (isn't that what everyone is so upset about).
Secondly, my point was that if you take the estimates from 16 months ago that had the project at around 5billion and then use the high end of doubling that (10billion) you are probably somewhere in the ballpark. Why you are trying to make it seem that I'm doning anything other than grabbing at a rough estimate is beyond me. Besides, do you really think that in 16 months the project actually went more than double the original estimates. Come on, you must be listening to Liberal Radio stations or something. Most analysts put it at around 5.5 to 7 billion.
WJM tried to make something of my comments, without putting it in context as is usual for this guy: "Purely a political question intended to score points."
He said it was a valid question.
First of all, there were 13 questions and as I said, not all were valid, though some were.
Some were clearly intended by the Liberal party to score points. It's not hard to pick those out if you look at what was asked.
Better luck next time WJM.
2. Why did you agree to freeze the royalty rate paid by the oil companies at one percent until payout?
I just wanted to point out that Alberta currently charges this amount for oil sands oil developments - one percent royalty until payout. It's pretty standard and is the foundation for the super oil economy in Alberta. Alberta's oil sands were comparatively quiet until Alberta adopted this 1% policy in the mid-90's. Alberta is currently looking at increasing it's royalty demands - partly because other oil jurisdictions, including Newfoundland and Labrador, demand more.
It makes me laugh that Danny Williams is so often accused of being business un-friendly especially with the oil companies and yet Alberta, which everyone looks to as a beacon of business sensibility, is now looking to places like "backwards" NL for direction.
The Globe and Mail recently had a 2-3 page spread on this very issue. It's worth checking out - sorry I don't have a link.
Most analysts?
The Premier used the figures of getween $7 and $11 billion.
Since you didn't link to anyone, what analysts are you discussing when you say "most"?
The numbers I used aren't hard to find. When the news of the Hebron MOU came out newspapers, analysts, Bloomberg, CNN, CTV and others all reported it as either a 5 or 6 billion dollar project. Even considering that those numbers were based on estimates made before talks broke down it isn't hard to speculate that the price would be somewhere between those numbers and a few billion more.
If you need links to find references to those numbers why don't you look them up yourself. They aren't hard to find.
Patriot ,just one other comment if I may.
"And wasn't Danny going to stand up for "our rights", not those of "Big Oil" that he railed against for years?"
To make my point Patriot as clear as possible.Mr Williams and his administration got everything that they had been asking for.Maybe a 1/2% point differance here or there.A link was given from the Golbe and Mail Patriot but that has since expired.This link to the Telegram gives some explanation .
http://www.thetelegram.com/index.cfm?main=multimedia&MMID=618
May I add as I have already stated Patriot that furhter confrontation,is that and that alone,confrontation.
Why continue to fight with an enemy that has been defeated.That would amount to nothing more then stupidity.
If I can take a point from Stephen,and add that this deal is not just a break for the Williams administration ,but it is causing Governements and organizations around the world to reassess thier relationship with Big Oil.
As for the point that what I am stating is Hero worship or that I am a Danny Fan.If the Individual stating those claims knew me or my Ideology ,i think they would recant those staments .
Personally I think that Mr Williams as a Premier is nothing more then a Paper Tiger.He has accomplished good things for the people of Newfoundland and Labrador,but time and time again all he has shown us is that "IF NOT FOR Canada"
My opinoin of Mr Grimes,well,thats a long topic for a short discussion on a pathetic,weak,and insignifagant administration given to canada by the people of Newfoundland and Labrador .In my opinoin,they recieved from Mr Grimes what they had asked of him.A Happy Glowing Friendly ProCentral Canadain Governement ,and they got what they put in Governement.A Pro Ottawa Governement.And,like Tobin,Wells,and Smallwood before him as histroy has shown ,and shown well miight I add.Every single time that we give an inch ,they stab us in the back and take a mile.What do I have to say on the debate. :)
PS,............"Long Live The NRA"
It would be just as easy for you to provide some links in the post so the rest of us could follow along, patriot.
The 5, 6 7 and 11 billion are around but the $3.90 a barrel production cost, for argument sake.
Was that bloomberg, cnn or where?
The 3.90 was quoted by an oil analyst during an interview on CTV Newsnet the day of the announcement.
Do you happen to remember which analyst?
This is one of the reasons why links are so good. you can go and find these things out and learn more.
"Was that bloomberg, cnn or where?"
September 03, 2007 2:01 PM -Patriot ,if I may so Bold as to ask a question .
Did you not have people register for comments ,too due away with this kind of De-Bate.
"When the news of the Hebron MOU came out newspapers, analysts, Bloomberg, CNN, CTV and others all reported it as either a 5 or 6 billion dollar project"
This is Pretty Common Knowledge is it not!!!!Or ,do we have to debate this as well,lol!!!;)
Regardless of how the deal goes down, the North East Avalon marches on regardless.
To Anon: No, I don't remember the analyst.
To USSR: That comment doesn't even merit a response.
Wow, it must be nice to be so smart.
I found the interview. Thanks for taking the time to answer.
The number he gave was $3.20, not $3.90. It isn't "most analysts". It's one guy who is a reporter for BNN quoting someone else.
I found some information at NOIANET on White Rose. White Rose cost is $3.00 a bareel. hebron is bigger and more expensive so I doubt very much it is only 20 cents more expensive than White Rose.
I wanted to check it out so I could learn something. I did learn something. I learned it is important to check information because sometimes it isn't right or there is room to doubt it.
Looking for that one bit of information, I also found information on how the development and discovery costs get paid back and what that costs per barrel. Patriot's comment about $3.90 a barrel and $70 a barrel doesn't take all of it into consideration.
Thanks for taking the time. I learned a lot of new information but most of all I learned to check information people give on blogs particularly when they don't give any links. Sometimes it turns out the information is wrong or that more information is needed to help under stand what is being said.
Thanks for correcting my mistake (3.20 rather than 3.90). You might want to read the piece again though. In it I said, "some analysts expect the cost of production to be around $3.90 per barrel" I never said "Most analysts"
Regardless of this, the point is that the risk level is not high based on today's numbers. It doesn't take any analysts to see that. If the risks were too high do you honestly believe companies like Chevron and ExxonMobil would be so interesting in coming back and making a deal so soon?
folks:
the figures are between $7 and $11 billion for the life of the project. estimates for development (building the platform and topsides, and drilling the initial wells) are $4-6 billion (up from 3-5 billion 18 months ago). the rest of the $7-11 billion would be drilling, maintenance and operational costs over the 20 year life of the project.
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