Feds, Quebec open offshore oil "Accord" talks

It looks like the battle ground of inter-provincial boundaries between Quebec and NL is about to heat up. The following story from the Canadian Press points to a potential flashpoint between the two jurisdictions, and even with Ottawa in the coming months.

Quebec claims the ocean boundary between the two provinces should be based on an agreement (signed by...yes...you guessed it, none other than Joey Smallwood once again) in the mid-sixties. Newfoundland and Labrador feels the Law of the Sea should prevail since the border discussed in the sixties was never presented to Ottawa and never actually ratified by them.

This may leave it to Ottawa to decide where the border lays.

If that happens, God Help thee Newfoundland and Labrador.

Read on:

MONTREAL - Negotiations have been launched between the federal government and Quebec in an attempt to strike an offshore drilling deal similar to those that have enriched Atlantic provinces.

Federal Natural Resources Minister Christian Paradis expressed confidence this week that the sides are moving towards an arrangement that could unlock the potential windfall in the Gulf of St. Lawrence.

"I feel there is momentum — as much on the provincial side as for the federal government," Paradis told a news scrum in Montreal this week.

"I'll do everything in my power to get a breakthrough."

Paradis and his federal colleagues will be walking a fine line as talks go forward. The deposits straddle a much-disputed maritime border between Quebec and Newfoundland.

At stake are the potential riches of Old Harry, a 29-kilometre hydrocarbon field thought to contain either as much as two billion barrels of oil, or five trillion cubic feet of natural gas.
Such oil deposits would be twice as much as the Hibernia project off the coast of Newfoundland, or in terms of natural gas three times Nova Scotia's Sable Island field, according to oil industry representatives.

But unlike Newfoundland or Nova Scotia, Quebec does not have an agreement with Ottawa for underwater extraction.

Quebec, however, feels a breakthrough could be coming soon.

"The differences between Quebec and Ottawa have been simmering for 12 years," Quebec's natural resources minister, Nathalie Normandeau, said this week.

"This is the first time I've sensed such openness from the federal government, and the (federal) natural resources minister in particular."

Details about what the deal would entail, and when it would be implemented, remain vague. But Paradis described the broad outlines while standing next to Normandeau at an event earlier this week.

"We're talking about an administrative deal," he said.

"The goal is to create an office of hydrocarbons, as is the case in Nova Scotia and Newfoundland."

Both those provinces have offshore petroleum boards, joint independent agencies with Ottawa that oversee various elements of oil and gas exploitation.
They were created following accords with the federal government that allow revenues from underwater resources to flow to the provinces.

Paradis said he prefers an administrative deal to a legislative one that could provoke greater federal-provincial bickering.

However, there still remains potential for friction between Quebec and Newfoundland.
Quebec is keen to have any deal recognize a 1964 agreement between the four Atlantic provinces that left the majority of Old Harry inside its borders.

Newfoundland maintains that agreement was negated by a federal-provincial tribunal that ruled, in 2002, that it had never been submitted to Ottawa for approval.

Newfoundland and Labrador's natural resources minister, Kathy Dunderdale, says the border will have to respect the international law of the sea.

Dunderdale was not available for comment on Thursday. But she has said in the past that Newfoundland and Labrador is not seeking to have the line redrawn to place the entirety of Old Harry in its waters.

Instead the province wants any deal between Quebec and Ottawa to include the creation of a tribunal that would settle the border issue.

In the meantime, Newfoundland has granted a Halifax company, Corridor Resources Inc., a license to go ahead with exploratory drilling in an uncontested area of Old Harry.

It is not yet clear whether the hydrocarbon deposits contain oil or whether they contain gas but Corridor is confident that, either way, something valuable lies underneath.

"This would be a company-maker, no question about it," said Norman Miller, Corridor's president and CEO.

Despite the optimism expressed by both Quebec and Ottawa about the potential for a deal in the near future, Miller is not holding his breath.

"We've concluded that it will happen in its own good time," Miller said. "We've done everything we can do to communicate what the potential is."

He accused Newfoundland of complicating attempts to settle the issue by focusing excessively on where the line between the two provinces should be drawn.

"They just say they don't agree with it or they say there is no border, but they don't put forward what they think it should be," Miller said.

"That just serves to frustrate the border issue."

His preference would be to drill on the Quebec side, but the province has had a moratorium on offshore drilling in place since 1997.

Deal or no deal, Quebec has vowed not to lift the moratorium before the scheduled 2012 completion of a series of environmental studies.

Miller says he can't wait that long, as his license with Newfoundland is set to expire in 2013. The company plans to have drilling get underway by 2012.

But following the Deepwater Horizon blowout in the Gulf of Mexico, politicians are increasingly wary about any drilling projects. Quebec promised to keep close watch on Corridor's operations in Old Harry.

"Given the proximity of the drilling to the Quebec border we will be extremely vigilant and we will ask other questions to Newfoundland about it," Normandeau said.

Miller believes both provinces have an interest in finalizing the border line and allowing his company to start drilling.

"In a development spanning both sectors, you would see development going both ways," he said.

"It could have very substantial economic benefits to a part of the country that lags behind the rest of Canada in economic development activity."

Double, Double - Oil and Trouble

The new president of ExxonMobil Canada has announced that the oil giant will be moving its headquarters from Halifax to St. John’s.

While ExxonMobil has maintained its head offices in Halifax for some time, with major production and exploration activity on the East Coast clearly centered on Newfoundland and Labrador the incoming president, Meg O'Neill, has decided to move their base of operations to the St. John's area.

This move is expected to bring with it an increased need for high end office space as well as new employment to the region.
Local industry leaders are applauding the decision and say they look forward to working closely with the new president.

Newfoundland and Labrador Ocean Industries Association (NOIA) chair Jack Lawlor says it’s very good news, “...a great business decision for Exxon.”

Meanwhile, also on the oil front, but on a less positive note, as previously mentioned here on Web Talk, a border dispute between Quebec and Newfoundland and Labrador is once again heating up.

This dispute isn’t about the border between Quebec and Labrador, a provincial boundary never accepted by Quebec in spite of its legal standing. This time the boundary is on the sea.
At the center of the dispute is “Old Harry” a potential oil field in the Gulf of St. Lawrence named after the nearest settlement, the village of Old Harry, 80 kilometers southwest on Quebec's Iles-de-la-Madeleine.

The stakes in this dispute, as they could prove to be for the land based boundary, are huge.
Old Harry is a 29 kilometer long field of undersea hydrocarbons, estimated to hold as much as two billion barrels of oil or five trillion cubic feet of natural gas. Only further exploration drilling will determine whether it the field contains gas, oil or both.

According to earlier exploration results, Old Harry could have twice the potential of the Hibernia oilfield or three times the potential of Nova Scotia's Sable Island gas reserves.

Drilling at Old Harry has been stalled for some time because it is not clear where the undersea border lies between the two provinces and because Quebec, unlike Nova Scotia and Newfoundland and Labrador, does not have an agreement with the federal government, which claims ownership of all undersea gas and oil deposits, even inside provincial boundaries.

Newfoundland and Labrador recently fired a shot across Quebec's bow in a letter from Natural Resources Minister Kathy Dunderdale in response to Nathalie Normandeau, her Quebec counterpart.

Normandeau had asked Dunderdale what measures were planned in light of the April 20 Deepwater Horizon disaster in the Gulf of Mexico.

Dunderdale replied that Newfoundland and Labrador had adopted "new oversight measures," had no plans for a moratorium on offshore drilling. Ms. Dunderdale also
noted Normandeau's reference to a " 'cross-border geological structure,' and making the assumption that Ms. Normandeau was referring to the Old Harry prospect.

In her letter Minister Dunderdale stated, "Please be advised that, apart from the line established pursuant to the 2002 award of the arbitration tribunal concerning the delimitation of portions of the offshore areas between Newfoundland and Labrador and Nova Scotia, the government of Newfoundland and Labrador has never agreed to a line demarcating the boundary of its offshore area in the Gulf of St. Lawrence”.

"I hope this response addresses your concerns."

Ken Morrissey, Minister Dunderdale's press secretary, explained that in Newfoundland and Labrador’s view, "There isn't any existing border now."

Quebec disagrees, sticking to the "Stanfield line," agreed to in 1964 by the four Atlantic premiers, led by then Nova Scotia premier Robert Stanfield, but with Newfoundland premier Joey Smallwood also signing on to the line, which would give most of Old Harry to Quebec.

The 2002 ruling Dunderdale refers to was to delineate the offshore boundary between Newfoundland and Nova Scotia on the Atlantic side, not the Gulf.
But Gerard LaForest, a retired Supreme Court of Canada justice from New Brunswick, who led the 2002 tribunal, ruled the 1964 line was not valid because the provinces did not submit it to the federal government, as required in the constitution.

Normandeau, in Sacramento, Calif., to promote Quebec's hydroelectrical potential, told The Gazette Quebec is sticking to the 1964 line.

"Newfoundland has been telling us for years that they don't recognize the 1964 line," the Quebec minister said, adding that her priority is an agreement with the federal government similar to the 1985 Atlantic Accord, which allowed Newfoundland to develop its offshore potential.

And she wants that agreement with Ottawa to "recognize Quebec's full jurisdiction in theGulf of St. Lawrence."

"The federal government is telling us to go negotiate with Newfoundland and we'll see after," Normandeau said.

"We say no, no no, no. Why would we negotiate with Newfoundland if we think there is no problem with the 1964 boundary?”

"There has never been any question of negotiating with Newfoundland."

Normandeau is counting on Christian Paradis, a Quebecer and the federal natural resources minister, to be in her corner on the talks.

"We want to ensure that we get our fair share in our negotiations with Ottawa," she said.

Meanwhile, time is running out for Corridor Resources, the leaseholder on the field.

The company has had a licence from Quebec to drill in its portion of Old Harry since 1996. Corridor also has drilling rights in Newfoundland that expire in 2013. Faced with that deadline and the lack of an agreement between Quebec and Ottawa, Corridor is planning to drill on the Newfoundland side in 2012.

With excerpts from the Montreal Gazette and VOCM news

NL Launches Own Fisheries Research Program

From CBC News:

Williams Launches Fish Research Program

Newfoundland and Labrador Premier Danny Williams launched a program of fisheries science and research Friday, even though the area is the jurisdiction of the federal government.

Williams, who unveiled a $14-million program that will include chartering a research ship, noted the federal government has consistently scaled back spending on fisheries science since the 1990s.

"We have leading international scientists in this province [who] are not getting the credit they deserve, and don't have the resources and the funding that they need to get the job done," Williams said.

"Those days are over."

Williams made the announcement in St. John's on Friday, 18 years to the day after the federal government announced it was imposing a moratorium on northern cod, which had been the largest single fishery in the country.

Williams has had an often contentious relationship with both Liberal and Conservative federal governments, primarily over benefits from the province's offshore oil industry. Friday's announcement had less to do with ideology and more to do with the gradual diminishment of fisheries research in Canada.

"It's not a partisan comment, and it's not intended to be an attack on the current government," he told reporters after the announcement. "This has been a federal government problem that crosses all party lines."

Williams said the program will "change the face of the fishery in Newfoundland and Labrador, but this time in a much more positive and forward thinking direction. No longer will we exclusively rely upon the research of others to guide the fishery into the future."

The government is chartering the Celtic Explorer, a 65-metre research vessel from Ireland, to undertake an acoustic survey of northern cod in 2011. The vessel will conduct research on offshore fish stocks. The government has already sponsored inshore fisheries research.

George Rose, a former federal research scientist who has been outspoken about fisheries management issues for years, has also been appointed as director of a newly founded Centre for Fisheries Ecosystem Research, to be based at Memorial University's Marine Institute in St. John's.

"We can more or less stand on our own feet here in terms of our knowledge base about our own fishery, something that I think has been overdue for a long time," Rose told reporters after the announcement.

Rose's own research program at the Department of Fisheries and Oceans was discontinued.
In a statement issued on Friday, federal Fisheries Minister Gail Shea said "sound science is a cornerstone of managing the fishery and a priority for our government. We were interested to hear of the Province's initiative as they have been talking about this for many years. Because some of their activities will likely require federal approval, we look forward to seeing their proposal."

Under the Terms of Union that brought Newfoundland into Confederation in 1949, Canada has exclusive jurisdiction over inshore and offshore fisheries. Williams said he recognized that management decisions over quotas will rest with Ottawa, but that there will be a new and independent source of information about the health of local fisheries.

He also said he would not object to the federal government joining the research initiative at some point.

"[But] we can't wait. We can't afford to wait," he told reporters. "This will be a wonderful thing.… the outcomes will be significant from this exercise that we've launched today, and hopefully we'll be able to fund it up even more."

Newfoundland and Labrador will also spend $2 million to sustain the Canadian Centre of Fisheries Innovation, a research and development agency that recently lost federal funding.