The Tribune

TOUGH CALL

By LARRY SMITH

ABOUT a month ago, I wrote an in-depth article on oil exploration in the Bahamas to try and sort through some of the confusion surrounding this issue, following a series of conspiracy charges levelled against the government by the DNA.

It was the most comprehensive account of this subject yet published. My view, then and now, is that oil is the biggest single issue facing the country today.

One way or the other, it will have a dramatic impact on our entire society and culture far into the future. It is something we have to carefully consider.

As Environment Minister Earl Deveaux has said on more than one occasion: "Our way of life in the Bahamas is defined by, and inextricably bound to, the environment. Any significant decision with the potential to dramatically alter our environment should only be made after the widest possible consultation."

Petroleum exploitation is such a decision, he continued. "Without detailing all the issues inherent in something so materially significant, it is a clear responsibility of the government to prepare the country for oil and its likely consequences."

One of the key points I addressed in my previous article was the PLP's apparent conflict of interest in this whole affair.

"BPC's licenses were awarded by the Christie administration in 2006, and signed by former Governor-General Arthur Hanna in April, 2007," I wrote then.

"It is noteworthy that PLP candidate Jerome Gomez is the company's resident manager, former PLP cabinet minister Sean McWeeney is its senior counsel, and PLP deputy leader Brave Davis' law firm is the company's onshore legal advisor... what is even more noteworthy is that the PLP has so far ignored this important public debate."

Since I wrote that article, the PLP has been forced to deal with the issue, after Prime Minister Hubert Ingraham revealed that Perry Christie was also a paid consultant for BPC (through Davis & Co).

Christie subsequently confirmed this, but then reversed himself - saying he had long ceased being a consultant. And anyway, no conflict of interest was involved.

"It's not a conflict because the advice I'm giving now has nothing to do with any decisions I (will) make as prime minister," Christie initially told the Nassau Guardian. PLP deputy leader Brave Davis also denied that the relationship with his firm amounted to a conflict.

"I'm not in government. How does it become a conflict?" he asked.

Meanwhile, BPC has since removed the names of Jerome Gomez and Sean McWeeney from its website, and announced the appointment of former RBC Bahamas chief Ross McDonald as a non-executive director.

It has also asserted that since it has "exceeded all license commitments and obligations with cumulative expenditure in excess of $50 million", its license to explore must be renewed by whatever government is elected on May 7.

This is all eerily reminiscent of the Christie administration's apparent intention to fast-track BTC's sale to a little-known venture capital firm known as Bluewater, just before the 2007 general election. If you recall, Brave Davis was the legal consultant for Bluewater back then.

On April 22, Prime Minister Ingraham upped the ante - saying a new FNM administration would not necessarily approve oil drilling in Bahamian waters: "We are undertaking studies and after that we will see," he told the Guardian. "But we don't have any plans to drill for oil in the Bahamas. We've seen what happened in (the Gulf of Mexico) with oil drilling. We are not now in a position to so regulate and oversee drilling operations in our waters."

And the prime minister pointed out that such a critical decision should never be influenced by any financial relationship that exists between the company seeking a permit and its paid consultants and attorneys.

"It is a decision with wide ramifications that will affect the very nature and essence of who we are as a country. Is it a mere coincidence that a foreign oil company decided to hire as consultants, and pay handsomely, the two most senior leaders of the official opposition, and potentially two senior leaders of the executive branch in the country in which they are seeking to drill for oil?"

At first, Christie was nonchalant about whether oil drilling would be approved by a new PLP administration, saying the decision would depend on environmental studies.

Later, he strengthened his remarks - insisting that drilling would only be considered once a full regulatory infrastructure had been put in place to ensure proper safety and environmental standards - much the same as the FNM's position.

He went on to criticise the FNM for approving "oil exploration permits with no serious environmental conditions whatsoever". Whereas in the case of BPC's approval, Christie said he had "personally intervened to impose environmental restrictions and conditions unprecedented in their stringency".

The FNM issued two exploration licenses in 1995 (to an American company called Liberty Oil). Those licenses were issued under the outdated and generic terms and conditions of the Petroleum Act, which came into force in 1977. These were exactly the same terms and conditions that governed the licenses issued to BPC by the PLP during their last term in office.

"I can confirm that there were no special environmental conditions attached to the BPC licenses issued by the PLP," Environment Minister Earl Deveaux told me recently. "In fact, the seismic testing was conducted during the current FNM administration, and it was my ministry that required them to undertake passive sonar surveys only."

Passive sonar does not use air guns that create explosive sounds in the water to locate oil and gas resources beneath the ocean floor. The sounds are known to cause deafness and otherwise disrupt the behaviour of marine animals.

There are currently seven approved licenses for oil exploration in Bahamian waters, and 10 applications for new licenses have been submitted since 2008, when the Ingraham government imposed a moratorium on exploration following the disastrous Gulf of Mexico spill. Five of the approved licenses are held by BPC. The other two are held by Liberty Oil, but were suspended years ago because of the company's failure to remove a sunken barge from an Abaco reef.

A US corporation called NPT Oil has applied for seven licenses covering more than six million acres north of Grand Bahama. NPT's Bahamian data and assets were recently acquired by Pennine Petroleum Corporation, an emerging oil and gas exploration and development company active in Alberta and Saskatchewan.

A Canadian geophysicist named Allan Spector has applied for an onshore license near Seymours on north Long Island. And a partnership between BPC and the Norwegian company Statoil has applied for licenses covering more than 2.3 million acres near the Cay Sal bank.

The Ingraham government has repeatedly stated in the clearest possible terms that the exploration freeze will remain in effect until an updated regulatory system has been put in effect, and the widest possible public consultation on the issue of oil production has taken place.

Experts have long believed that large quantities of oil and gas lie beneath the Bahamian seabed, and now that drilling technologies and market conditions have reached the point where exploitation is not only feasible but profitable, we can reasonably project a massive influx of petroleum revenues in the near future. But our petroleum act was written 40 years ago, and is silent on many of the complex issues the Bahamas would face as an oil producer.

And that is precisely why the government is seeking to overhaul our legislative, environmental and financial regimes, so as to lay the groundwork for the orderly development of this industry, should a national consensus be reached. Environment Ministry officials have met with their counterparts in Norway to discuss revisions to the existing act and regulations. Deveaux (who is retiring from politics) says the proposed regulatory system will be included in his hand-over notes for the next government.

Norwegian officials have advised the Bahamas to ensure that all the essential elements of oil and gas governance are in place before any drilling begins. These include environmental, safety, tax, revenue, training and employment policies; contingency plans; and insurance requirements.

"We have to come to the public with full information," Deveaux told me. "We want a standard of management similar to that of Norway. We need a petroleum directorate that is fully staffed with a range of expertise, including financial. If oil is produced we will be dealing with billions of dollars, changing the whole culture of the country and the way the government deals with money. It is no small thing."

In addition to being heavily conflicted in this matter, the PLP has made several contradictory statements recently that reflect badly on its credibility.

And as I said at the outset, oil is the biggest single issue facing the country today. It will surely have a dramatic impact on our entire society and culture far into the future.

Clearly, Christie and the PLP have condemned themselves with their own twisted words on this crucial national issue.

• What do you think? Send comments to larry@tribunemedia.net or visit www. bahamapundit.com.