Opportunity is Knocking. Will Newfoundland and Labrador Let It In?
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Newfoundland and Labrador In Position To Capitalize On Energy Crunch
By Myles Higgins
Rumors have been swirling around the province of Newfoundland and Labrador for months that Premier Danny Williams has been in discussions with Mr. Opportunity himself, Sir Richard Branson, about building an oil refinery in the province. Although these rumors were considered by many to be totally absurd, yesterday fuel was added to the fire when Sir Richard himself made it official that he is more than interested in entering the oil business.
Branson, the maverick business man and founder of such international interests as Virgin Records, Virgin Airlines and most recently Virgin Cellular, has become more than a little upset at the cost of fuel and how it is affecting his airline interests. In fact, his anger, combined with a clear understanding of the profits existing in today’s oil industry has spurred him to begin planning the development of a new independent refinery.
According to Mr. Branson, his plans are still in the early stages and he is actively seeking investment from other airlines with an interest in controlling their fuel supplies rather than being dependent on the major players such as Exxon, BP, Shell and others.
According to reports, Sir Richard has been investigating locations in every country from England to Africa and at this point the choice of location has yet to be determined. Although the site is not yet known, it is expected that any future refinery would not be built in the U.S. due to the complexity and volume of red tape involved in opening a refinery in that country. In fact, no new refineries have opened in the U.S. in nearly 30 years and this lack of refining capacity is considered to be one of the key factors behind current fuel prices.
In recent months Premier Williams has made it very clear to oil industry executives that he wants more secondary processing, in the form of refining, to take place in the province, rather than simply shipping oil elsewhere. Oil industry executives have balked at the idea of investing in a new refinery due to the cost of construction and the fact that low refining capacity world wide is helping ensure higher profits at the pumps. Regardless, Premier Williams has not walked away from his plans for this sort of development. Add to this his recent announcement that his government is embarking on an aggressive plan to assist business development in the province by reducing red tape by 25 per cent over the next three years and the possibilities become clear.
Enter Sir Richard and opportunity does indeed knock.
Newfoundland and Labrador, which has the highest unemployment rates in Canada is not only interested in hosting a new refinery and benefiting from the employment it would produce, it is currently the second largest producer of oil in the Country behind Alberta and its crude oil capacity is growing every year.
Newfoundland and Labrador, which is strategically located in the middle of the North Atlantic, might prove attractive to someone like Branson due to its location as well. Currently it is over flown on a regular basis by most international flights traveling between Europe and North America’s Eastern seaboard. In fact, before the dawn of the jet age, the island of Newfoundland was visited by nearly every plane needing to refuel before or after embarking on a trans-Atlantic flight. This, combined with its year round port facilities, makes it an ideal location for fuel shipment and more importantly to international airlines, for re-fueling.
Although some oil industry executives have dismissed the idea of an independent oil refinery being built due to the cost, an estimated $2 billion, it may still become a reality. All of the elements are there.
In Sir Richard Branson one finds a dynamic entrepreneur who has been known over the years for his “never say never†attitude. A man who was no doubt also told he was crazy when he decided to begin an independent cellular carrier and airline. A man who clearly understands that he cannot control his business costs in that airline unless he can control his fuel supply, and a man who recognizes a business opportunity where profits are now filling barrels and bank accounts to explosive levels.
In Newfoundland and Labrador, anyone hoping to build an independent refinery will find an interested government, a willing province, an available workforce, a strategic location, an easily accessible oil supply, a stable environment and a Premier who appears to be willing to think outside the box.
Coincidentally, the fact that the provincial government recently deposited a $2 billion oil revenue check and is in the process of determining how to invest some of that money can’t hurt.
Has Premier Williams discussed these possibilities with Sir Richard Branson?
If he hasn’t, perhaps he should.
For more by Myles Higgins: http://www.freenewfoundlandlabrador.blogspot.com/
@ September 18, 2005