Thursday, August 23, 2007

Oil Slick

Danny Williams was smooth and slick Wednesday as he announced the memorandum of understanding between NL and Hebron industry partners. At 70% in the polls he certainly don't really need a big announcement like this to put him over the top in the fall election, but some will say that he's also being slippery. So far the M.O.U. has been given very favorable assessments by some key analysts. Economist Wade Locke gave it a clear thumbs up on CBC TV earlier, mentioned short term benefits of job creation, oil industry momentum and spin-off industry development. He also said that the risk associated with the Hebron project is acceptable, and "it's hard to find something negative about this development." "It could add $8.1 billion to the province's coffers until 2035." MUN's Steve Tomblin expressed similar thoughts and had a positive tone about the M.O.U. in a CTV interview.

A gravity-based-structure (gbs) is to be constructed in Newfoundland, similar to the Hibernia platform, and again will need to employ 1000's of workers to construct the gbs. Everything sounds very much like this 1990 Hibernia news clip, including a less optimistic Wade Locke, who said that the Hibernia development would not improve the standard of living for the "average Newfoundlander".

Hebron could be the second largest oil field in the Jeanne d'Arc Basin, producing from 400 - 700 millions barrels of oil in its lifetime. Hibernia was estimated to have approximately 1 billion barrels of oil reserves. There is only the potential of the upper limit but because the oil is a heavier and lesser-quality crude than the other three oil fields - and thus, the price will be less than what Hibernia can get.

Chevron Canada's VP, James Bates was generally positive in his interview on Here & Now but careful not to divulge any details or show much exuberance about the M.O.U. One sensed that yes indeed plenty more detail had to be inked, and that the "deal" could change. How good the Hebron M.O.U. is may become more apparent in months from now. Give or take a couple of hundred $million, it's still a provincial opportunity to complete infrastructure projects, make a considerable payment on the debt, and maybe even allow the possibility of NL financing the development of Lower Churchill hydro besides developing hydro-carbons.

Hebron sounds great for the province in terms of jobs, the province's financial situation, and industry spin-off. Some ex-patriots will come back for employment, the outmigration trend will slow during the gbs construction phase. The level of celebrations will vary from person to person, group to group, region to region. A couple of weeks ago a local radio station ran an interview with some local (St. John's?) business person who referred to the current time of being without the Hebron deal as being the "party's over." For many average Newfoundlanders and Labradorians the question has been, what party was that? So it is best that people are realistic about this good development. There is such a wide variety of talents, strengths, and skill sets in our province, and many may not see immediate work opportunities, so a common sense piece of advice is to think ahead. What skills will be in demand? What services will people need? There will be an increase in oil related construction, so what products, services, activities will people want?

Newfoundland and Labrador won't be another Alberta anytime soon, but it's always good to see the potential and promise of a large economic development.


BNB said...

It does sound kinda nice doesn't it. I can't shake the "Beverley Hillbilly's" theme out of my head for some reason...

Come and listen to my story 'bout a man named Dan
Was a lawyer dude and then a cable man
then one day he was shooting up the bull
and up through the sea came a bubbling crude

oil that is - black gold - Townie Tea...

kodak said...

I was tapping my foot to those words and tune. As I wrote this that song came to mind too.

For some ex-pats, "Ya'll come back, ya hear!"

nadinebc said...

I wish we could come back...I am not sure how many of us will be coming back for this though. I hope many do, but I fear to believe it yet

kodak said...

Hi nadine, I hope that opportunities arise for you and yours to return home. Best wishes.