Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Friday, February 18, 2011

The Stunned and the Gutless: Ms Dunderdale and Parson's Pond

Brace yourself. This is a true story - it just seems that nothing this stunned could be true. With minimal fanfare, and a short press release, Nalcor announced the purchase of a 67% working interest in the Parson's Pond oil and gas play from Leprechaun Resources Ltd. Leprechaun is a small resource company with it's head office in Calgary, and is controlled by John Maher - a native of Newfoundland. The deal called for a compensation of Leprechaun's equity in the project totalling $559,000.00. The provincial government further committed to reimburse Nalcor a total of $580,000.00 on completion of drilling. Curious that the government would be reimbursing it's own Crown corporation for a cost of business? Perhaps someone in the Crown corp wasn't happy about those funds coming from it's bank - the principle was added to for the purpose of payback.

That was the 7th of August, 2009. Kathy Dunderdale was Minister of Natural Resources. Ross Wiseman was Minister of Business. Charlene Johnson was Minister of the Environment. Our illustrious provincial government agreed to construct a 10.4 km access road to the site - presumably covering the cost. It had four partners in the play: Vulcan Minerals; Deer lake Oil & Gas; Leprechuan Resources Ltd., and Investcan Energy. Investcan Energy is an interesting partner considering they are owned by SCDM Energie,which in turn controlls 18.6% of the massive Bouygues Group - a controlling interest. The Bouygues Group built the James Bay hydro project, and Investcan controlls a great deal of the new natural gas industry in Quebec.

Despite the failure of a previous firm in 2004 to explore the property successfully, Nalcor and partners picked up the torch and on the 16th of February, 2010 the first well was spudded. By the week of the 26th of May, 2010 it had reached final depth of 3160 meters. Nalcor's press release of that week stated in part:

"The extent of flow characteristics and overall volumes of gas in place have yet to be
determined. The well will be suspended to allow for further analysis of the data and to
prepare testing plans. Next steps are the coordination and mobilization of necessary
testing equipment. Testing will be conducted during the summer months and further
information will be released following completion and analysis of the results.

Nalcor’s main operational objective was to gain information from this well which will
allow further insight and assessment of the petroleum potential of this area. “The
information obtained to date has already advanced our understanding of this basin,”
said Keating. “The geological and geophysical prognosis of formation depths and
stratigraphy anticipated from our pre-well analysis proved to be accurate.”

Essentially, Nalcor hit some gas, but a study of the economics of further development was required and a study of the results necessary. Nalcor goes on to state:

"Nalcor Energy – Oil and Gas is now preparing for the drilling of the second well of the

planned three well program. It is anticipated that the drilling of Nalcor et al Finnegan
will commence this summer."

In other words, we aren't waiting to see if this is a good place to drill. No, we are moving onto the next spot and drilling.
In September of 2010 Nalcor spudded it's second well at the site. Funny enough they got the same initial result - some natural gas and no oil to speak of. Their press statement in part stated:

"As with our first well in the area we encountered natural gas during drilling,” said Jim

Keating, Vice President Nalcor Energy Oil and Gas. “The well is currently suspended as
we review the data and determine next steps including a potential test plan.”
Nalcor is also about to commence testing on its first well, Seamus, which has been
suspended after reaching total drilling depth in May 2010. A test rig is on site and
testing will determine the extent of flow characteristics and overall volumes of natural
gas in place.

Nalcor’s main operational objective of this drilling program was to gain information
from this well which will allow further insight and assessment of the petroleum
potential of this area. Nalcor Energy is now preparing to drill the third well of the
planned three well program. It is anticipated that the drilling of Nalcor et al Darcy will
commence early in 2011."

Bottom line - did not take the proper amount of time to assess the first well before starting the second. Also, they were preparing to drill the third well without completing assessment of the second well. Something that doesn't happen when private sector money is deeply involved - as a rule. The result of all this interest purchasing, road building, environmental assessing, and public investment in drilling was a huge bust.

Nalcor's (read the taxpayers) initial share of the costs was $14 million dollars for 3 wells drilled. By the time Nalcor announced a premature end to drilling after the first two wells our responsibility is about $23 million. Almost double the original cost for all three wells. The reason: wells that were supposed to take only 50-55 days to drill instead took 100 days. Translation: it took twice as long as we thought to drill the wells.
A mind blowing loss to the taxpayers of at least $23 million. About three times the cost of moving the air ambulance service from St. Anthony's. About half the cost of the brand new hospital in Lab West - before it doubled to at least $90 million.

The government's response - a late Thursday press release from Nalcor stating an end to operations at Parson's Pond. A late enough release to try and kill the story over the weekend. Not one press release from the government or the Minister of Natural Resources Shawn Skinner. Minister Skinner was interviewed by NTV on Friday. His response: "Well we got unlucky on these two. It may take four, five, six attempts, but we'll get there. We thought it best to stop for now and have a look at things. Look how smart we are at administering your money. Aren't we on top of things. We are on your side." This is my summary of what he said, but you can check it out for yourself on NTV.

Ms Dunderdale, now Premier, then Minister of Natural Resources, had this to say: nothing... In any province in this country, or any state in the world this would be a scandal that would at a minimum bring down a minister. Here we get 'don't worry be happy'. Rural Newfoundland and Labrador continues to suffer from the inflation of the off shore boom, but receives none of the benefit. We lose proper access to health care, services for family and children, and so on. Yet, amongst the still evident wreckage of hurricane Igor we live while our provincial government throws the dice at $23-25 million at a time on wreckless less oil and gas plays. While the fishing industry, and all those families that depend on it, lies in suspended animation awaiting the illusive MOU, our PC government fritters away the bountiful inheritance on stunned resource gambles. Mr. Harper, if you are listening, see this example as a stark warning of the inability of this provincial government to make the right decisions for it's people, and do not grant any financial assistance for the Lower Churchill development. It simply is not fair to the people here.


  1. From: Anonymous
    Date: 19/02/2011 12:40:54 PM
    Subject: [ROCK SOLID POLITICS] New comment on The Stunned and the Gutless: Ms Dunderdale and Par....

    Anonymous has left a new comment on your post "The Stunned and the Gutless: Ms Dunderdale and Par...":

    Seriously you have no idea what you are talking about Brad, as usual. No one ever knows for sure how long it is going to take to drill a well, how much it will end up costing or if it is going to produde oil. That is a fact, stop trying to make it seem like a huge scandal when there isn't one.

  2. Bay Roberts, thanx for the comment. You couldn't be more wrong. Perhaps your comments regarding not knowing what I am talking about should be directed to one Ms Dunderdale, and company, who authorized this abuse of taxpayers money. Afterall, is she did we would not be out $23 million plus on this deal alone. We will be stuck with the environmental clean up for Abitibi. We would have been stuck with the expropriation bill as well if the feds hadn't paid it. I guess you believe these people know what they are talking about? If that is the case then I am happy not to know what I am talking about. Have a great week.

  3. " No one ever knows for sure how long it is going to take to drill a well, how much it will end up costing or if it is going to produde oil".

    There , you have just "hit" the corporate nail on the head .

    Mineral and oil exploration are unpredictable , highly speculative ventures and are usually unproductive .

    Venture capital is hard to come by with its return, similiar to that of a trip to a casino .

    This is one of the main reasons why governments have no place spending public funds in this manner .

    It is far more prudent to let others take the risks of an equity position and instead rely on the lower return of a guaranteed royalty .

  4. HAHAHA Brad! 2 months ago you were praising everything the government did. Now though that they didn't want you as their leader you are flip flopping to the other side. Shows your true colors I guess.

    You might want to let actual NL'ers worry about what OUR Govt is doing and since none of us are complaining maybe you shouldn't either.

  5. " You might want to let actual NL'ers worry about what OUR Govt is doing and since none of us are complaining maybe you shouldn't either".

    Not so fast there oh nameless one , I am a Newfoundlander and Labradorian .

    I take my complaining very , very seriously .

    Speak for yourself ,but , then again ,is it not people of your ilk who allow governments to degenerate into corrupt entities ?

  6. Than-you for your insightful comments. I consider myself an "actual Nler". Whether you do or not is of no concern to me. Perhaps you should open your ears and eyes to listen to all the NLers, and not just your Party. The people always come before the Party. The actual NLers I know put others before themselves. Perhaps you are not quite the NLer you envision yourself to be. I will hold out hope for you that petty partisianship will eventually submit itself to the benefit of your fellow Nlers.

  7. Brad , did you read Wangersky's article in today's Telegram , not as in-depth as yours ,but, it has the ability (unfortunately you are unable to reach so many at one time)to reach a wider readership. That I feel you would agree, is the main objective .

  8. Ursula, I did read the editorial, and was happy to see the message getting out there. A government, any government, should not be able to squander important resources with impunity. Apart from the obvious cost, it shows an arrogance that endangers our collective rights. Indeed, the Abitibi Affair, Lab West School over runs, and now this send a very clear message - complete incompetence. The blind leading the blind, or the blind leading the greedy - whatever your take on it is. Hopefully the message is getting out there. Cheers.

  9. An actual NL. What is that? Where is the famous Newfie welcoming hospitality? I now understand that "Newfie" is a degrading term. Well, I was born in the States, my mother is a Newfie, I grew up there from the time I was 11 years old, on the Northern Peninsula. And am proud to be a Newfie. If the "actual NL"s are not welling to stand up and question the government or anything else, maybe it is time some of us that aren't seen as "actual NL"s step up to the plate. Keep up the good work, Brad.

  10. One of my pet peeves are those "anonymous" posters. At least, if you are going to make a comment, stand behind it with your name out in plain sight.

  11. Thank you Barbara. I appreciate your words. It's ironic how the a blog on the "gutless" attracts the Anonymous. I have since made it necessary for people leaving messages to identify themselves. Unfortunately, the proud Newfoundlander and Labradorian has been twisted by some to require a DNA test first to see if you are worthy. Take care.


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