Regulator slams Williams’ government
In a rare spat between an energy regulator and a Canadian government, the Newfoundland administration of Premier Danny Williams has been rebuked for blocking development of a 233-million-barrel Hibernia field and potentially causing a “significant” value loss.
In a letter to Williams’ government, Canada-Newfoundland and Labrador Offshore Petroleum Board Chairman Max Ruelokke said that, as a general rule, stalling production “erodes value, whereas accelerating production enhances value.”
He said the government had all the information required to give conditional approval to the Hibernia South development, which could prolong the life of the existing Hibernia field at 180,000 barrels per day, and failed to raise its concerns about a lack of information when it had the chance during the six months of public review.
Board concerned with timing Ruelokke said his board (a joint Canadian and Newfoundland government agency) is concerned the province “found it necessary at this juncture to take a position that the proponent’s development plan amendment application does not contain sufficient information on which to base a decision.”
The regulator warned the delay would cost both the province and the Hibernia South consortium including ExxonMobil, Chevron and Petro-Canada.
It also said the Hibernia South slowdown could affect the pace of other projects, including a planned expansion of Husky Energy’s White Rose project, creating “some urgency” about resolving the difficulties.
Ruelokke called for an early meeting between the board and province to establish the ground rules for the White Rose hearing.
The board’s five-page letter to Newfoundland Natural Resources Minister Kathy Dunderdale has no known precedent for an energy regulator taking issue with the government that appoints the board members.
There is speculation that Williams’ opposition to Hibernia South is an extension of last year’s dispute with partners in the Hebron-Ben Nevis project, when he demanded higher returns and greater benefits for Newfoundland, prompting the partners to walk away from negotiations and fold their project teams.
—Gary Park
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