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Harper: Negotiate, don’t legislate Canadian P.M. won’t back Newfoundland’s Hebron consortium fight; premier calls response ‘disgusting, disgraceful, shameful’ Gary Park For Petroleum News
Newfoundland Premier Danny Williams has had the same blunt message from Canadian Prime Minister Stephen Harper twice in the last five months and he hasn’t liked it either time.
He’s been told repeatedly the federal government won’t cooperate in his plan to impose “use it, or lose it” legislation setting a fixed time limit on oil and gas companies to develop offshore resources or see the property revert to the province.
Harper sent a message to Williams in mid-April that he would not support any move to meddle with property rights and risk opening the door to a whole range of possible legal actions, including a challenge under the North American Free Trade Agreement.
He left little doubt that he disapproved of Williams’ campaign for so-called fallow-field legislation, arguing it was best to keep a “stable investment climate in the oil and gas business.”
“I think it’s important that we respect any property rights and that we don’t … expose the government of Canada or the taxpayers of Canada to significant liabilities,” Harper said in the thick of a spat between the Williams government and the four companies involved in the Chevron-led Hebron consortium.
In what seemed to be his final word, Harper released a letter Sept. 8 that federal intervention in a commercial arrangement, such as the issuing of offshore licenses, “would be inconsistent with the market principles the Government of Canada is promoting.”
He said the commercial matters raised by Williams “can only be resolved by the parties to a negotiation.”
Williams accuses Harper of pandering Williams, notorious for his short fuse, accused Harper of being a “buddy of Big Oil” and pandering to the interests of foreign oil companies.
He said it was “disgusting, disgraceful and shameful” that the federal government would not stand behind his province in its efforts to squeeze higher royalties out of offshore projects.
If Harper is a “buddy of Big Oil, then I’m not,” Williams declared.
It is now five months since the consortium in the Hebron-Ben Nevis project abandoned negotiations with the province, ending hopes of a possible 100,000 barrel-per-day, C$5 billion venture to start production from a 788-million barrel field.
The partners said they were unhappy with Williams’ demands for higher royalties and a 4.9 percent government equity stake.
Williams rejected the consortium’s bid for C$500 million in tax credits, telling operator Chevron 28 percent, ExxonMobil 37.9 percent, Petro-Canada 23.9 percent and Norsk Hydro 10.2 percent that so long as he was premier “we will maintain this position. So there is no question of the oil industry waiting me out.”
He said each of the Hebron partners has indicated the offshore find will be developed. “I’m expecting they’ll be back to us,” he said, adding his government is ready to wait indefinitely to extract better returns.
Pending Harper’s response, ExxonMobil Canada President Liam Mallon suggested that if Newfoundland has any desire to see its offshore industry grow it should focus on a “stable, predictable” investment climate that builds cooperation between the government and industry.
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