"That amount ($10 billion) is actually double the royalties collected by the province from all three projects to date, since 1997," - Premier Danny WilliamsSpeaking at the Newfoundland and Labrador Offshore Oil and Gas Industries Association Conference in St. John’s on Tuesday Premier Danny Williams announced a long awaited tentative deal with a consortium of industry partners for expansion of the Hibernia South offshore project.
An agreement on the expansion was put on hold by the Province months ago when the government introduced its new energy plan. At the time government requests for clarification on some aspects of the expansion and the lack of an agreed upon royalty regime or equity position for the Province delayed the project.
On Tuesday Premier Williams announced to a packed house at the NOIA conference that a tentative agreement has now been reached that will see the province take a 10% equity stake. Depending on the future price of oil, the equity position, combined with provincial taxes and an enhanced royalty regime is expected to put $10 billion dollars into provincial coffers over the life of the project.
The royalty regime for the extension can top out at 50% once payout is complete and if specific oil pricing conditions are achieved. The final contract is yet to be completed so precise details of what those conditions are or what the province’s 10% equity stake will cost have not been released, though some estimates have put the cost at about $30 million.
The Hibernia South extension is estimated to contain more than 230 million barrels of oil and based on past estimates from within the oil and gas industry in the region those estimates are likely on the conservative side.
According to Premier Williams, "Hibernia South will increase and sustain production from the Hibernia field, preserving employment, while providing a significantly greater royalty return for the province than any previous project."
This is great news. I've been reading about it all morning on various news sites. By the way, here are the details being reported on the royalties from this deal:
ReplyDeleteThree new "super royalty areas" are also included in the MoU.
The first is for new licence areas - PL1005 and EL 1093 - for which the top royalty rate will now be 50%. The super royalty is incremental to the royalty rates of 30% and 42.5%, and will be paid out in two steps – an extra 2.5% when oil is equal or greater than US$50 West Texas Intermediate (WTI) and another five per cent when oil reaches US$70 (WTI), which brings the total royalty to 50%.
The second is for the portion of Hibernia South that is contained within the original licence area - PL 1001- but will be developed with the new subsea facilities.
This royalty is on top of the payout royalty rate of 30% and will also be paid out in two steps – an extra 7.5% when oil is equal or greater than US$50 (WTI) and another 5% when oil reaches US$70 (WTI), which brings the total royalty to 42.5%.
Finally, for the part of Hibernia South where oil will be produced from the existing gravity based structure, an extra 12.5% cent has been applied, effective immediately. This new enhanced royalty of 42.5% has no price trigger.
I want to give kudos to Premier Williams for the MOU signed this morning outlining the proposed new economic prosperity for our province, with regards to the South Hibernia Oil Field development.
ReplyDeleteI ALSO still think Premier Williams is the best Premier we have ever had and he is the most intelligent.
However, after saying that I want to give kudos to Randy Simms of VOCM Open Line, for once in his Open Line Life, asking the most pressing and pertinent question in our province today, that being "are we, as Newfoundlanders and Labradorians, too caught up in the Sexy but finite Oil Industry, while ignoring the Fishing Industry"?
Indeed it is a very, very pertinent question which Randy Simms asked and it has been screeching out to be asked for years, and I wondered every day why Randy Simms and others in the Media omitted asking it?
Now we need to hear Premier Williams' voice back on Randy Simms’s Show to speak on the amendment which was placed on the table by Ottawa last Friday that, if instituted, will give the European Union the right to have a say over the administration of fish quotas inside of our 200 miles limit.
I am appalled that our astute Premier has not made a statement on the most important natural resource within our province to date, the renewable resource of "Fish" and what his wishes are for that God given industry! Will he please come forward and do so?
When Premier Williams called Randy Simm’s Open Line Show today to scold Randy for asking the question on the fishery, particularly, as Premier Williams said, “on such a momentous day”, and he, himself, did not make any reference to the fishing industry and what the resource means to our province, it sort of told me that the Fishery is not one of his main concerns.
Premier Williams can assure those of us who now have the belief that the fishery does not matter embedded in our minds, by coming back to Randy Simms's Open Line Show, as soon as it is possible, to speak on the fishery issue and the Ottawa amendment which I spoke of above.
Maybe he can put a lot of our minds to a peaceful rest, especially if we are reading him wrong.
I do hope that Premier Williams is not agreeing with Ottawa on the issue off allowing the EU in having influence in the administration of the fishery inside of Canada's 200 mile limit. If he does, he will cancel out everything he announced in today's economic proposal on the Oil, after all the "fish resource" is our renewable heritage resource which should be strong for ALL future generations.
Well said Anonymous 12:06 PM
ReplyDeleteUnfortunately I didn't hear Randy Simms opening monologue this morning so I don't know exactly what he said (only what Randy Simms recounted that he said afterward). Never the less, (and as much as Walter or whoever he is might believe I'm a Danny kool-aid drinker) I think the Premier's all out verbal vent on the Open Line host was disgusting and totally out of line.
I don't doubt for a second that anyone who heard it came away with one impression and it wasn't a good one. His actions served to push aside any doubts anyone might have had left that the Premier is a hot head who far too often reacts before he thinks and in doing so sometimes ends up with foot in mouth disease.
I, like you, believe Williams is doing a great job overall (not perfect however) and he has certainly improved our fiscal situation provincially but there is no excuse for making a point of calling somone with no purpose except to vent when that person is simply asking questions that should be asked.
Freedom of speech is something all of us have the right to expect and nobody, especially not a political leader, should ever go on the attack when someone uses that right in a respectful and open way without malice of their own.
It's inexcusable.
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ReplyDeleteI think Danny is caught up in these oil deals because they have to be dealt with in a timely manner. We're talking big $'s and if he doesn't jump on it now and squeeze every cent he can out of it then the opportunity may pass and once again we will watch the money boat pull away from the dock leaving us with scraps. Not that I don't think the fisheries is important. I just think that getting the oil squared away is an excellent start. Let's get the bucks in the bank, throw off the shackles of our debt and free ourselves. It's the debt that's killing us. Once that's under control, then we can go full bore on the fisheries. I'm really hoping that is the plan that Danny has up his sleeve. Danny is probably pissed off with Simm's because he was berated after nailing down what is an incredible deal. If you worked like a pig with the big boys and managed to get that kind of gravy deal you would be pissed off too if you got sh!t on. Maybe we should cut Danny a little bit of slack. Give him credit where credit is due, celebrate the victories and criticize when the time is right. Sometimes we can be our own worst enemies. How many premiers before Danny has done what he done? None. We should be kissing his butt for his expertise in deal making. Right now there are fantastic opportunities with our nonrenewable resource and there is no one better to take advantage of them. My hope is that once he gets that salted away, and our finances in good shape, then he will turn his attention to the fisheries and our other renewable resources. Who knows maybe one day Newfoundlanders and Labradoreans will wake up and realize that we are "masters of our own destiny" and we don't need to be part of this confederation anymore. Maybe we will be able to take care of our own offshore without Canada interfering. The deals made with the EU will come out of St. John's not Ottawa. We can all dream. But let me tell you one thing, once we get ourselves out from underneath our crippling debt, we will be looking at a very powerful, very independent Newfoundland and Labrador. That's something that our "friends" on the mainland will absolutely hate to see.
ReplyDeleteTo Anon 5:05, If you really believe that this web site is controlled or working for the govt. of NL you are sorely mistaken. That said, at least I know you can't be one of those hacks who claims nobody is allowed to say anything that isn't flattering to the Danny Williams since I've done that here on several occassions, including in the comment right before yours.
ReplyDeleteTo Starrigan,
I agree the oil has to be taken advantage of and Williams appears to have the business sense to be teh right one to manage it now. WIth taht out of the way, governmetn has to be able to focus on more than one issue at a time and with so many MHAs on the governmetnt side, if they are any good, they should be able to work on those other files.
I believe they are working on them but there seems to be little progress. I don't know if that's due to the nature of the problems or the people involved in dealing with them.
As for Danny Williams verbal assault on an open line host who really was just asking some questions (I heard the entire exchange) there is no excuse for that. Williams may be a good business person and I believe is doing his best, but he has a volotile temper that needs to be reigned in.
June 18, 2009 12:07 AM
ReplyDeleteHere ,Here and very well said Starrigan !!!
WTG Premier Williams and cudos to the people of NL for backing him and giving him the mandate of no more give aways!
ReplyDeleteMake Hay/Oil when the sun shines.
You do realize that the fishery is controlled for all intensive purposes by the Tyranny of the Majority national Political parties.
ReplyDeleteSo beating up on Danny of Clyde or Tobin or Moores or Joey for that matter is useless.
If you really want the International Tragedy of the commons being perpetrated by our Tyranny of the Majority political system to be exposed and hopefully changed you have to stop lending credence to how we have been treated by all of the national political parties and actually vote for someone who won't be forced to toe a national party line of doing whats in the best interest of the majority of the population of which we aren't a part.
Would you post something about the Hibernia deal please?
ReplyDeleteI'd like to get your views on it.
Not sure who your referring to Anoynomous?
ReplyDeleteBut
I've often wondered who would own the GBS once it was paid off.
Since according to the Press releases it seems that is the case does that mean we now own wholly or in part the GBS?
When you consider that we were taking lower royalties until it was paid of it would seem only logical that we in fact own the GBS because it was our reduced royalties that paid for it?
I say we either make it a permanent structure and use it as the nearest point of land to extend our jurisdiction of our continental shelf to it;s limit or drag it over to the Strait Jacket of Belle Isle and use it as a pier for a fixed link to the mainland.