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