Gerry Reid will PRIVATIZE NLH

I can state this because Reid is opposing the people of this province investing in oil and gas projects offshore.

I am left to wonder if Reid's "war room" actually even considered that this thinking could be applied to all our resources.

Think about this for a minute - first Reid says Newfoundland and Labrador already owns the oil and gas. In fact we do not - Canada owns it - and we receive royalties based on Canada's recognition that we are the province adjacent to the resource. If we want to own it - we must separate from the federation.

Then Reid says - Danny should not risk the peoples money by taking an equity position - in fact he says if we elect the Tories and let Danny buy equity - he will bankrupt the province.

On that basis - the debt outstanding by Newfoundland and Labrador Hydro would also be seen as a risk and have to be eliminated. Reid's thinking would have our Crown Corp sold off to outside investors (Ontario Pension Fund) or perhaps Fortis - and we will take royalties instead of the profits. Taking that further - he would develop the Lower Churchill by giving that development to outside investors and ask for a few royalties in something we actually own. Under Reid's New Liberalism we - of course - could not risk investing our money in such a project.

Williams has many weaknesses in policy - especially in areas such as the fishery - pulp and paper - agriculture - and rural development - and in these areas he does not enjoy broad-based support. Reid chooses to take on the equity position - which does have broad-based support of a people who are sick of giving away our wealth for a few coppers and jobs.

Reid has gone from left of center - to Harper's best economic policy bud. And all of this because the Libs have resurrected policy experts like Rex Gibbons. The Liberal leader has not yet learned that this direction is a political failure. If the party does not wake up and understand that people of this province want more from our valuable resources - Williams will have an unending term of office. This is not what we need and the fishery and rural Newfoundland and Labrador will suffer. But if we elect Reid - everything is gone.

Can't vote Liberal - Energy Policy by Gibbons and Dumeresque

Voting Liberal means returning to the energy policies of Clyde Wells and Rex Gibbons - PRIVATIZATION included and further deters any ownership of oil and gas projects. And worse he tries to dupe the media - or he does not understand the issue at all.


It's no secret that I have policy issues with the Premier. I support his move to acquire equity in the oil patch - but I do not support his failed fisheries policy - failed rural policies - and especially the suggestion that Lower Churchill power be exported. The "pamphlet" he calls an "energy plan" could have been written in a few nights by myself and a couple of energy zealots. Further it is an insult to Labradorians - simple as that.

I also don't like his style - the Führer comment that got him into an outrage - pontificating on hitting below the belt. The Premier says they will do the campaign without getting into "gutter" politics. The truth is - the man threatened civil servants - threatened to sue bloggers - and generally is a bully. He surrounds himself with "experts" as long as they are his buddies or past business partners.

I support his stand on removing non-renewable resource revenues from equalization - but he is doing nothing practical to make "Steve" live up to his promises.

He's just dragged out the joint management of the fishery again and his desire to see Canada take custodial management of the nose and tail of the Grand Banks - but oddly when Loyola Hearn reneged on this promise - he claimed Tom Rideout and the provincial government agreed with changes made to NAFO on surveillance and penalties. Then the whole works of them got rid of FPI - no equity there. This also includes the Liberals who did not want to upset some of the potential for political contributions.

But let's get to it.

Gerry Reid has just added another piece of logic to his "no equity" policy. Now he says Norway just took equity because it needed to kick start it's offshore - in the same way that Canada did when it took equity in Hibernia.

Why then Gerry does Norway continue to take equity position? Why then Gerry does Norway continue to be a major shareholder in Norsk Hydro? How about this?

Norway has produced this year - a "simple" easy to follow "FACT" sheet on the petroleum sector. Here's a sample found in the document.

The government receives a large share of the value created through:

* Taxation of oil and gas activities

* Charges/fees

* Direct ownership in fields on the Norwegian continental shelf (through the State’s Direct Financial Interest, SDFI)

* Dividends from ownership in Statoil

The State’s Direct Financial Interest (SDFI) is an important source of state revenues, in addition to taxes, fees and dividends from its ownership in Statoil. SDFI is an arrangement in which the state owns interests in a number of oil and gas fields, pipelines and onshore facilities. Each government take is decided when production licences are awarded and the size of the state interest varies from field to field. As one of several owners, the state pays its share of investments and costs, and receives a corresponding share of the income from the production licence.

Gerry - regardless of what Rex says - trying to sell the media that crap is bound to come back and bite you.

And Gerry - let me cut this off at the pass - on Hydro...

Just last month - and based on the current and future value of hydro-power the Government of Norway issues this News Release:

The right of reversion – The Government secures public ownership of hydropower

It says in part:

Today, a provisional decree has been passed in the King’s Council with instant effect which is considered to bring the right of reversion in accordance with the ruling of the EFTA Court and the EEA agreement. It is stated that the basic principle of public ownership of the Norwegian hydropower resources at state, regional and local level is being maintained. It will no longer be given licenses for acquisition of waterfalls and hydropower plants to private actors. Such actors can, however, still own one third of public owned hydropower plants, Mr. Enoksen says.

and

I am very pleased that we have reached an arrangement which completely keeps our most important renewable resource on public hands. We maintain public ownership at state, county and municipal level and thus secure all public hydropower owners rights to the hydropower without time limits, Minister Odd Roger Enoksen states.

Voting Liberal means returning to the energy policies of Clyde Wells and Rex Gibbons - PRIVATIZATION - included and further deters any ownership of oil and gas projects. And that goes for Party President and Candidate Danny Dumeresque (another Clyde boy that promoted and apparently still does support the ideology of privatizing hydro).

The smell of "Old Liberalism" cannot be masked by expensive perfume...

What is it with the Liberals? They describe themselves as left of center on their web-page (at least it did until they updated it today)- while going right of Williams and the Tories on energy policy.

The answer is Rex Gibbons - if the Liberal Party of Newfoundland and Labrador continue to follow the strategy of this man on energy - the Liberals will fail - politically.

Yesterday Gerry Reid was telling university students that equity in oil projects would not happen under a Liberal government. In defense of this position - Reid said that Alberta does not do it - so if that energy powerhouse does not do it - why should we?

Two answers to that Mr. Reid - and you would see them if Gibbons would stop advising for a little while.

1. Alberta owns it oil and gas resources. We do not. When Alberta develops it can say - you may develop this parcel if we receive this amount in royalties and we get a refinery or other petro-chemical industry in Alberta to process the resource. We are not allowed to refine our own oil until the refineries in Eastern Canada are fully satisfied. Do you understand this? Have you read the Atlantic Accord recently? Rex has - and Rex knows. Rex was the Minister of Energy - he made the deals on oil and he attempted to privatize Newfoundland and Labrador Hydro. His policies failed and he has not been re-elected since.

2. Who cares if Alberta or other Canadian provinces do not take equity? I don't - I do not need Alberta to guide us on what we as our own jurisdiction should or should not do. We can have independent policy choices. Further - Reid should know that many other jurisdictions in the world do seek and achieve equity positions - such as Norsk Hydro.

Then there is the Liberal policy on wind development. Once again Rex (Clyde) rares his head and Gerry spews a suggestion regarding private wind generation.

Here is the situation Gerry - if Hydro guarantees to buy the output of such generation then you and me Gerry will pay for it via our electric bill. When that is paid - who do you prefer a portion be returned to - our provinces treasury or let's say the Government of Italy. This creeping in of private sector energy developments is back-door privatization of a resource we own outright. Further Gerry - you should ask Rex what happens when you have multiple players in the generation sector inputting into an electricity grid. You should ask him why Ontario had the big blackout when Quebec did not. You should ask him how we guarantee maintenance with a group of private generators and the cost of not having that control. You should ask him what happened with the joint use of utility poles - and what happens when one group maintains the poles a little more or less than another.

Until the Gerry Reid's "New Liberalism" stops depending on failed "Old Liberalism" policies - the party will continue to enjoy falling polls. It's time to let new thinking take over from Rex Gibbons - Clyde Wells - and past Minister Walter Noel. There is no perfume they can buy to make these policies smell good.



And as for Labrador energy policy - both the Liberals and the Conservatives fail - and they will get a sense of that as they crawl and slither around Labrador looking for a vote (the right to exploit Labrador to benefit the Avalon).

As I write this - back comes John Efford - dipping his toes in the political ocean - John - even if we can get past all the spending scandal and you were as pure as the driven snow in the administration of your constituency allowance - you are the one who told us to take or leave a lesser deal on equalization.

I close with this observation. If Williams does not win 3 of 4 seats in Labrador - he will not have a real mandate to develop the Lower Churchill under less than "best" terms for the Big Land. This is something I hope Labradorians will consider.

Questions and Answers Hebron MOU

The only thing I want Danny Williams to do respecting the Hebron MOU is release it. Then I and any others interested can get a first-hand look at the document and do our own review.

As for major resource development - I call on Gerry Reid - Lorraine Michael - and Danny Williams - to introduce legislation that would require such MOU's to be released and debated in the House of Assembly. Otherwise you are all hypocrites.

Now that Danny won't release the MOU and Gerry has gotten into a list of questions - which I say the Premier will have a list of answers to during a televised election debate (won't be pretty) - I have some questions and answers of my own.

Why in the face of obvious public support for equity ownership (risks-benefits) accepted - do Gerry Reid and the Liberal Party continue to question the policy choice?

Here's one of Gerry's questions:

How long will it take for government to recover its up-front investment?

An estimated $600 million is a lot of money to put forward in up-front costs without any immediate return on investment. How long will it take to recover this investment before any real money flows into the province's coffers?

My answer is - yes it is a significant investment - with significant reward potential - nothing is guaranteed. At a time when oil was below $20 a barrel the feds purchased a piece of the Hibernia action and it has paid off exponentially. Now when oil sits at almost 4 times that value - we are wondering why we should take a piece of the action. Well that thinking gets us right back into the Upper Churchill. If we had taken some of the financial risk of that investment as Quebec did - we might be sitting here now with a few hundred million a year to work with. Labrador could have a highway of gold.

What is more puzzling is that the NDP and the PC's are willing to invest in equity and the Liberals are waffling on the whole idea. Get your arse pants off the picket fence and make solid policy choices.

Yes there are risks with equity - but you still buy a home right? Anything might happen.

With the size of our stake and the associated costs - one might imagine the "risk" the companies must be taking with the other 95%. We all know the oil companies do one thing better than any other industry - make profit. They too would have to speculate what the market would deliver - and they expect to make money from the Hebron development. We will also.

Let's look at another of Reid's questions:

How much money has been left on the table by compromising on the royalty regime and allowing a one percent payment until payout?

If the generic royalty regime with an increasing royalty rate from 1% to 7.5% until payout is applied, similar to White Rose, hundreds of millions of extra dollars will flow into the province=s coffers in the early years of production. What impact will your compromise have on the amount of money that could have flowed into provincial coffers in the first ten years of production?

Well I will address this two ways. First if we take more royalties on the back end of the deal instead of in the first ten years - we have essentially accomplished our equalization objective. Harper did not remove non-renewable resource revenues from the formula - so why scoop them all up now - only to lose equalization payments? No let's be more clever - bide our time - maybe the formula will change to reflect that policy in years to come - but if we are in the country let's max equalization as is done in Quebec.

Secondly if the profits of the equity are funneled into the new Energy Corporation and invested in much needed social and economic programs - we hide them from the equalization formula - thereby increasing our take again of the resources in our waters.

The Liberals had this advice in the past and ignored it. Too bad - they could have used the boost in public popularity and increased our benefits. Notwithstanding all of this in order to be a Norsk Hydro or a Hydro-Quebec we have to be players - and under past Liberal policy we were not. I only wish the Premier had done the same with wind - because in that you find Danny's weakness - inconsistency. That should have been further obvious when he did not release the MOU.

Over the next few days I will respond to Gerry's questions - and give you my take. Meanwhile Danny release the MOU. I have my own theory on where the oil companies made the gains and it's not with Hebron.

A + for the Hebron MOU - stay tuned...

As one Newfoundlander and Labradorian who stood squarely behind the Premier on his position with big oil - I am not disappointed. The benefits announced from the Memorandum of Understanding signed off by both sides are extremely beneficial to the people of our Province.

As I also believe strongly in equity positions on major resource developments - this 4.9% is something I support fully. That is exactly what Norway has done to make Norsk Hydro what it is today.

The equity position is great. 4.9%

The super royalty is great. 6.5%

The stated intent on local engineering - design - and construction work is great.

The Research and Development commitment is average.

$120 million over the life of the project.

The Education commitment is poor.

$1 million pre-sanction to College of North Atlantic and Memorial University of Newfoundland to enhance skills training.

On the choice of platform - Floating Production, Storage and Offloading (FPSO) - or Gravity Based Structure (GBS) - myself and the Premier may disagree but both would have exceptional benefits for the province - if the legal agreement delivers the objectives of the MOU.

Here's the difference for me:

The FPSO can be costed over more that one project and is significantly cheaper. The GBS is one project - one unit and currently is a permanent structure in the water.

This means cost recovery or time to royalties may be increased with the GBS. On the Premier's side of this however is the GBS is more labour intensive especially for building and construction trades. So one might say what we lose on the cost recovery/royalties we make up for through increased employment and perhaps materials supply.

I would and have argued that the FPSO technology is an area where facilities such as those found in Marystown benefit greatly from gaining expertise in building and maintaining them - in a fashion that additional work from FPSO's not involved in our oil patch would be achieved. In other words an industry developed on but not dependent on our resources.

Having said that it is believed that GBS is better for heavy oil projects.
Further the GBS is now being looked at for LNG applications. Perhaps we can develop an industry based on these structures.

Considering the engineering expertise employed by government and the oil consortium - I yield - to that decision.

All in all this is an advanced MOU which satisfies the Province's benefits list for the Hebron development.

Danny Williams was right to hold off until equity - super royalty - and employment/construction/engineering targets were achieved.

This MOU is a superior and an advanced position for a province in deals with oil companies/consortiums.

I do not believe the oil consortium gained anything tremendous in this MOU. I do believe the Province gained substantially in this particular project.

I do believe the additional benefits to some or all of the consortium partners will be found outside this deal in future ventures. We will get into that next week.

Now it's back to the Lower Churchill.