September 5, 2008

Newfoundland is bubbling to the top

On Aug. 20, the final deal with Hebron was signed in St. John's after two years of tense negotiations.

The government of Newfoundland and Labrador is estimating the province will gain at least $20 billion in royalties and up to 3,500 jobs from the Hebron offshore oil project.

So it begins.

There are three projects currently active offshore: Hibernia, Terra Nova, and White Rose.

  • Hibernia is the name of a petroleum field located in the North Atlantic Ocean, approximately 315 kilometres southeast of St. John's. It was discovered by Petro-Canada.

The production platform Hibernia is the world's largest oil platform and consists of a integrated topsides facility mounted on a gravity base structure. Inside the gravity base structure are storage tanks for 1.3 million barrels of crude oil.

Exploration drilling to map the field began in the 1960s and continued into the 1980s, with the loss of the Ocean Ranger rig in the process. In the mid-1980s under Prime Minister Brian Mulroney, Hibernia would become one of a series of regional "mega-projects" that Mulroney's government started across Canada during this time.

  • Terra Nova is an oil field development project 350 kilometres off the coast of Newfoundland. Petro-Canada is the operator and 34 per cent interest holder in the Terra Nova oil fields.

Discovered in 1984 by Petro-Canada, the field is the second largest off Canada's East Coast. This oilfield utilizes a ship called a Floating Reduction Storage and Offloading Vessel (FRSO). Production from the field began in January 2002.

  • White Rose is an oil field development project 350 kilometres off the coast of Newfoundland. Husky Energy is the operator and 72.5 per cent interest holder in the White Rose oil fields.

Discovered in 1984, the White Rose offshore oil field is located in the Jeanne d'Arc Basin 350km east of St. John's. This oilfield also utilizes an FRSO. Production from the field began in November 12, 2005.

Hebron, the new kid on the block, was discovered circa 1980-81, and will go into production in 2018 after the rig is built in Newfoundland. It's owned by Chevron and the Government of Newfoundland and Labrador. This is the largest offshore project in the region since Hibernia.

The oil from the Hebron field will flow in 2018, but the spinoffs from construction will fire up the economy. Indeed, as I noticed when I was home this summer, there are already changes taking place in St. John's. Recent news reports have confirmed my theories.

We can hope that abandoned communities will start to repopulate. I'm suggesting that the government begin a "heritage fund" and start saving immediately, as oil doesn't last forever.

I was watching Discovery Channel's "Secrets of the Deep" two weeks ago and during a feature on sperm whales it mentioned that fish congregrate around oil rigs. The bases of oil rigs seem to make excellent artificial reefs. Maybe this sounds completely absurd, but can this be harnessed somehow to bring the fishery back, and revitalize Newfoundland's original industry?

Newfoundland and Labrador is officially a "have" province.

Now what?