The Newfoundland and Labrador government will demand a 10 per cent ownership stake in future energy deals, Premier Danny Williams said Tuesday.

Premier Danny Williams says Newfoundland and Labrador will insist on an ownership stake in future oil and gas developments.
(CBC)

Announcing a long-awaited energy blueprint, Williams said the province will want a minority stake in oil and gas developments "where it fits with the strategic long-term directions of the province."

The energy plan, announced less than a month before an Oct. 9 general election, follows on themes Williams has laid out during his first term in office and lays out new goals for the government.

The government had expected to table its energy plan in 2006, but a variety of reasons — including Williams's high-profile clash with proponents of the undeveloped Hebron field, and an industry he derided as "Big Oil" — pushed it back.

The industry itself has been appealing for the plan, if only for clarity on what the ground rules for development will be.

"This is intended to give stability to the industry. It's something that they've asked for for some time, something we weren't in a position to give them at the time they asked," said Williams.

The new energy plan will replace royalty and benefit regimes that were introduced for Hibernia, above, and other projects.
(CBC)

"We were going through a period of transition," he said, referring to the status of oil plays in the offshore.

Williams expressed confidence, though, that the plan's key ambitions will endure.

"The regimes that will come from this will stand the test of time," said Williams, who frequently noted that Newfoundland and Labrador — in seeking an equity stake — is doing nothing that governments in other jurisdictions around the world, including the federal government itself, have done on similar projects.

'Rules of game' better known: producers

Paul Barnes, an Atlantic Canadian manager with the Canadian Association of Petroleum Producers, said not everyone in the industry will like Williams's energy plan.

However, Barnes said, they know now what he wants.

"Industry wishes to know the rules of the game.

"So some of these elements now are in this energy plan, and it gives industry an indication of what the rules are in the regulatory environment here in Newfoundland."

'Super royalty' regime called for

Among other things, the plan includes the first royalty regime for natural gas development, including a so-called "super royalty" program when prices are high.

To date, three oilfields are in production on the Grand Banks, but natural gas resources have yet to be exploited.

With gas and future oil projects, Williams said, a new royalty regime will follow the one negotiated for a tentative deal on the Hebron megaproject, which will become the province's fourth offshore oil field.

But Simon Lono, a Liberal candidate in next month's election, said the plan should be regarded as just a draft document.

"Government and industry still have to move together and figure out what they're going to do with it," Lono said. "There's nothing in place. It's just proposals."

Lono, who is running in St. John's North, said the timing of the document's release is significant.

"When you really get right down to it, this is probably [the] most expensive, most comprehensive and physically heaviest campaign brochure ever underwritten by the people of the province," Lono said.

Williams, though, said the plan is significant for a period stretching well past the coming term.

"Newfoundland and Labrador is blessed with an abundance of natural resource wealth, matched by few jurisdictions in North America," said Williams, referring to what the government describes as an "energy warehouse" that incorporates petroleum, hydroelectricity and wind energy.

Tentative deal reached in August

After a 16-month standoff with a consortium led by Chevron Canada, Williams reached a tentative deal in August that marks a new beginning in offshore oil development off Newfoundland.

The government negotiated a 4.9 per cent ownership stake in Hebron, for a purchase price of $110 million. The province estimates Hebron to turn over revenues of about $16 billion over the 25-year life of the project, making it — by far — the most lucrative of the fields in the province's oilpatch.

Following the Hebron royalty regime, royalties in other oil and gas projects will rise as they become more profitable. Conversely, they will decrease as profits decline. 

Meanwhile, the government is also developing a package of environmentally friendly proposals to reduce greenhouse gas emissions. 

It hopes to replace Newfoundland and Labrador Hydro's oil-burning generator at Holyrood with power from the proposed Lower Churchill hydroelectric megaproject in Labrador. As well, the government plans to build a transmission line between Labrador and the island.