FEDS APPROVE BAY DU NORD BUT BEWARE ANOTHER SHOE TO DROP

NL may have dodged one offshore bullet, but well-informed sources in the Nation’s capital advise that the public were given only one part of the story.

The Federal Cabinet has agreed, over objections from Environment Minister Steven Guibeault, to allow Bay du Nord to proceed. But so far unannounced is that Ottawa has extracted from Premier Andrew Furey an agreement that in return, no other offshore oil development licenses will be issued. Ottawa does not want to be seen doing the killing alone.

This compromise was the cost of the Fed’s $2 billion loan for “rate mitigation”. A more mature, savvy, politician would have told Ottawa to stuff it. Furey has agreed to the price.

The “noise” that you are hearing from local media, over the past few days, revolves around climate friendly wind power and hydrogen.

What you are hearing is a structured campaign giving the impression that your future is connected with these energy sources rather than oil – though the globe needs oil and we have some of the lowest carbon emitting stuff. It is a more important industry than many people, including our own, fully understand.

Premier Furey and Natural Resources Minister, Andrew Parsons, are active parties in this PR job. It includes rebranding C-NLOPB, provincial legislation to lift the embargo on wind energy development, and environmentally “sexy” hydrogen.

Minister Seamus O'Regan

Hydrogen is not a primary source; it is what some refer to as a carrier, developed from  natural gas or coal on favourable economic terms, and inexpensive electricity, necessary for the electrolytic process. Conversion losses challege carbon capture, the road to producing "green" hydrogen economically is far in the distance. Then there are issues of storage and transportation. Expect fierest competition, too, from utility scale solar producers, those with access to some of the required  infrastructure, and players closest to major markets. 

Some experts say that hydrogen technology is still “ten years away from being ten years away” though Norway, South Australia and others, supplying (brown) hydrogen (the darker the colour the higher the carbon emitted) to Japan's power plants, dispel this notion. 

Still, no one will argue that the technology and the markets for the cleaner and more accessible fuel will need more time and a lot more capital to mature, which is the part that politician don't discuss.

That is not to dismiss hydrogen’s potential. Just don’t let political rhetoric mislead you to thinking that we can shut down the offshore oil sector tomorrow and presto, wind power and hydrogen development is going to replace those jobs.  

And, on the subject of wind, if it is not used in the manufacture of hydrogen, what market will it serve? The Maritime Link has been sized essentially to transmit only surplus power from Muskrat Falls. 

Of course, politicians have grown used to teasing the locals with visions of Gull Island; wind and hydrogen are just the new “magic beans”.

Premier Furey leaves the impression that the offshore oil industry is easily replaced. The PR types smell a public as gullible as ever, especially those attracted to environmental buzzwords and gobbledygook. Real project economics? Oh c’mon!

There is another feature to this story about which my Ottawa sources know plenty: NL Minister Seamus O’Reagn and Gudie Hutchings may as well have been in Timbuktu for all the help they were to the Bay du Nord decision.

Bay du Nord was salvaged only because Deputy Prime Minister Chrystia Freeland and International Trade and Business Minister, Mary Ng, forcefully argued that aside from a potentially very costly lawsuit originated by Norwegian oil company, Equinor, any action taken to kill off Bay du Nord would have sent the worst possible reputational signal to the global investment community of the risk of investing in Canada.

Environment Minister Steven Guibeault is not happy. But he will have the last laugh now that the Feds, with Premier Furey onside, are back in full control of new exploration licenses. 

For that reason, there is more to this story. ncle Gnarley’s correspondents are on the trail of SNC Lavalin. There will be no shortage of funding in Thursday’s Federal Budget for studies, including for hydrogen and other things "green". The fringe groups of B.C. and Central Canada will be sated and, just as important, Ottawa’s favourite consultants - and a few locals, too - are ready for a new gravy train.  

Just you remember…only boondoggles need apply.