By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A Bahamas Petroleum Company (BPC) director yesterday slammed "preposterous" environmental activists for seeking to block this nation from discovering whether it has natural resources to exploit.
James Smith, one of the oil explorer's non-executive directors, emphasised that he was speaking for himself and not the company when he told Tribune Business that the threat of legal action by the Our Islands, Our Future coalition and its allies "doesn't sit well with me".
He argued that with tourism "collapsing, and the economy tanking" as a result of COVID-19, there was "even more reason" to allow BPC to proceed with its exploratory well drilling and determine whether commercial quantities of oil exist that could benefit the Bahamian people.
Saying that he nevertheless "understood" environmental concerns over BPC's plans, the ex-Central Bank governor and finance minister also questioned why the threatened Judicial Review and injunction bid had singled out the explorer rather than all oil-related activities in The Bahamas.
Pointing out that tankers were moving through Bahamian waters every day, and sometimes offloading their cargos at the Buckeye (former BORCO) and South Riding Point terminals in Grand Bahama, as well as at Bahamas Power & Light's (BPL) facilities, Mr Smith argued that these activities presented a greater risk of a spill than BPC's exploratory, non-production Perseverance One well.
BPC and its chief executive, Simon Potter, did not respond to requests for comment sent via their public relations agency after Our Islands, Our Future and its attorney, Fred Smith QC, unveiled their threatened legal action accompanied by warnings urging both the Government and oil explorer to "stand down" until the merits of their case are decided.
However, Mr Smith said: "It would be preposterous for any group to sue the Government, private or otherwise, for pursuing a policy of trying to determine if we have natural resources and the extent of it.
"The next step, if they [BPC] find something, is they have to go back to the Government and negotiate over how they exploit it. It's a two-step process. The end of this process is whether they find something or not. It's an exploratory well.
"They have to go back to the Government if they find reserves estimated at so and so, and a new round of negotiations begins between the Government and the company for the right to produce. That could take any number of forms. The Government might reduce the acreage and keep some for itself, or take a checker board approach where they take the red and the company the black," he added.
"I understand the environmental concerns. I'm not an expert, but when you have oil wells around the world in the Gulf of Mexico, Persian Gulf, UK, US and Russia, and through Latin America, Venezuela, Guyana and Suriname, and you're saying The Bahamas doesn't have the right to determine whether they have natural resources and commercially viable natural resources?
"To find out, at a time when the main industry is collapsing and the economy is tanking, should be even more reason to find out whether there are other valuable commodities or activities to address the downturn."
Mr Smith echoed the policy of the last Christie administration, which was to allow BPC to explore for oil and determine whether there were sufficient commercial quantities that could be extracted, before taking the issue to a referendum where the Bahamian people would decide whether to allow commercial production.
"Any sovereign government has the right to determine what is there, and if they're talking about going to the courts to say an elected government should be stopped from finding out if they have natural resources that are commercially viable, that doesn't sit well with me," he told Tribune Business.
Apart from publicly saying it will grant no other oil exploration licences, the Minnis administration's position on the issue has been less clear. It has tended to hide behind its predecessor, saying that it is bound to honour the obligations the Christie government committed to.
It is also unclear whether any oil discovery would trigger a fresh round of talks between the Government and BPC that could increase the royalty rates paid to a sovereign wealth fund on the Bahamian people's behalf.
Mr Potter earlier this week said the existing rates were embedded in both the law and BPC's licence, and gave no indication they would be subject to re-negotiation in the event of commercial success.
BPC’s existing commercial terms with the Government involve a ‘sliding scale’ of royalty fees, with the rates tied to production (the daily volume of oil, measured in per barrel terms) that is extracted from Bahamian waters.
The royalty rates range from a low of 12.5 per cent for 75,000 barrels per day to a peak of 25 per cent for 350,000 barrels per day or more, with a production licence granted for 30 years. Using a hypothetical example of oil priced at $80 per barrel, BPC has said once production costs - which typically make up 50 percent of the per barrel price - are deducted, the remainder will be split 50/50 between itself and the Government.
This would see both parties earn roughly $20 per barrel at the $80 price. Under current global oil prices, which are trading around $40 per barrel, the split would seemingly be $10 a piece - if oil is found.
Mr Potter has also indicated that BPC is not deterred by the present relatively low global oil prices given that it will be some years before production starts in the event of a discovery. This means that any decision on oil production, if reserves are below the Bahamian seabed, will fall to the next administration.
Mr Smith, meanwhile, said it was "somewhat curious" that environmental activists were not complaining about what he argued was the greater risk of an oil spill occurring from the multiple tankers passing through Bahamian waters daily.
"The horse is already out of the gate in terms of The Bahamas being a transshipment centre," he added. "If you are really concerned about it, you should spread your wings and go after everything that could result in a potential oil spill rather than selectively going after an exploration company."
Comments
Porcupine 4 years ago
Mr Smith said: "It would be preposterous for any group to sue the Government, private or otherwise, for pursuing a policy of trying to determine if we have natural resources and the extent of it." No sir. Not preposterous.The world's foremost scientists have said we must keep the remaining oil in the ground to avoid environmental catastrophe and the collapse of civilization. They have said this for many years now. Exxon's own scientists, as early as the 1970's came to the same conclusion as the overwhelming scientific consensus today. The burning of fossil fuels is heating up our planet, among hundreds of other things threatening life on this planet. What are you arguing for Mr. Smith? What are simply not getting? "It is difficult for a man to understand something, when his salary depends upon his not understanding it" Upton Sinclair.
Proguing 4 years ago
So basically only people who have a vested interest in BPC support this oil drilling project
BahamaPundit 4 years ago
It's really quite surprising how powerful money is. Almost magical.
Porcupine 4 years ago
A Bahamas Petroleum Company (BPC) director yesterday slammed "preposterous" environmental activists for seeking to block this nation from discovering whether it has natural resources to exploit." says Mr. James Smith. You are missing the point Mr. Smith! This is not about going against The Bahamas "exploiting its natural resources. This is about not exploiting the Bahamian people, and wanting to see The Bahamas exist for another generation, or two. Mr. Smith, come out of your money bubble. The science has all been pointing to the frying of the planet due to the burning of fossil fuels. This fight we "environmentalists" have is not about stopping progress, it is about making sure progress is possible. We want to see The Bahamas continue to exist and to prosper. You have missed the boat, Mr. Smith. That is a problem with allowing businessmen to try and run a government. They think they can eat money. Not to be disrespectful Mr. Smith, but when was the last time you learned about the plight of coral reefs, and their importance to all marine life? How many days a week do you spend on the water, in a garden, or fishing? I appreciate that you are an expert on money, but in the end, and probably sooner than we think, we will find out that we can't eat money. You will be off in some foreign country with your millions, while the vast majority of Bahamians will be left here to fight over the scarcity of nearly everything.
Porcupine 4 years ago
Mr Smith, meanwhile, said it was "somewhat curious" that environmental activists were not complaining about what he argued was the greater risk of an oil spill occurring from the multiple tankers passing through Bahamian waters daily." How do you know we're not? The end of fossil fuels is coming. Stopping this exploratory well is something both tangible and timely. It is merely a first step. Nobody takes on everything at once. you do it in stages. So, nothing like the lack of logic used by Mr. Smith. The tides are rising faster and faster. This isn't alarmist talk. It is scientific reality. With a little intelligence, education, humility, and sacrifice we may, just may, be able to leave a few more generations of Bahamians with the same abundance of real honest true natural resources. The worship of money has left its mark on many in the ruling class everywhere.
Porcupine 4 years ago
"Saying that he nevertheless "understood" environmental concerns over BPC's plans, the ex-Central Bank governor and finance minister also questioned why the threatened Judicial Review and injunction bid had singled out the explorer rather than all oil-related activities in The Bahamas" One step at a time, Mr. Smith. That's how things work. You cannot "understand" environmental concerns because you have spent your adult life focused on one thing. Right? No matter how well intentioned, the money masters are, they will never be able to appreciate the importance of our down home natural resources. Money buys everything. When you are a hammer, everything looks like a nail.
Bahama7 4 years ago
Look at porcupine squeal like a pig....
Bahama7 4 years ago
The buckeye terminal is under your nose porky, who delivers that oil daily ?? Mary poppins or oil tankers?
Scream as much as you like porky but open your eyes. Don’t be a fool all your life.
Voltaire 4 years ago
You been drinking hey Britain7? Check out all the name calling and insults!
Voltaire 4 years ago
I think you should slow down before claiming some kind of victory over these nonsense comments by smith.
Voltaire 4 years ago
BPC director is ‘shockingly uninformed’
Save The Bays chairman takes James Smith to task over oil drilling comments
STATEMENT By Joseph Darville STB Chairman
There are so many things wrong with the recent published statements by James Smith regarding oil exploration that it is difficult to know where to begin. I will not say he is being disingenuous or intentionally misleading, but as a director of a company proposing to undertake the extremely dangerous action of drilling into our sea-floor in search of oil, he does seem to be shockingly uninformed.
Smith uses the trick of choice for Bahamas Petroleum Company directors nowadays: Why complain about drilling, when there are other oil-related activities taking place in the country?
While Save The Bays certainly opposes the transportation of petrochemicals through our waters, the argument that since we already face some level of danger, we might as well go ahead and increase it exponentially, is ridiculous on the face of it.
Furthermore, Smith is drawing a false equivalence, comparing apples and oranges, as the level of danger in what BPC is proposing utterly dwarfs any tanker accident imaginable.
The 2010 Deepwater Horizon disaster spewed around 200 million gallons of oil into the Gulf of Mexico. The vast majority of tankers in operation today carry between 15 and 25 million gallons at full capacity. This means that, at minimum, eight to thirteen of these massive vessels would have to suffer a catastrophic accident and spew their entire contents into the sea – all at the same time – in order to replicate the impact of a major spill from an offshore drill site.
Smith’s suggestion that these tankers present a greater spill risk is misleading in the extreme. It is just downright wrong. The Deepwater Horizon drilling disaster led to a massive stretch of ocean (15,300 sq. miles) – an area nearly THREE times the size of the entire The Bahamas (5,358 sq. miles) – being covered by toxic chemical sludge. The worst possible tanker disaster would not even come close. All spills are very bad, but not all spills are equal!
Perhaps most frightening is Smith’s suggestion that we shouldn’t worry about the drill project, as is nothing more than an exploratory well. Can this BPC director really not be aware that the Deepwater Horizon disaster was also “just” an exploratory well? Can he not know that exploratory wells are among the most dangerous of all the petrochemical disasters waiting to happen?
The truth is that there is no such thing as safe oil drilling and we have too much to lose in this country to bet everything on a roll of the dice. Our economy is totally dependent upon industries derived from the beauty and abundance of our fragile marine environment.
Nothing about the BPC deal suggests that it will even come close to providing us with an alternative – certainly not with oil prices crashing and the world moving further away from fossil fuels by the day.
Porcupine 4 years ago
Agreed. Thanks for taking the time.
Voltaire 4 years ago
rtainly not in a country that is among the most vulnerable on the planet to the ravages of climate change, which the oil industry is largely responsible for.
I would ask James Smith to seek to educate himself more thoroughly on the industry which he has chosen to champion before offering further public remarks on an issue that could ruin countless Bahamian lives. And, I would ask him to speak next time as a Bahamian first, and a shareholder in a foreign for-profit oil company second.
Bahama7 4 years ago
You been smoking hey Voly?
Porcupine is an old adversary of mine on oil drilling. Now wash your face!!! Wake up - investment is needed.
Wash your face!!
Porcupine 4 years ago
I'm an adversary of ignorance.
Voltaire 4 years ago
Lol an adversary on oil drilling? Well it couldn't be on any other issue. That is the only thing you have every commented on Isle-of-Man7. It is your reason for existence. You know that its possible to see everyone's comment history, right? Just admit that you are a troll sent by BPC. Its ok - everybody knows.
Porcupine 4 years ago
Yes they do. He's trying to provoke. A paid shill. Gives not a shit about The Bahamas and Bahamians.
Voltaire 4 years ago
BPC7 mussee pass out...
Voltaire 4 years ago
@Porcupine, listen - if the best they gat is to wheel out James Smith, the 'local' board member to defend them, this is already over. They have NO IDEA what they are up against in the form of Fred Smith.
becks 4 years ago
A company shill....zero credibility.
Bahama7 4 years ago
@voltaire - thank you for your concern. Now do be quiet and let this company continue with its operations inline with its license obligations. Thank you very much young man.
Voltaire 4 years ago
LOL I have news for you buddy... you are not drilling a goddam thing into our seafloor. Just wait and see.
Porcupine 4 years ago
Pride cometh before a fall. Clearly not a Bahamian. If you are. Prove it by showing another Bahamian-centric comment you've made in support of Bahamians. Just a poor little oil boy. No brains but probably a little money to show off. The price for a soul is pretty cheap now.
alistairmccausland@ymail.com 4 years ago
Well said, Mr Smith, I have every confidence should there be any challenge it will be thrown out
Voltaire 4 years ago
I don't think you understand how this works...
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