Watson Island saga continues

The soap-opera that is Watson Island took another turn last week, with the introduction of a new player.

The soap-opera that is Watson Island took another turn last week, with the introduction of a new player as the epic saga enters its eighth year.

First it was Sun Wave Forest Products back in 2006, a relationship that ended in a lengthy court battle, followed by the suitors of WatCo in 2012, which once again ended in the two sides on opposing sides of the courtroom. Now we have Watson Island LNG (WILNG), council’s latest hope to return the former pulp mill to an economic generator for the city coffers.

Council will have to forgive residents if they don’t break out the confetti and party hats to celebrate this latest agreement – aside from the two failed sales, there seems to be a lot of questions about the capability of WILNG to create a meaningful industrial entity on the North Coast.

First and foremost, WILNG appears to be a small fish in a big pond. With LNG competitors including state-owned energy companies like Petronas, international energy giants like ExxonMobile, Chevron and the BG Group and Canadian energy giants like Shell Canada, the incorporated-in-April WILNG could be likened putting a guppy in a shark tank. Given that none of these companies with nearly limitless resources have made a final investment decision, one would be excused if they didn’t hold their breath.

Then there’s the cost of remediation of the site, pegged at more than $50 million. Facing an infrastructure deficit nearing $200 million, the city certainly doesn’t have the money to pay for that cleanup and the province is MIA. It’s going to take a lot of money to clean the site, which is a huge hurdle to any startup company.

And then there is the ongoing court challenge from WatCo. While Mayor Jack Mussallem believes oral contracts aren’t enforceable, a quick Google search indicates otherwise. And, given the length of the last court battle over Watson Island, the likelihood this case is settled before the exclusivity agreement with WILNG runs out at the end of the year seem extremely slim.

Many hope WILNG succeeds, but there are many obstacles to be overcome.