Williams says Ottawa too cozy with big oil firms

"My concern here is that the oil lobby is very, very close to this government," Mr. Williams said of his federal counterparts. "They have a significant voice in this government. And as a result, they've dissuaded them from acting."

The Globe and Mail
October 17, 2006

Williams says Ottawa too cozy with big oil firms
Shawn McCarthy

OTTAWA — Danny Williams, the Premier of Newfoundland and Labrador, tore a strip off the federal Conservative government yesterday for being in bed with the oil industry, and urged Ottawa to pass "use it or lose it" legislation to cover future offshore oil developments.

In an interview yesterday, Mr. Williams criticized Prime Minister Stephen Harper for failing to pressure the companies with threats of legislation earlier this year when the province was trying to renegotiate a development agreement on the Hebron field.

"My concern here is that the oil lobby is very, very close to this government," Mr. Williams said of his federal counterparts.

"They have a significant voice in this government. And as a result, they've dissuaded them from acting."

The Conservative Premier said his government was close to a deal last spring with a consortium of oil firms led by Chevron Canada Ltd. and Exxon Mobil Corp. which would have seen the province take a 4.9-per-cent equity interest in the Hebron project.

But talks broke down, and the consortium disbanded its Hebron team.

Mr. Williams wanted the federal government to bring in "use it or lose it" legislation and to take back the leases if the companies didn't develop them. Mr. Harper met with Mr. Williams on the weekend in Gander, Nfld., before addressing the provincial Progressive Conservative Party at its annual meeting.

While he spoke glowingly of the province's energy future, the Prime Minister reiterated his opposition to any legislation that would retroactively force the oil companies to move forward with development or face penalties.

Mr. Williams acknowledged yesterday the province will not be able to force the companies into a "use it or lose it" situation on Hebron. And he conceded that the companies could have sued the province under the North American free-trade agreement if governments resorted to retroactive legislation to strip them of equity in the project.

Mr. Williams said the two sides have recently had informal talks, and he is hopeful they will come to an agreement that will allow the project to move forward, with the province taking its 4.9-per-cent stake.

Hebron was discovered more than 25 years ago and would cost an estimated $5-billion to develop.

The Premier said the Prime Minister did not rule out introducing legislation that would, in future, penalize companies if they fail to develop projects for which they are granted exploration licenses. He said the legislation could stop short of "fallow field" legislation, which would strip the asset from a firm, and employ financial penalties.

Sandra Buckler, the director of communications, said the federal government "would not consider fallow fields legislation." But she said there was no discussion during a meeting between the Premier and Prime Minister of forward-looking legislation.

"I believe the only discussion was on the retroactivity, which we have said we won't consider. I am not aware of any other legislation being pushed by the province," Ms. Buckler said.

Mr. Williams said that under a federal-provincial agreement governing the offshore, Atlantic Canada is the only major jurisdiction in the world that does not provide some sort of penalty to encourage companies to develop their licences. He noted that even Alberta has penalty clauses for firms that fail to develop resources under lease.

"I don't want a situation where, in order to develop our natural resources in Newfoundland and Labrador, I have to wait on a decision from a boardroom in Houston," where the major oil companies are headquartered, he said.

Newfoundland is now looking for Ottawa to introduce fallow field legislation that would cover areas such as Orphan Basin, where a consortium that includes Chevron, Exxon Mobil and Exxon's Canadian subsidiary, Imperial Oil Ltd., are currently drilling an exploratory well in waters that are 2,400 metres deep.

Chevron Canada spokesman Dave Pommer said there has been no change in the status of the Hebron project. "Our licence for Hebron was issued under [the federal-provincial Atlantic] accord and hundreds of millions were invested on evaluation in Hebron based on those established terms and contract conditions," Mr. Pommer said.

"While evaluation has been suspended, the co-ventures remain open to the possibility that it could proceed at a future date."


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