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APremier Williams refuses to release the Memorandum of Understanding (MOU) reached with the Hebron consortium and that in itself raises a number of questions,@ said Mr. Reid. AThis reinforces the closed nature of this government and it leads many to question whether this whole deal was timed to get the premier through an election campaign without having to deal with one of his biggest weaknesses, the inability to negotiate deals.@

In his letter to the premier, Reid poses 13 questions related to the Hebron announcement. Each of the questions is seeking further information related to royalty payments, work commitments and project time lines that were missing or not disclosed at last week=s press conference.

AThe premier has asked the people to trust him without seeing any of the details of this agreement. As the Official Opposition, we are not willing to trust him blindly. We will support this MOU if all details are provided and it is determined to be a good deal for the province. To date, we have not seen any of these details and all we can surmise is that the premier is hiding something. We believe these questions are very important to determine whether this is indeed the best deal possible for our province.

AWe understand that there are a number of people throughout the province who are excited to have this project go forward. We, the Official Opposition, also wish to see Hebron-Hebron Ben Nevis and other projects proceed and have lobbied hard to get Hebron back on track; however, this cannot be done at any cost. Without questioning, we will never know what loopholes and other problems may exist. If problems are discovered a year from now, it will be too late. Without seeing the document, how do we know whether or not a Mac Truck can be driven through this MOU? If this is the best deal possible for our people, a full and open debate should take place immediately to ensure it is done properly.@

August 30th, 2007

Premier Danny Williams

Office of the Premier

8th Floor, East Block

Confederation Building

P.O. Box 8700

St. John=s, NL

A1B 4J6

Dear Premier Williams:

Last week, you announced that a Memorandum of Understanding (MOU) had been reached with the Hebron consortium to develop the Hebron-Ben Nevis project. At the press conference, you released a highlights sheet, but refused to release the actual MOU. As a result, there are many questions that remain unanswered and many details that must be discussed in more detail. We, as the Official Opposition, have a duty to ask questions and ensure that concrete information is provided. If this project is as good as you profess, we would appreciate timely answers to the following questions, answers that provide detailed information and not rhetoric.

1. Why is your government refusing to release the MOU?

- As reported in the media, you committed to release all details related to resource agreements to the people for analysis; this is a commitment that you made while you were Leader of the Official Opposition. Unfortunately, it now appears that you have changed your mind and are refusing to release this document. What is contained in this MOU that has so dramatically changed your mind and why are you unwilling to let others analyze this document?

2. Why did you agree to freeze the royalty rate paid by the oil companies at one percent until payout?

- Your government has constantly stated that our people are not receiving appropriate royalties from our three existing offshore projects. Instead of reaping the benefits of an increasing royalty rate until payout has been reached (which is the case for Hibernia, Terra Nova and White Rose), you have instead agreed to freeze the Hebron-Ben Nevis rate at one percent. This has the potential to cost the province billions of dollars.

3. How much money has been left on the table by compromising on the royalty regime and allowing a one percent payment until payout?

- If the generic royalty regime with an increasing royalty rate from 1% to 7.5% until payout is applied, similar to White Rose, hundreds of millions of extra dollars will flow into the province=s coffers in the early years of production. What impact will your compromise have on the amount of money that could have flowed into provincial coffers in the first ten years of production?

4. What will the province lose in royalties if the price of oil, after payout has been reached, is less than $50 a barrel?

- There has been much discussion regarding the Upper Churchill contract and the exclusion of an escalator clause. If only people knew when that agreement was signed that the price of electricity would jump so dramatically during the 1970s; however, analysts did not predict such an increase in the price of electricity and the province has lost significant revenues ever since.

Your Hebron MOU proposes a super royalty regime that kicks in once oil reaches $50 a barrel. However, should oil decline below $50 a barrel, the companies do not have to pay this royalty. The province has stated that to achieve this super royalty, sacrifices had to be made on the generic royalty and hence a one percent frozen royalty payment until payout. What safeguards have been built into this MOU to protect the people of the province should oil prices drop?

5. When will the project reach payout?

- With so much of the royalty revenue dependent upon when this project reaches payout, what time frames has your government used in its calculations? We all know that this is somewhat dependent on the cost of developing the project and the price of oil, but could you provide a breakdown on the criteria government has used in making this projection?

6. How much will government have to invest in up-front costs related to the 4.9 percent equity position?

- Government announced an investment of $110 million to purchase the equity stake and an unknown amount in go-forward development costs. Some have pegged this cost at as much as $300 to $500 million for construction and development related costs, bringing the potential total cost to upwards of $600 million. Can you provide the actual figure and the analysis that government has completed to get its figure?

7. How long will it take for government to recover its up-front investment?

- An estimated $600 million is a lot of money to put forward in up-front costs without any immediate return on investment. How long will it take to recover this investment before any real money flows into the province=s coffers?

8. What risks has the province been exposed to related to liabilities such as environmental clean-ups or cost overruns because of the equity position?

- The province has a 4.9 percent equity stake in this project and will be responsible for 4.9 percent of the overall costs. This would include 4.9 percent of any cost overruns or 4.9 percent of any liabilities, such as an environmental clean-up if there was an oil spill. Has government included any of these factors in deciding the profitability of an equity stake, or is this a decision that accepts risk and hopes that nothing goes wrong over the life of the project?

9. Apart from the GBS (which is captive to this province and will be built at Bull Arm),what percentage of other fabrication work will be completed in this province?

- At your press conference, you refused to put a figure on how much work will be completed in Newfoundland and Labrador. During White Rose, government stated up front that over 80 percent of the total work would be completed in this province. At the end of the project, over 85 percent of work that could be completed in this province was completed in Newfoundland and Labrador. Can you provide a concrete figure on the work percentage for Hebron, the breakdown of the calculation, and if not, why not?

10. How much of the FEED (front-end engineering and design) and other detailed engineering work will be completed in this province?

- In the past, we have heard vocal critics such as Mayor Andy Wells state that no FEED or other engineering work should be done outside the province. This announcement certainly hints that a significant majority of engineering work will be completed outside Newfoundland and Labrador. Can you please provide the percentage of FEED work that will be completed here; provide a breakdown of how this calculation was done; and why we are allowing a significant portion of this work to be done elsewhere?

11. How large will the Gravity Based Structure (GBS) be in comparison to Hibernia?

- We have spoken with some industry analysts who state that the GBS to be completed for this project at Bull Arm will be one third the size of that for Hibernia. Is this true, and if so, will only one third of the workforce be required? Can you provide an analysis that shows the true size and work requirement to build this GBS? How many work hours will be required and what will be the peak years?

12. How much of the topsides work will be completed in this province and where?

- You stated at your press conference that more fabrication tonnage will be completed in this province than either the White Rose or Terra Nova projects. Both White Rose and Terra Nova were floating vessels, whereas Hebron-Ben Nevis requires a GBS. The weight of the concrete alone would satisfy this requirement, but certainly does not provide any work commitments for topsides fabrication.

- While the smaller GBS will be built at Bull Arm, there does not appear to be any commitment for all the topsides work to be completed in this province. You have already stated that the major process module will be built outside the province. Can you provide a breakdown of what percentage of the topsides work will be done in Newfoundland and Labrador and where? What is the estimated tonnage of the topsides? How many person hours of work will be required? What percentage will be within the province? What components?

- We know Bull Arm will get the GBS work, but there is no real commitment to topsides work anywhere. What percentage of work will be undertaken in Marystown? What percentage will be undertaken at other sites in the province, e.g. St. John=s Dockyard?