Below are some excerpts from an interesting article by Averill Baker I came across today.
…Hibernia has been producing oil for shipment to markets in the US and Canada since November 1997.
… to this day not one new refinery or other oil-related industry has been built in Newfoundland… One would think… multi-national corporations beating down the door to build refineries. Why are they not doing that?
The answer to that question is largely found in a legal document this province was forced to sign with Ottawa 26 years ago. The key paragraph in the legal document is as follows: “Hydrocarbons produced from the offshore area will be made available to Newfoundland and Labrador… provided such feedstock is excess to feedstock required to meet the demand of presently existing industrial capacity in eastern Canada.”
...Why do the existing refineries and other industries in the other provinces have access to our oil before any new industry can be built in this province?
This problem dates back to…
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Steve here,
ReplyDeleteWhile on first blush this would seem to be a real impediment to refining, it's a real question as to what exactly was meant by
"required to meet the demand of presently existing industrial capacity in eastern Canada"..
Presently existing industrial capacity would have to have been the capacity at the time of the agreement, but what precisely was the definition of Eastern Canada at that time? Does that include Labrador and Newfoundland only? or Labrador and Newfoundland plus the other Atlantic provinces, or everything from the geographic center of Canada eastward, or something else completely?
What's more if you read it literally, wouldn't by definition Newfoundland and Labrador be a part of the eastern canadian capacity, so any refinery in Newfoundland or Labrador would have to be considered new "eastern Canadian refining capacity" Under that view Newfoundland and Labrador could theoritically increase their capacity to any level without affecting the overall term of the agreement.
The only way that this clause would seem to provide a real impediment is if the term Eastern Canada was defined elsewhere in the agreement as specifically excluding Newfoundland and Labrador. And just to tweak things a little bit, would that mean that the province is not part of Eastern Canada, in essence being driven by the quoted agreement itself out of Confederation. *wink*
Read that way, it would seem that ALL the production from the off shore could be refined in Newfoundland and Labrador since by every map I've ever seen, it is the easternmost set of provinces.
It is exactly this kind of language that lawyers use to buy and then drive their Lamborgini's through contracts, treaties, and wills.
Actually, it seems pretty clear that the agreement states that no new refineries will be built until existing refineries are all operating at full capacity (unless I'm reading it wrong).
ReplyDeleteIf that is the case, it's a rather standard practice of provinces, states and nations all through the world.
Oh brother!! The reason industry isn't beating down your doors is because your so darn frickin' hard to deal with!! Look at the Hebron Fiasco ....... what other company would want to repeat that costly mistake??
ReplyDeleteTo Crazy-American,
ReplyDeleteNot that you would know this, but the author of that article IS a laywer who is heavily involved in NL issues. Her father was also a provincial politician for years and until a year or so ago was NL's liason in Ottawa.
The reason I say all of this is not to make any major point, simply to say that if she reads the clause as a problem it makes me worry.
That's right Anon, we are hard to deal with. I guess we should simply lay down and let big industry do whatever they want with our non-renewable resources. I mean who the hell are we to want benefits from them?
ReplyDeleteGood idea, we bend over and take it and you give us a few dollars.
ReplyDeleteSounds like prostitution to me!
Wanting benefits is one thing...is a fine thing... is a natural thing!!
ReplyDeleteNot willing to listen to ANYONE outside of the province and blowing deals is entirely another thing.
anonymous you are absolutely right. why do people in nfld think they are immune to market forces.
ReplyDeleteJust ask the local realtors and they will tell you that more and more of their business lately is from oil companies pulling their people out, rather than sending them in, and there is no one to buy these houses.
ReplyDeleteHebron fallout will hit hard very soon.......the exodus has already begun....and the local economy will suffer for it. Further developement is grinding to a halt as companies are hesitant to deal with a government that will not be reasonable. No one is blaming Newfoundland for wanting a fair shake, but when the paranoia and hardball deals drive investors and developers away, someone has to stand up and say enough is enough.
Happy now Mr. Williams?? Yeah, you're a tough guy...just not a very smart one.
Patience is a virtue Sensay!
ReplyDelete