Gary Lunn vs. Danny Williams

[geoffrey]

From the Globe and Mail:

Mr. Lunn said the province has missed out on an energy-related investment boom that has generated growth and employment in western provinces – and has lured young Newfoundlanders to work there.

Oh Gary. Is this Harper's strategy? Trash Williams on the basis that he's willfully destroyed his province? If so, I like it. It will sell everywhere other than the Maritimes.

Forget the ___, we'll take the rest, worked for Trudeau against an unpopular (and rich) West. Why not try the same??

As a non-partisan type, I think it's a wise move for the Tories. Their Atlantic seats are generally secure traditional ridings and the rest of Canada likes to see someone taking the laggards to task.

For his part, Mr. Williams opened the conference Tuesday by offering a glimmer of hope on Hebron, but he warned he is not prepared to compromise on his principles to get a deal.

Williams thinks oil and gas care about him, but they'd rather put their money on something more reliable. Southwest Calgary has a bigger economy than Williams, why the hell would anyone even care?? He needs to sell Newfie oil, not raise barriers to the development of a very difficult resource (offshore).

But he cautioned that he would not succumb to pressure and sign “a deal for the sake of a deal.” Previous governments had followed that course with disastrous consequences for the long-term economic health of the province, he said.

The long term economic health of the province, according to Williams, seems to be robbing equalisation as much as possible. That's not reasonable. Newfoundland is a failed state. Unless it can develop an economy, they will continue to be an exporter of bright, sometimes educated, hardworking individuals.

Danny Williams is playing the royalty game like Ed Stelmach... without the economy or business investment being there to begin with.

Mr. Williams acknowledged his tough stance was causing pain among Newfoundland businesses that service the offshore oil and gas industry.

“Trust my judgment,” he urged the local industry association that he once described as ‘annoying.'

“Short-term pain will lead to long-term gain.”

Short-term? Is twenty years of third world economics short-term (without equalisation, Newfoundland has been REALLY poor)? How about thirty? Will it be the big 4-0 before Newfoundland understands they are competing with Alberta, with BC, with Saskatchewan on investment?

Again, who the hell cares about Danny and his 1.4b barrels? Whoop de do.

It's enough money to fix Newfoundland, but it's a pitance to oil and gas.

The Premier – who faces a re-election fight next fall – is running high in the polls partly because of his populist attacks on international oil companies and the government of Stephen Harper.

Attacks on international oil companies??? That sells in an impoverished, unemployed province?? Who are these people?

--

Williams is a fool if his intentions for Newfoundland are good. He's brilliant if he wants to be re-elected. Unfortunately, democracy allows such irrationality.

[GreenWhiteandPink]

Looks like Danny's plan to hold out for a better deal on the Hebron development will pay off.

Hebron oilfield negotiations formally resume

Link

Williams says Hebron discussions at ‘delicate stage'

Link

greffory said: Williams thinks oil and gas care about him, but they'd rather put their money on something more reliable. Southwest Calgary has a bigger economy than Williams, why the hell would anyone even care?? He needs to sell Newfie oil, not raise barriers to the development of a very difficult resource (offshore]

Sure whatever That why Chevron were the ones that restarted the negotiations.

Edited August 11, 2007 by GreenWhiteandPink

[Moxie]

Yes let us bend over to a lying Federal PM and then bend over again and take it from filthy rich oil companies who pollute and give nothing back to the environment they distroy. Give them hell Danny, at least he cares about his province and it's people more than I can say for the left or the right as they bow before the almight Filthy Rich Oil Industry. If they can make more money in third world countries let them, China would be happy to do business with NFL screw the US and their Arab backed buddies.

[B. Max]

Yes let us bend over to a lying Federal PM and then bend over again and take it from filthy rich oil companies who pollute and give nothing back to the environment they distroy. Give them hell Danny, at least he cares about his province and it's people more than I can say for the left or the right as they bow before the almight Filthy Rich Oil Industry. If they can make more money in third world countries let them, China would be happy to do business with NFL screw the US and their Arab backed buddies.

That from a welfare state.

[GreenWhiteandPink]

A DEAL HAS BEEN REACHED!!!

NL WILL GET A 4.9% EQUITY STAKE AND SUPER ROYALITIES.

There will be a press conference tomorrow.

Danny's royalty game worked. He stood up for NL interest and got a better deal.

So much for greffrey thoughts on the matter

Edited August 22, 2007 by GreenWhiteandPink

[Topaz]

I can see Williams running for PM, after he's done with NFLD and maybe the party he'll run for will be the Progressive Conservative and that would probably complicate Harper's party. There's two people I like to see opposite to Harper, one is Williams and the other is Bob Rae, just to sit and watch them in "Question Period" would be a treat!!

[GreenWhiteandPink]

Finacial Post: Williams to claim victory

In what would be a big victory for Newfoundland and Labrador, Premier Danny Williams is expected to announce Wednesday that he has reached an agreement with an oil consortium led by Chevron Corp. to develop the shelved Hebron Ben Nevis heavy oil project offshore its coast.

The combative premier and the oil companies broke off negotiations on the $6-billion project -- Newfoundland's fourth major oil development -- in April, 2006, when they couldn't agree to fiscal terms.

The premier came under severe criticism, both in his home province and in the oil community, for refusing to back down on his demands, which involve heavy provincial involvement and for which he was likened to Venezuela strongman Hugo Chavez.

However, the gambit appears to have paid off. According speculation in Newfoundland Tuesday, he will announce a memorandum of understanding in which he won a 4.9% equity stake in Hebron for the province as well as a super royalty that would increase with oil prices -- demands that the oil companies would not agree to a year ago.

Good news for NL. He will probley sweep Oct's election.

Edited August 22, 2007 by GreenWhiteandPink

[geoffrey]

Why does the government need to represent Newfies in the investment? Why can't private individuals invest instead? Does Danny think your incapable of calling a broker and buying some Chevron? Why do you take such insults?

1.4 billion barrels x $60 a barrel x 0.14 Margin x 0.049 Equity = ~ $600 million. And that's being aggresive. What did this deal cost Danny? This is a small pitance over many years, a real nothing.

But hey, Danny fought for ya! Woohoo!

The government has no business in owning oil and gas projects, it makes no sense. Remember when PET tried that, and what a booming [sarcasm]success[/sarcasm] that was.

Nationalising industry is of zero benefit to the people. This is 4.9% less jobs that Newfies will get in order for these companies to make their desired returns. If you think Chevron is willing to walk home with less, your wrong. They will find ways to cut costs to make their desired return.

I'll wait until I see the full deal before commenting further (we don't know all the terms yet).

EDIT: It's not even 1.4 billion barrels, I over stated by nearly 2x. Ok. Danny got ya about $300mil over many years. And we still don't know what it cost you yet.

Edited August 22, 2007 by geoffrey

[GreenWhiteandPink]

The royalites from this one project alone will be more than the previous combined, some where over the 8 billion range. The deal will allow the province to earn a 4.9-per-cent equity stake in the project, and has a royalty regime that will ensure the province earns a greater share of the proceeds as the price of oil rises.

Why has Norway's state-owned Norsk Hydro ASA invested in all 3 current projects already, do you think the people of Norway are not going to benefit from this. Nationalizing the Oil and gas industry is the best way to for small jurisdictions to provide the maximun benefits to people.

Norway has the same population and geographical size as Alberta but it has has a hertiage fund of $300 billion as compared to Alberta's $12billion and Norway's was only started in 1995, it is expected that the fund may reach USD 800-900 billion by 2017. Alberta would of been way better off if it had nationalized it oil and gas indusrty, and one day Albertian's are going to realize this.

The 4.9% is also needed as it will be used ito secure funding in the development of the Lower Churchill Mega Project, which will start within the next 2 years.

Edited August 22, 2007 by GreenWhiteandPink

[geoffrey]

Man you don't have a clue The royalites from this one project alone will be more than the previous combined, some where over the 8 billion range.

An $8b royalty return on this is comparable to Alberta's royalty regime. This is no great feat. It's below average if you favour government's having money over individuals.

--

Again, I ask, do you think Newfies are too stupid to call up their brokers to get their stake in the project or is there another reason why the government needs to babysit everyone?

Personally, I think Newfies are smart enough to dial their phones. They can buy into the project through private industry. You don't need a government player. That 4.9% equity position is 4.9% less that will go to individuals and that much more into general government revenues to be squandered as they always are.

The deal will allow the province to earn a 4.9-per-cent equity stake in the project, and has a royalty regime that will ensure the province earns a greater share of the proceeds as the price of oil rises.

How do you earn an equity stake? Either this author is using the wrong word here, or Newfoundland is signing over major concessions for this stake. They either have it, or not. You can't really earn equity outside of say, stock options. Doesn't make sense. If the 4.9% is conditional, I'd want to know what the conditions are.

4.9% prevents Newfoundland from having a say in any operational decisions. 5% would have got them a voice.

Nationalizing the Oil and gas industry is the best way to for small jurisdictions to provide the maximun benefits to people.

Alberta is as rich as Norway per capita. And we have to deal with Canada's taxation. Outside of Canada, Alberta would be considerably more wealthy than Norway.

I tend to think that market principles work better than government beaurucracy. Alberta is a case in point.

You don't need to nationalise oil and gas to be successful. In fact, more wealth exists in the hands of Albertans than for Norweigans and we share a similar level of social services. The Alberta model is far better than Norway's.

The 4.9% is needed as it will be used ito secure funding in the development of the Lower Churchill Mega Project, which will start within the next 2 years.

Newfoundland, though having a weaker than most credit rating, is still a taxing authority. They can borrow pretty cheap. They don't need a pitance stake in an small oil well to secure funds (this field has less oil in total than is produced by Syncrude annually). It's a ~$5.2b project and Newfoundland's stake is ~$254M. That's not even the cost of an upgrader. Meh. It won't change their borrowing ability. And there is likely huge restrictions on the liquity of that equity chunk anyways.

I'm not convinced this does much at all for Lower Churchill.

--

There is already talk of Danny's concessions. It seems like the project will likely not have to be constructed entirely in Newfoundland (something agreed to before he chased everyone out of town). The loss of potential jobs is unfortunate.

The loss of offices, technical talent and skilled labour to Alberta over the last 15 months is far greater in cost than what Danny won for you.

[GreenWhiteandPink]

How do you earn an equity stake? Either this author is using the wrong word here, or Newfoundland is signing over major concessions for this stake. They either have it, or not. You can't really earn equity outside of say, stock options. Doesn't make sense. If the 4.9% is conditional, I'd want to know what the conditions areYou don't need to nationalise oil and gas to be successful. In fact, more wealth exists in the hands of Albertans than for Norweigans and we share a similar level of social services. The Alberta model is far better than Norway's.

Newfoundland, though having a weaker than most credit rating, is still a taxing authority. They can borrow pretty cheap. They don't need a pitance stake in an small oil well to secure funds (this field has less oil in total than is produced by Syncrude annually). It's a ~$5.2b project and Newfoundland's stake is ~$254M. That's not even the cost of an upgrader. Meh. It won't change their borrowing ability. And there is likely huge restrictions on the liquity of that equity chunk anyways.

.

They will pay fair market value around $300 million and it will be worth about $1.5 billion of the life of the project.

There is already talk of Danny's concessions. It seems like the project will likely not have to be constructed entirely in Newfoundland (something agreed to before he chased everyone out of town). The loss of potential jobs is unfortunate.

Long term royalties/income for the province(20+years) are more valuable than short term jobs that may last 3-4 years.

The loss of offices, technical talent and skilled labour to Alberta over the last 15 months is far greater in cost than what Danny won for you.

And the moment this project gets started they will all be heading back, and alot of these workers and other NLders living in Alberta still have their homes here in NL. Oil company's/contractors in Alberta fly them back and forth every 4-6 weeks (they take their incomes home with them), all their expenses in Alberta are paid for by their employers(accomadations meals etc.), they spend their money in NL, buy/build homes in NL. This is know as the mobile work force.

And the Hebron field is likely to be double it's suggested size. The Hibernia field shown to be double it's original projections.

Edited August 22, 2007 by GreenWhiteandPink

[GreenWhiteandPink]

NL will only pay 110 milion for a 4.9%share, about a third of what it should cost. And the province stands to make 16 billion over the life of the project and the feds 7 billion. The Project will create more jobs than previous projects. A highlight of the deal is that a GBS, or gravity-based system, will be constructed solely in Newfoundland and Labrador.

CTV News details

http://www.releases.gov.nl.ca/releases/2007/exec/0822n02.htm

Highlights of today’s MOU include:

The province will purchase an equity ownership position of 4.9 per cent at a price of $110 million CAD.

Modifications to the Generic Royalty Regime:

The new super royalty for the province is an additional 6.5 per cent of net revenue at higher oil prices (>US$50 WTI/bbl) after net royalty payout;

Provide downside royalty protection by keeping the basic royalty rate at one per cent of gross revenue until project costs are recovered (i.e. simple payout)

Commitment for construction of a gravity base structure (GBS) in Newfoundland and Labrador.

All fabrication work will be completed in the province*, with the exception of the fabrication of the utilities/process module. (*subject to reasonable capacity and human resource availability).

Front-end engineering and design (FEED):

Most GBS FEED-phase engineering will be done in Newfoundland and Labrador.

Late FEED transition to the province for work to be performed in the province other than the GBS.

Make available engineering / technical or other professional positions to residents of the province to work in contractors’ offices outside the province for any FEED done outside of the province.

Detailed engineering:

Detailed engineering of the GBS (including mechanical fabrication and mechanical outfitting) will be done in the province.

Detailed engineering for any other construction or fabrication work performed in the province will be done in the province.

Make available engineering / technical or other professional positions to Newfoundland and Labrador residents to work in contractors’ offices outside the province for any detailed engineering undertaken outside the province.

Other:

The establishment of a Project Management Office in the province, and significant operator team activities including project management and reservoir and drilling engineering.

All procurement and contracting activities to be coordinated and managed out of an office in the province.

Provision of a travel fund, to begin during the pre-sanction FEED phase, for travel of Newfoundland and Labrador contractors/suppliers to visit engineering offices for work done outside the province.

Request for Proposal (RFP) and bid packages will ensure Canadian standards are met where such standards are appropriate.

Conduct early supplier development workshops for the local service and supply community so contractors can prepare for bidding and establish joint ventures, and promote and encourage technology transfer opportunities.

Fixed R & D amount of CAD $120 million over the life of the project, provided such commitment meets the Board’s requirements.

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

Edited August 22, 2007 by GreenWhiteandPink

[fellowtraveller]

Does this mean that Alberta can expect to see some of that $16 billion flowing West?

[NovaScotian]

Does this mean that Alberta can expect to see some of that $16 billion flowing West?

Meaning?

[fellowtraveller]

Meaning?

Meaning Alberta has been sending billions eastward forever, Nfld will finally be a 'have' province, and Manitoba in the West is in ongoing and desperate straits. Any reason Nfld should not return some of the benefits they have enjoyed for so long? Doesn't Premier Wiliams believe in fairness?

Quebec could always use a few billion too, Nfld will find there are always plenty of willing recipients.

Understand?

[NovaScotian]

Meaning?

Meaning Alberta has been sending billions eastward forever, Nfld will finally be a 'have' province, and Manitoba in the West is in ongoing and desperate straits. Any reason Nfld should not return some of the benefits they have enjoyed for so long? Doesn't Premier Wiliams believe in fairness?

Quebec could always use a few billion too, Nfld will find there are always plenty of willing recipients.

Understand?

Forever? Well I suppose 40 years seems like forever.......but OK!

Of course Newfoundland should 'pay in'. But remember that 16 billion is not a lump sum, it is payed to the province over 25 years. The Atlantic Accords only shield NFLD until 2013(?) so after that there equalization payment will be cut off. Even until then Nfld has only a small payment anyway and one of the lowest per capita equalization transfers.

Edited August 23, 2007 by NovaScotian

[GreenWhiteandPink]

Meaning?

Meaning Alberta has been sending billions eastward forever, Nfld will finally be a 'have' province, and Manitoba in the West is in ongoing and desperate straits. Any reason Nfld should not return some of the benefits they have enjoyed for so long? Doesn't Premier Wiliams believe in fairness?

Quebec could always use a few billion too, Nfld will find there are always plenty of willing recipients.

Understand?

Do you have any idea how equalization works? Equalization transfers come the federal government, Alberta and Ontario don't send money anywhere. Canadians pay the same federal tax based on income regardless of where they live. Someone working in Aberta making $75000 pays the same federal tax as someone living in NL.

Using your rational one can argue that Alberta and Ontario have sending billions to Manitoba forever as well, and because Mantobia has alway been a "have not" province, Manitoba has enjoyed the same "benefits" as NL forever as well.

[fellowtraveller]

Do you have any idea how equalization works? Equalization transfers come the federal government, Alberta and Ontario don't send money anywhere. Canadians pay the same federal tax based on income regardless of where they live. Someone working in Aberta making $75000 pays the same federal tax as someone living in NL.

Using your rational one can argue that Alberta and Ontario have sending billions to Manitoba forever as well, and because Mantobia has alway been a "have not" province, Manitoba has enjoyed the same "benefits" as NL forever as well.

Must be just a coincidence then that neither Alberta or Ontario appear on this equalization table, while every other province does appear.

Yes, I agree that the situation in Manitoba is unconscionable. All those years sucking on the federal teat..... I am glad that Nfld will be stepping up to do their share for Manitoba and especially Quebec, God Bless Danny Williams.

[geoffrey]

The latest GDP (PPP) numbers I saw put Newfoundland ahead of Ontario. Yet Ontario funds Newfoundland. This is the only place you'll find me and McGuinty in agreement over anything.

Ontario is getting bagged on this one. Out here we'll always fund everyone else, but Ontario shouldn't be funding richer provinces. That's ridiculous.

[GreenWhiteandPink]

The latest GDP (PPP) numbers I saw put Newfoundland ahead of Ontario. Yet Ontario funds Newfoundland. This is the only place you'll find me and McGuinty in agreement over anything.

Ontario is getting bagged on this one. Out here we'll always fund everyone else, but Ontario shouldn't be funding richer provinces. That's ridiculous.

So what? GDP(PPP) are irrelevant, unlike the rest of the country most of our resources are shipped to other provinces for secondary processing (Voisey Bay Nickle sent to Sudbury for example, Labrador West's Iron Ore suppling Ontaios's Heavy Maufacturing, Auto and steel industries for the past 50 years), NL loses out big time! NL should be as properous Ireland or Iceland, but since NL has entered confederation its resources have been pillaged and taken for the benefit of the rest of Canada, if NLder's tried to stand up, thsy get insulted or told to shut up and be gratefull for the few scraps that fall its way. Those days are over!! That's why Danny held out on the Hebron deal and fought to end the clawbacks on the Atlantic accord.

Edited September 2, 2007 by GreenWhiteandPink

[geoffrey]

So what? GDP(PPP) are irrelevant, unlike the rest of the country most of our resources are shipped to other provinces for secondary processing (Voisey Bay Nickle sent to Sudbury for example, Labrador West's Iron Ore suppling Ontaios's Heavy Maufacturing, Auto and steel industries for the past 50 years), NL loses out big time!

Most of Alberta's production is shipped elsewhere too. You don't hear us whining. Exports are part of the GDP calculation, by the way.

NL should be as properous Ireland or Iceland, but since NL has entered confederation its resources have been pillaged and taken for the benefit of the rest of Canada, if NLder's tried to stand up, thsy get insulted or told to shut up and be gratefull for the few scraps that fall its way. Those days are over!! That's why Danny held out on the Hebron deal and fought to end the clawbacks on the Atlantic accord.

And actually you got the same deal on both counts, but Hebron just delayed a year and a half. Wow. Look what an election year can do.

[GreenWhiteandPink]

Most of Alberta's production is shipped elsewhere too. You don't hear us whining.

No it is not. The secondary processing of Bitumen from the tar sands takes place in Mc Misery, where it provides tens of thousands of jobs for Alberta and the spin off jobs and income tax revenue that goes with it. How would Albertan's feel if the Bitumen was mined from the ground loaded on a train and shipped to Montanna or Sask, I 'm sure you hear some whinning then. In addition much of the synethic oil and oil from conventional reserves are then sent to other refineries in Alberta to make various petro products and petro chemicals, which then provide addition high paying jobs, spin off industries and taxes for the province. If the oil was just extracted from the earth and shipped elsewhere how prosperous would Alberta be today? Probley in the same situation as NL!

Exports are part of the GDP calculation, by the way.

So what it is still irrevant to the situation at hand.

And actually you got the same deal on both counts, but Hebron just delayed a year and a half. Wow. Look what an election year can do.

With his party at about 70% in the polls before this MOU was announced, the fact that it is a election year has nothing to do with the deal. He would of won a massive majority regardless.

[geoffrey]

No it is not. The secondary processing of Bitumen from the tar sands takes place in Mc Misery, where it provides tens of thousands of jobs for Alberta and the spin off jobs and income tax revenue that goes with it. How would Albertan's feel if the Bitumen was mined from the ground loaded on a train and shipped to Montanna or Sask, I 'm sure you hear some whinning then.

It is mostly piped to the US for refining in Texas and the Mid-West. The upgrading in McMisery is just into a state where it can be pumped elsewhere to be refined into marketable oil products. You can't pump sand down a pipeline, but you can pump upgraded bitumen:

http://www.albertaventure.com/abventure_47...tml?doc_id=6946

http://www.ualberta.ca/PARKLAND/research/p...PEvidence07.htm

http://www.petroleumnews.com/pntruncate/459552562.shtml

Some reading for you.

In addition much of the synethic oil and oil from conventional reserves are then sent to other refineries in Alberta to make various petro products and petro chemicals, which then provide addition high paying jobs, spin off industries and taxes for the province. If the oil was just extracted from the earth and shipped elsewhere how prosperous would Alberta be today? Probley in the same situation as NL!

Much of the petrochem and other products produced up by Edmonton and that area are based on our conventional supplies and the very little synthetic marketable crude we have. Your right, it's a highly profitable industry. No reason Newfoundland can't have the same though, they just need to have an attractive business climate to invest.

There is also a natural gas component to alot of this, of which I'm not 100% of how much supply Newfoundland has to use on petrochem.

So what it is still irrevant to the situation at hand.

With his party at about 70% in the polls before this MOU was announced, the fact that it is a election year has nothing to do with the deal. He would of won a massive majority regardless.

I agree with you. It just makes no sense why he waited so long to sign realistically the same deal that was offered before. Nothing REALLY changed.

[no queenslave]

From the Globe and Mail:

Oh Gary. Is this Harper's strategy? Trash Williams on the basis that he's willfully destroyed his province? If so, I like it. It will sell everywhere other than the Maritimes.

Forget the ___, we'll take the rest, worked for Trudeau against an unpopular (and rich) West. Why not try the same??

As a non-partisan type, I think it's a wise move for the Tories. Their Atlantic seats are generally secure traditional ridings and the rest of Canada likes to see someone taking the laggards to task.

Williams thinks oil and gas care about him, but they'd rather put their money on something more reliable. Southwest Calgary has a bigger economy than Williams, why the hell would anyone even care?? He needs to sell Newfie oil, not raise barriers to the development of a very difficult resource (offshore).

The long term economic health of the province, according to Williams, seems to be robbing equalisation as much as possible. That's not reasonable. Newfoundland is a failed state. Unless it can develop an economy, they will continue to be an exporter of bright, sometimes educated, hardworking individuals.

Danny Williams is playing the royalty game like Ed Stelmach... without the economy or business investment being there to begin with.

Short-term? Is twenty years of third world economics short-term (without equalisation, Newfoundland has been REALLY poor)? How about thirty? Will it be the big 4-0 before Newfoundland understands they are competing with Alberta, with BC, with Saskatchewan on investment?

Again, who the hell cares about Danny and his 1.4b barrels? Whoop de do.

It's enough money to fix Newfoundland, but it's a pitance to oil and gas.

Attacks on international oil companies??? That sells in an impoverished, unemployed province?? Who are these people?

--

Williams is a fool if his intentions for Newfoundland are good. He's brilliant if he wants to be re-elected. Unfortunately, democracy allows such irrationality.

your post is a failed state- no links.