Posted by: Tony Carson | 22 August, 2007

Newfoundland now a ‘have’ province

Fantastic news! After languishing as a ‘have-not’ province for its entire history, at the stroke of a pen, the Rock crossed to the other side of the ledger.

According to a Memorial University economist on CBC, Newfoundland and Labrador will no longer get federal equalization payments starting next year and its expected to be well into the black until at least 2025.

Oh, what oil can do for an economy.

The Hebron oil field, located 340 kilometers (210 miles) southeast of St. John’s, Newfoundland, and discovered in 1981, holds an estimated 700 million barrels of reserves.

Talks between Chevron and the government to develop it had broken off last year, but resumed last month on the eve of a provincial election.

Newfoundland has agreed to purchase a 4.9 percent stake in the project for 110 million Canadian dollars (104 million US) and expects a return of 16 billion dollars (15 billion US) over 25 years, Williams said.

The federal government, meanwhile, would bank seven billion dollars (6.5 billion US) in royalties, he said.

If average oil prices top 50 dollars US a barrel, Newfoundland would receive additional “super-royalties” of 6.5 percent, Williams added.

“Step by step we are becoming masters of our own house,” he said. “As we move forward with this negotiation, we were determined to raise the bar in terms of local benefits.

Premier Danny Williams played hardball with the federal government to get the deal he wanted but according, again, to the economist cited above, everyone is a winner in this deal. He expects to see many of the Newfoundlanders who left for opportunities in the Alberta oil patch to return home.

The full AFP story is here: Newfoundland-Chevron in Hebron offshore oil deal

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: