A Christmas Miracle Comes Early

It may not be Christmas quite yet but it seems a seasonal miracle has happened none the less thanks to a recent article in the National Post.

Who would have thought a national paper would actually side with Newfoundland and Labrador on any issue, let alone in its struggles with Quebec.

Enjoy the Post article, but don't expect to read too many like this one in the national papers. Remember, as far as most Canadians are concerned the Country's border ends at Halifax.

John Ivison: Quebec should be embarrassed by powerline protectionism

My office phone rang the other day and the conversation went something like this: “Hello, it’s Danny Williams here,” said a familiar voice.

“Er…hello, Premier.”

“I’m not very happy about today’s column, where you compared me to Robert Mugabe….”

“Er…no, Premier.”

I’d written about allegations of intimidation during the last election in the Newfoundland riding of Avalon, where it was suggested Mr. Williams’ Anyone But Conservative campaign had led to tactics more familiar to political campaigns in Zimbabwe than Canada .

According to Mr. Williams, the allegations are untrue “on my father’s grave”. I tried to substantiate the rumours during the campaign, with no success. So until someone comes forward with some proof, we must take the Premier at his word.

In any event, it proved an interesting, if tangential, aside to the real issue I’d been writing about – namely, Newfoundland and Labrador’s attempted purchase of the federal government’s stake in the Hibernia oil field and Ottawa’s potential investment in a sub-sea electricity transmission line from a putative Lower Churchill hydro-electric project to markets in the south and west.

The province’s electricity corporation, Nalcor, has applied for $375-million in federal funding to help pay for the multi-billion underwater transmission line.

The main lesson that readers should take away from this story is what a sorry admission of failure in Canadian federalism it represents. The obvious route to markets in Ontario and the U.S. for Lower Churchill’s power is overland through Quebec .

Hydro-Québec claims that upgrades of up to $3-billion would be required to transport power through the province. Quebec’s energy board, the Régie de l’énergie, has sided with its own power corporation against Nalcor, even though it was prepared to pay for “reasonable upgrades” and up to $200-million in annual tariffs. Needless to say, Mr. Williams unleashed a broadside when the decision was announced in May, protesting Quebec ’s “arrogance and discriminatory business practises”.

You won’t read this in this column very often, but Danny Williams has a point. The Régie decision is an insult to add to the considerable injury of the existing, long-term Churchill Falls contract, under which Newfoundland and Labrador is forced to sell power for a quarter of a cent per kilowatt hour and then watch Hydro-Québec resell it for up to 36 times that price.

Both situations are a disgrace but only one is within the federal government’s purview to change.

The National Energy Board, an independent regulatory body created by Ottawa , has jurisdiction over designated inter-provincial power lines by determination of the federal cabinet. No such lines have been designated, leaving the field to provincial regulators. But a government that genuinely believed in making the federation work more effectively, not to mention saving Canadian taxpayers billions of dollars, would demand that Quebec open up its transmission lines.

Contrast this mess to the situation in Europe where the much-maligned European Union has stepped in to remove barriers to cross-border exchanges in electricity. New regulations mean transmission system operators are obliged to take new generation and compensation is paid by the operators of the national transmission systems from which cross-border flows originate.

If 27 sovereign states can reach agreement on a system that forgoes protectionism and monopolistic market dominance, in exchange for more competition and lower consumer prices, why can’t Canada ? Quebecers should be embarrassed.

John Ivason - National Post

Will Old Harry Put Ottawa - Quebec - Newfoundland & Labrador at Odds Once Again?

With excerpts from the Vancouver Sun

Que. seeks deal on petroleum exploration in Gulf of St. Lawrence

QUEBEC — The Quebec government on Tuesday called on Ottawa to come to an agreement that would allow oil and gas exploration in Quebec's sector of a multi-billion dollar prospect in the Gulf of St. Lawrence.

The Old Harry formation is one of the largest undrilled prospects in Eastern Canada with an estimated potential for up to two billion barrels of recoverable oil or up to five trillion cubic feet of recoverable gas, making it almost twice the size of the Hibernia oil project.

Old Harry has remained undrilled because Quebec and Ottawa have not struck a deal yet on oil and gas management and revenue sharing. The most likely reason for the delay in striking a deal is the location of Old Harry which straddles a disputed marine border between Quebec and Newfoundland and Labrador.

"This represents a good opportunity and lot of money for Quebec...", said Natural Resources Minister Nathalie Normandeau. "We want to settle this issue for good. Quebec has been very patient and we're taking a firmer line today. We've been waiting for 12 years and now we want to reach a deal."

The minister noted the main two points of contention are the ownership of the sea bed and the boundary between Quebec and Newfoundland in the Gulf of St. Lawrence.

The Old Harry prospect is located in the Laurentian Channel and straddles the Quebec-Newfoundland boundary, agreed to by Quebec in 1964 but still disputed by Newfoundland and Labrador.

Normandeau wants Quebec to come to a deal similar to the ones reached separately by Newfoundland and Nova Scotia with the federal government in the 1980s.

In a statement sent to Canwest News Service, federal Natural Resources Minister Christian Paradis said his government is "willing to work with Quebec and all provinces to ensure a responsible and lasting development of our natural resources."

Corridor Resources, which has the drilling rights to 60% of the Old Harry site announced last month that it will conduct a site survey on the Newfoundland side of the Old Harry structure in preparation for drilling an exploration well.

The PQ fears the company will siphon Quebec's resources through Newfoundland and end up leaving the province short of billions of dollars in royalties.

"We don't want Old Harry to become payback for Churchill Falls," said PQ critic Alexandre Cloutier.

The CEO of Corridor Resources said Quebec's sector of Old Harry remains the most desirable location for an exploration well, but stressed the company has to go where there are no impediments.

"If a well on the Newfoundland side is indicative of a potential, there may not be a followup on the Quebec side," said Norman Miller.

Newfoundland and Labrador Takes 10% Stake in Offshore Expansion

"That amount ($10 billion) is actually double the royalties collected by the province from all three projects to date, since 1997," - Premier Danny Williams

Speaking 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."

Final Agreement on 2 New NL Oil Projects Near

At the annual meeting of the Newfoundland and Labrador Oil Industries Association (NOIA) on Tuesday Premier Danny Williams told those in attendance that he's hopeful a deal for development of the Hibernia South oil field will be reached by the end of the year and he that expects to see a final contract on the larger Hebron oil development within a matter of weeks.

"We are moving closer, day by day, to signing that deal," Williams said.

"Both sides are working vigorously to conclude what has been an intense yet productive — and I mean very productive — negotiating process".

"I am fully confident that we will have positive news on that front in the very near future."

The Hebron oil development was a point of major disputes between industry partners and the Newfoundland and Labrador government just over a year ago when Williams informed the partners that his government wanted an equity stake and a richer royalty regime. After months of silence the oil companies returned to the table and, after agreeing to many of William's terms, last August a memorandum of understanding was signed. According to Williams, the final step in the process, before the project begins is now in the offing.

There had been rumors circulating for several days that the Premier would announce a final deal on the Hebron project during his address today but the Premier down played those rumors late last week by saying that he had indeed been shooting for this date but had no intention of rushing the details of the contract in order to accomodate it.

Both Hibernia South, estimated to contain 223 million barrels of oil and the Hebron field, estimated at around 750 million barrels, are long awaited developments that, when combined with the existing operations at the main Hibernia platform, White Rose and Terra Nova are expected to provide a major boost to Newfoundland and Labrador's already growing economy.

After Premier Williams' speech Glenn Scott, president of ExxonMobil Canada, a partner in both the Hebron and Hibernia projects, said, "I think we're all aligned and, you know, with everyone aligned and working as hard as they can, I think it's going to move quite quickly".