By RICHARD COULSON
The phrase “pouring oil on troubled waters” arose when seafarers saw the beneficial effect of pouring a barrel of oil on storm-tossed seas and found the waves were flattened and subdued.
These days the very mention of “oil” arouses public ire, with or without justification. The publicity about the recent oil-spill at the Equinor storage terminal in Grand Bahama infects any discussion about two other oil related projects in our country, one half-baked, the other sensible.
The half-baked one is Oban, which has pestered our government ever since its ludicrous announcement in February 2018 proposing a $5 billion combined storage terminal-refinery-shipping facility not far from Equinor. The promoters of this project, whoever they really are, have never made the slightest disclosure of principals who can build, finance and operate such a vast venture. A pleasant young man pops up now and again and simply displays the plans on his lap-top. There need be little worry about pollution from Oban, since it is a dreamland prospect.
The sensible project is the proposed drilling by Bahamas Petroleum Company (BPC), incorporated in the Isle of Man, listed with full disclosure on the London Stock Exchange, and controlled by clearly identified venture capital equity investors from abroad, with not a penny of Bahamas government money committed.
To summarise my view: I hope the project succeeds with the discovery of oil in commercial quantities, as I believe it poses minimal risk to Bahamian natural resources. The greater risk falls on the intrepid investors who have sunk nearly $100 million into this venture starting back in 2007, with no assured return.
Government has granted BPC licences to explore in five off-shore sites about 100 miles southwest of Andros, near the Cuban border. After several years of inspecting core samples from previous drilling plus extensive seismic research over the area, BPC and its expert advisers now have evidence of pockets of petroleum reserves sufficient to justify the substantial cost of drilling to prove these reserves. The latest licence extension requires BPC to complete an exploratory well by the end of 2020, so BPC is clearly under pressure to perform.
As the cost of an initial well is estimated around $20-25 million, BPC has over several years sought a major oil company to become a “farm-in” partner to provide the capital. However, while this is still the preferred choice, BPC has decided to “go it alone” in raising the funds. To that end, it has just completed a successful open offer to its existing and new shareholders to raise $11.4 million, and has conditional agreements from Australian investment banks to place about $13 million of convertible notes by early February. A detailed prospectus is available online disclosing all the risk factors in these transactions.
If the exploratory well gives a promising show of recoverable oil, signing up a farm-in partner will become more likely, who will be essential in providing the much greater capital needed for production wells. In 2018 an unnamed major company paid $1 million for a four-month exclusive option to investigate, but terminated with no further commitment.
Moving ahead, BPC has contracted with offshore drilling specialists Seadrill Limited for a 748-foot drill ship, scheduled to arrive from the Gulf of Mexico by the end of next March. The bright orange hull of of “West Auriga” will doubtless skip Nassau and drop anchor directly over the licenced drilling site, probably alarming our vigilant environmentalists.
Outspoken groups like Re-Earth, Save the Bays, and BREEF play a valuable role in protecting our environment, but should take a rational view of BPC’s drilling. The local undersea geology differs radically from conditions underlying the infamous Deepwater Horizon explosion in 2010 (which has no parallel before or since), and recognised current patterns will sweep any unlikely spillage far from our sensitive beaches and tourist areas. Government has accepted successive Environmental Impact Assessments, reviewed by BEST and supported by consultants Black & Veatch, and has joined the international consortium Oil Spill Response Limited, pledging prompt help from nations with full resources to handle emergencies.
When, and if, oil is discovered and flows in commercial quantities, The Bahamas could reap substantial benefits. Once BPC recovers its development costs and operating expenses, revenue from petroleum sales in the international markets (of unpredictable size, since dictated by world crude prices) will be split 50-50 between BPC and government, allowing accumulation of cash for a Sovereign Investment Fund, the same path that Norway has followed to become a prosperous nation since North Sea oil was discovered in the late 1960s.
Bahamians are already reading Rachel Maddow’s fascinating book “Blowout”, documenting how Third World countries have been blighted with the “resource curse”. The worst example is the tiny west African nation of Equatorial Guinea, whose massive petroleum revenues are diverted for the exclusive enjoyment of the ruling elite. Quite true, but I am confident The Bahamas will never descend to the abysmal level of corruption, oppression and public poverty created by the family dynasty that has held power for over 30 years in that benighted nation.
Whatever the flaws in our political system, our long traditions of democratic governance and business experience should assure that, like Norway, we can invest oil earnings for the public good.
Back in the day, passion meant something rather different . . .
Banks continue to struggle to find vocabulary that makes their mundane business sound imaginative and exciting. Virtually every financial institution, no matter how mercenary its objectives, is now guided by an inspiring “vision” supported by a lofty “mission statement”, carefully drafted by marketing specialists to lure new business.
The latest issue of glossy periodical The Bahamas Investor shows the search for novel verbiage rising to new heights. Banks must be “innovators”, fostering “positive disruption” with “agility” that “thinks outside the box” and ignores “middle-of-the-road solutions”. The currently favoured catchword is “passion”, with staff displaying a “passion for finance” and “passionate” about the bank’s services. I had always associated that word with decidedly unbanker-like behaviour more suited for private trysts, but clearly I am out of date.
Comments
laallee 4 years, 5 months ago
Balanced article and good reading. Thank you.
Bahama7 4 years, 5 months ago
Excellent write up! Good luck to BPC next year.
Porcupine 4 years, 5 months ago
Mr. Coulson,
Your thinking, which is so closely aligned with all other "businessmen" in this world is exactly what needs to change. The IPCC, the Intergovernmental Panel on Climate Change, along with most every honest scientist, have stated unequivocally that humanity must radically change our way of life to avoid catastrophe. They say this must be done immediately.
But, let's just start with your premises.
You say, "The publicity about the recent oil-spill at the Equinor storage terminal in Grand Bahama infects any discussion about two other oil related projects in our country, one half-baked, the other sensible." Now, according to you, one is half-baked, the other is sensible. Yet, both are whole heartedly embraced by our government. So, how is it that this same government who is tasked with reviewing the environmental impacts, deciding how this hoped for windfall will be used, cannot follow your logic and realize that one of these projects is half-baked. Please tell, Coulson.
"To summarise my view: I hope the project succeeds with the discovery of oil in commercial quantities, as I believe it poses minimal risk to Bahamian natural resources. The greater risk falls on the intrepid investors who have sunk nearly $100 million into this venture starting back in 2007, with no assured return." Let's take this, I believe it poses minimal risk to Bahamian natural resources. What do you spend your day doing Mr. Coulson? While I try and respect others beliefs, I have to ask what expertise do you have on the state of natural resources anywhere? How is it that so many scientists who study natural resources, here in The Bahamas and elsewhere are saying we have some very serious issues to contend with. For your information, the most valuable natural resources we have on this planet are under immediate threat. I maintain that you have little to no knowledge about the true state of our natural resources, or you wouldn't make such a flippant, and wrong statement. And, "the greater risk falls on the intrepid investors............" Yikes! Oh, Mr. Coulson. The investors are the only ones with a risk in this equation? No risk to our economy? No risk to our moral standing? No risk to humanity, even though many thousands of people with imminently more knowledge that yourself on this issue say so? No risk that the way the business class has conducted its business for the last couple of hundred years may just be wrong. Completely wrong. Is this the limit to our god given intelligence?
Porcupine 4 years, 5 months ago
"The sensible project is the proposed drilling by Bahamas Petroleum Company (BPC), incorporated in the Isle of Man, listed with full disclosure on the London Stock Exchange, and controlled by clearly identified venture capital equity investors from abroad, with not a penny of Bahamas government money committed." Let me get this straight, Coulson. Because a company is incorporated in the Isle of Man, a tax haven jurisdiction, and because it is listed on the London Stock Exchange and not a penny came from the Bahamian government, this gives this company legitimacy? You obviously have a stake in this endeavor, or you are lacking the requisite mumber of neurons needed to bring us into the future.
You go on, "Government has granted BPC licences to explore in five off-shore sites about 100 miles southwest of Andros, near the Cuban border." Hey, wait a minute. Isn't this the same government that signed a Heads of Agreement with Oban, which you called half-baked. But, now you want us to believe that an agreement with this government has merit. That this government is capable, both intellectually and morally, to review the Environmental Impacts of this project? Do I need to remind you, Mr. Coulson, of the number of extremely poor decisions this government, as well as the ones that came before, has made? Also, Mr. Coulson, I must ask, do you realize who many billions of dollars have flowed through this country, through this government, over the years, only to be squandered? Stolen. mismanaged, wasted. Why is it that this country is down on its economic knees after so many billions of dollars have been dropped on these shores? Both literally and figuratively. Isn't this a legitimate question? And yet, all of a sudden, with this sovereign wealth fund, we are all going to be doing better? Please Mr. Coulson. Get real.
Porcupine 4 years, 5 months ago
Mr. Coulson goes on, "Outspoken groups like Re-Earth, Save the Bays, and BREEF play a valuable role in protecting our environment, but should take a rational view of BPC’s drilling." For god's sake. How flucking nauseating. You are considered rational for proposing drilling for oil, while "outspoken" groups are only valuable in protecting our environment. I cannot think of a more uneducated statement made this year, shy of some of the shit that comes out of President Trump's mouth. Mr. Coulson, your viewpoints and words are holding us back as a species. It hurts me to read your utter foolishness. And further, that some kids may actually read and be influenced by your pornography. Mr. Coulson, you have inhabited a world where money is a god. The economy is king, to the sidelining of everything else. The chickens have come home to roost. Your worldview is what is killing this planet. That is why we have to stand up and say so. Not to read my own words, but to fight for a chance for our kids. Are you that dense that you continue on despite the earth's doctors saying unequivocally that we are headed in exactly the wrong direction. Your thinking is exactly the wrong direction this world needs at present. We have listened to the white, male businessmen for long enough. Enough with your foolishness, Coulson. The world's learned decent people and communities are DIVESTING from fossil fuels. Wake up, Coulson.
Porcupine 4 years, 5 months ago
"When, and if, oil is discovered and flows in commercial quantities, The Bahamas could reap substantial benefits. Once BPC recovers its development costs and operating expenses, revenue from petroleum sales in the international markets (of unpredictable size, since dictated by world crude prices) will be split 50-50 between BPC and government, allowing accumulation of cash for a Sovereign Investment Fund, the same path that Norway has followed to become a prosperous nation since North Sea oil was discovered in the late 1960s." Here we flucking go again. The 60's? That was nearly 60 years ago. Nothing has changed in your worldview in 60 years? When, if, could. unpredictable. Hmmm. an awful lot of speculation here, wouldn't you say, Mr. Coulson. Yeah, I'm sure our erstwhile leaders will follow exactly the same path that Norway did. No other comparisons needed. Not with the educational level, the social makeup, the socialist economy, and not even a critique of historical events. All so sweetly easy Mr. Coulson. Just like Norway. Mr. Coulson, you are either dishonest or a con artist. Or, both.
Porcupine 4 years, 5 months ago
"The worst example is the tiny west African nation of Equatorial Guinea, whose massive petroleum revenues are diverted for the exclusive enjoyment of the ruling elite. Quite true, but I am confident The Bahamas will never descend to the abysmal level of corruption, oppression and public poverty created by the family dynasty that has held power for over 30 years in that benighted nation." Mr. Couson, I really need not say any more. To your eyes, it is the abysmal level of corruption, oppression and public poverty created by a family dynasty that has spelled doom for this otherwise windfall for the people. Nothing to do with the accounting tricks used by all oil companies to make sure that the people in these countries where oil is found get little to nothing? Nothing to do with inflating costs, investor payouts, huge bonuses for the executives, reducing what they say they sold the oil for? Never any attempt by these oil companies to keep as much money as criminally possible, while the people of these countries are left dealing with the cancerous, environmentally destructive and deadly effects from the oil extraction industries of which the real money men will never ever witness for themselves. They must remain in denial, so that they can, without guilt, continue to collect their salaries, write opinion pieces, go to church on Sundays, and have everyone around them see them as outstanding citizens, well meaning and well educated and protectors of freedom. Ugggg.
Porcupine 4 years, 5 months ago
And, you are confident Mr. Coulson, that The Bahamas will NEVER descend to this abysmal level of corruption? Do you not read the paper that you contribute to? Are you this removed from reality? Honestly. Where did all the NIB money go? Where did all of the BEC/BP money go? Where did Water and Sewerage money go? Where did Bank of Bahamas money go? Where did Bahamas Air money go? Where did Road and Traffic money go? Do we need to go on? Was this simple incompetence, low productivity and mismanagement, Mr. Coulson? What of the daily papers highlighting the level of corruption among our elected officials? And, you don't question why Oban, despite all of the obvious irregularities, if I may be so bold, is still here on the table? Or, do you know something the rest of us do not? Please tell us what your definition of "abysmal corruption" is, Mr. Coulson.
Well_mudda_take_sic 4 years, 5 months ago
Coulson lost his ethics a long time ago and more recently his marbles. He will say and do whatever it takes to try put a dollar in his pocket. He more than deserves all of the quills you have stuck in him Porcupine.
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