Why Are There No New Petroleum Industries in NL?

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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Living on the Edge - Newfoundland & Labrador in Confederation

After years of Liberal leadership, a new conservative government is at the helm in both Ottawa and in Newfoundland and Labrador. Over the years many people have expressed concern about how things have gone since the Province joined Confederation in 1949. Time will tell if the approaches taken by both levels of government over the next few years will have an impact on those concerns, but one thing is certain, a lot of people are not satisfied.

Although there has never been a concerted or organized effort to build support for separation within the Newfoundland and Labrador population, statistics show that a strong level of dissatisfaction is never the less alive and well among the residents.

The 2005 Portraits of Canada survey, an annual survey of public opinion conducted by CRIC, found that:

37 percent of Atlantic Canadians felt that the federal government had become irrelevant to them. In Newfoundland & Labrador that number was a staggering 44 percent, while Ontario had the lowest level of discontent among Canadian provinces at 28 percent.

Only 18 percent of Newfoundlanders and Labradoreans felt that their province was being treated with sufficient respect by Ottawa. Not surprisingly, once again, Ontario had the highest satisfaction numbers, with 62 percent saying they felt their province received the respect it deserved. What's surprising in the survey is the responses from the people of Quebec, where separation has been high on the agenda for decades. 35 percent of Quebec respondents felt they are receiving a reasonable level of respect from Ottawa.

It's interesting that in a Province where 35 percent of the population feels Ottawa is responding to their needs, a large separation movement exists, while a Province where only 18 percent of the population were satisfied, no such movement is prevelent. Interesting as well is the fact that as soon as a Newfoundlander or Labradorean expresses their concerns in this area they are generally labeled a groaner or told how good they have it while in Quebec any issues that arise are at least listened too.

With respect to Newfoundland & Labrador, the problem of a lack of fair and respectful treatment was also identified in the Royal Commission survey which, although considered flawed in many areas, found that:

A slight majority (51 percent) listed ‘not being treated with respect/fairly by the federal government’ as a reason for their dissatisfaction.

A significant group (26 percent) listed ‘not being treated with respect/fairly by other Canadians’ as a reason.

The Final Report stated the following among other things.

Newfoundlanders and Labradoreans do not believe that the province has yet found its full place in Canada. There is a strong sense that the fundamental issues facing the province are not well understood by the federal government, and are too often ignored or dismissed as “regional” and far less important than concerns seen as “central.” The overwhelming sentiment is that the status quo is totally unacceptable.

The report also noted that, by and large, Canadians outside of Newfoundland and Labrador recognize the uniqueness of the Province with 72% of those polled saying they see Newfoundlanders and Labradoreans as a distinct culture. Not surprising since the Province was a separate country before Joining Canada. This is very telling in that Quebec has been recognized in this way for some time however Newfoundland and Labrador never has.

The numbers speak for themselves. They tell the story of a centralist country where Ontario, the seat of power, has enough federal representatives to ensure that their needs are met. They tell the story of a Quebec with enough of separatist sentiment and federal seats to ensure that they are being heard loud and clear. They also tell the story of Atlantic Canada, with Newfoundland and Labrador clearly the most dissatisified, being neglected and forgotten thanks to their pitifully small voice in Ottawa.

I believe a lot of the dissatisfaction is due to two primary reasons:

1. Being ignored by Ottawa on a regular basis because of the current structure of the centralist Canadian government.

2. When the smaller Provinces find themselves at odds with larger Provinces like Ontario or Quebec, they generally end up on the losing end, even when in the right, simply because politicians know they need to keep the larger Provinces happy if they hope to remain in power.

Don't get me wrong, I'm not trying to pit Newfoundland and Labrador against our bigger brothers in Confederation, Heavon's no. I don't believe the majority of people in the Province have a problem with any of the other Provinces generally. What they do seem to have a major problem with is Ottawa itself and the way things are done there. As far as most federal politicians are concerned, all Canadians are important, from Coast to Coast, all the way from BC to Quebec.

Premier Danny Williams - Master Poker Player

With what I’m about to say, I’m sure someone will accuse me of being a true blue Tory and on top of that I hate praising a sitting politician, but I’ll be damned if I won’t say what needs to be said about Newfoundland and Labrador Premier Danny Williams after his recent performance.

“Sir, I like the cut of your jib!”

Although the Province still has a lot of internal struggles to deal with (that’s an understatement), a number of major issues have arisen during Premier Danny Williams’ time in office that, more often than not, he’s addressed in a way that is in perfect harmony with the voters who put him in office.

First Williams managed to renegotiate Newfoundland and Labrador’s offshore oil revenues with Ottawa. Of course he had to back former PM Paul Martin into a corner in order to make him cough up billions of dollars in revenue, but it got done. That move provided the Province with the funds needed to decrease its debt, stabilize public sector pensions, address some long standing pay equity issues, begin improving infrastructure and balance the books. Not bad for a rookie.

Just a couple of months ago Williams made another bold move by taking a no nonsense stance with the oil industry’s biggest players. Simply put, he refused to allow Exxon Mobile and its partners to stroll in, extract the Province’s offshore oil, sell it at world record prices and walk away with hundreds of millions in additional tax breaks as icing on their corporate cakes. According to Exxon and some writers at the Globe and Mail, the offer was a sweet one the Province should have taken because it would have provided short term jobs helping the company ramp up for the big rape scene to take place offshore. Nice try Exxon, you too Globe but no thank-you.

Last week Williams decided to continue with his plans to place a Provincial lobbyist in Ottawa, something he tried unsuccessfully to do shortly after taking office. It seems he believes that the concept itself was a good one even if the structure, approach and perhaps even the man selected the first time around may have been flawed. Hopefully, with these lessons learned, the second time will be the charm.

Now in his latest attempt to add to his growing reputation as a hard line no nonsense leader Williams has hit a home run on his home field. After months of reviewing expressions of interest for development of the Lower Churchill power project, Williams made an announcement everyone in the Province has been waiting for with baited breath. Newfoundland and Labrador will develop the world class hydro project itself, without Quebec without Ontario and without anyone else for that matter. The Province will take all the risks and, hopefully as a result, it will reap all the benefits.

At this juncture I’ll say exactly what’s on the mind of nearly every person I’ve spoken with since that announcement, even at the risk of being accused of having a love in with the Premier.

“WAY TO GO DANNY!!!”

For the second time in as many months Premier Williams has told outside interests that we don’t need them to come in here, rape our resources, pocket the profits and give us the crumbs left over after they’ve picked the carcass clean. In making the announcement Williams has left the door open to dealing with outside interests, but the project will be a “made right here”.

Williams has said that he sees Ontario and Quebec as potential customers for the power, not owners in this project. Ontario is facing an energy crisis and the Quebec is expected to be in the same boat in a few years. The role of customer is a far cry from where both Province’s expected to be today. The Ontario government was so sure their joint bid with Quebec for the development would be accepted they their energy plan states that Ontario is, “…Working with Quebec to develop a major hydroelectric generation project at the Lower Churchill River in Labrador, from which 670 megawatts would come to Ontario.”

Nice try folks, but as Premier Williams said, if it’s good enough that everyone else to want, why shouldn’t we do it ourselves. By all accounts, nearly everyone in the Province agrees.

Williams’ tough attitude has prompted some Canadian columnists to brand the Premier a dictator, comparable to Hitler himself. As usual they’ve missed the point entirely. Williams isn’t doing anything more than the people of the Province want him to do. Unlike most politicians he is listening to his constituents. I know it’s revolutionary and unorthodox, it may even be difficult for some to comprehend, but if that’s the definition of a dictator we can use a lot more dictators around here.

As Bob Dylan once sang, “The times they are a changing.” The people of Newfoundland and Labrador are sick and tired of getting nothing but crumbs after bringing with them into confederation some of the Country’s most valuable natural resources.

The Province came into Canada boasting Atlantic fish stocks more abundant than could be found anywhere else in the world. After a few decades of management by Ottawa those stocks are now all but decimated and so too are the rural communities who depended on them for centuries.

The Upper Churchill River has been generating over 5 thousand megawatts of power for decades now. During all of that time Quebec Hydro has reaped billions in profits from the river while the owners, Newfoundlanders and Labradoreans, were forced into a deal that sees them run the generating station while barely receiving enough cash to keep the turbines turning. Adding insult to injury many people in Labrador, where the river resides, are forced to use diesel generated power to light their homes and the island part of the Province has to generate most of its power by burning heavy crude oil.

Billions of barrels of oil and gas sit off our coast and until recently it has benefited nobody except the oil companies and Ottawa. Some of those oil fields like the Ben Nevis field, over which talks broke down a short while ago, have been controlled and left untapped by multi-national oil interests for as long as 20 years. All the while the Province has continued to struggle just to survive.

(By the way, I hate to digress here but this whole oil issue really eats me up and I have to say something about it, sort of a rant within a rant if you like.

Everyday I hear people talking about the 2 billion dollars Ottawa “gave” Newfoundland and Labrador during the offshore revenue negotiations. I hear people say how terrible the deal was for the rest of Canada and how it was just another in a long line of hand outs to those “Dirty begging Newfies.” Well folks, for your enlightenment, even after that “handout” of money, which was generated by oil produced in the Province, Ottawa still receives over half of the royalties paid out by the oil companies while NL gets a less than half. We aren’t greedy. We like the deal because we like to contribute to the Country. We just don’t like being robbed by it.

Sorry about that, anyway back to the point at hand)

The Province brought with it into Confederation one of the world’s largest iron ore deposits, at Bell Island. Today those mines sit empty and deserted. Bell Island now supports only a handful of families. All the ore was stripped out and shipped away for processing someplace else years ago. All that’s left now are a few holes in the ground and a red rusty soil.

One of the world’s biggest nickel deposits is currently being mined at Voisey Bay in Labrador. As I write this column the ore is being stripped from the ground and shipped to Ontario for processing. According to INCO, they plan to build a smelter in the Province a few years down the road and will find ore elsewhere to make up for what they use now. I won’t hold my breath waiting for that to happen.

Once upon a time the Province was literally covered by virgin forests. Forests so beautiful they inspired the author of the Newfoundland anthem, the Ode to Newfoundland. One line in that heart wrenching song says, “When sun’s rays crown thy pine clad hills and summer spreads her hand.” As I look around me today I can pretty much count the number of pine trees left in the Province on the fingers of one hand, if I can find one at all.

The list of atrocities that have taken place in the Province since it joined Canada in 1949 is a long one. It’s a list that ends with a Province that has a population only the size of a small city yet with nothing to show for its world class resources except the highest unemployment, highest taxes and highest per capita debt of any Province in the Nation. Under those circumstances there’s little wonder the people of Newfoundland and Labrador are fed up, pissed off and aren’t going to take it any more. Now, at long last the Province appears at least, to have picked a leader who feels exactly the same way. Time will tell of course.

Something much of Canada fails to understand in this whole scenario is that most of the people in the Province simply don’t care anymore, not in the least. This feeling often arises when someone has been kicked around for too long. At some point that person realizes they don’t care what happens to them as a result of their actions. They just need to do something, anything at all. It’s what happens to a dog that has been beaten and starved until it finally bites its owner. It’s what happens to a battered spouse when he or she finally set the bed on fire while their partner sleeps. A point is reached where the action taken is just as important, perhaps even more so, than the results of that action and the consequences don’t matter in the least.

If industry, the Canadian government and even the public at large can understand this reality, they will have a much easier time over the next few years. Just so everyone understands it completely, especially the less than swift columnists at Canada’s National Newspapers, let me spell it out for you. The people of Newfoundland and Labrador don’t care if Exxon Mobile ever comes back to the negotiating table. They don’t care if the Ben Nevis oil field is ever utilized and they most certainly don’t care if the Province bankrupts itself developing the Lower Churchill. They just don’t care.

The reality is that Premier Williams in his efforts to support the very people who are supporting him, will either make Newfoundland and Labrador a very prosperous place to live or he’ll sink it so deep into the dark cold depths of the North Atlantic it’ll never be seen again. Either way it’s O.K. At this point the people of Newfoundland and Labrador just want to get busy living or get busy dying. The status quo is not an option.

Have you ever tried playing poker with someone who couldn’t care less if they lost everything? Well get ready folks, you’re about too.