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. Uncle 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.

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.


If a Big Mac costs McDonalds $10 to produce and it is sold for $1.50, McDonalds will go out of business. They would not declare a profit!


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.