Although I haven’t seen the actual text of the offshore deal made between the Diddler and the Harpocryte (has anyone?), I feel qualified to comment based on the news reports I’ve come across. Let me preface this by saying that every single report I’ve read has been awash in speculation. Either the press hasn’t seen the deal, or it’s so complicated that the various reporters don’t understand it/are unable to explain the terms in a few inches of newsprint.
Anywho, here are my impressions: It’s a good deal for Nova Scotia in the long term if we can trust future federal governments to honour the deal. In other words, it’s a bad deal. The Harpercryte himself has already shown that he can’t be trusted to honour provincial revenue-sharing agreements. That’s the whole reason why Casey voted against the budget, got kicked out of caucus, and forced the Diddler into sloth-like action. The current brand of Republicans did not honour an agreement signed by John Hamm (who?) and His Eeliness, Paul Martin. What makes anyone think that, should we suffer Conservative governments for the next 12 years, the Federal government won’t just go ahead and dishonour the new agreement come 2019, when the revenue sharing is supposed to begin favouring Nova Scotia? Will a new Liberal government honour a deal signed by two Conservative entities? I personally find it hard to trust politicians and lawyers for five minutes, let alone 12 years.
The other problem I have with the agreement is the notion that Nova Scotia will have any sort of meaningful oil and gas revenues come 2019. The Sable Project ran into a size problem (the two largest fields were smaller than anticipated), and will not last as long as originally hoped. Deep Panuke is likely only large enough to last for 7-9 years, so production there (assuming that project even goes ahead) will be in decline or finished come 2019. No substantial new fields have been found since Deep Panuke, and the industry hasn’t been exploring meaningfully for the past two years. Oil and gas is cyclic, but even so it’s a very bad sign when companies aren’t exploring your basin at today’s oil prices.
So really, unless exploration picks up and someone finds the fabled elephant in our offshore, a back-ended deal makes very little sense. Nova Scotia’s offshore revenues from Sable are peaking now, and really should be projected to peak again 3-4 years into the life of Deep Panuke. Banking on a long-term deal that wishes for sustained production until 2019 and beyond would probably make more sense for Newfoundland than Nova Scotia. I’m not sure who advised the Diddler on this deal, but whoever it was probably has a far more optimistic outlook for Nova Scotia’s offshore future than is currently warranted, or than is shared by the various companies who once explored here.
I’m interested in hearing other opinions. I ask: has anyone out there actually seen/understood the text of this agreement?