Exxon Mobil to spend $14-billion on Hebron offshore oil project

1/4/2013

Exxon Mobil Corp., one of the world’s largest energy companies, has pledged to spend $14-billion to develop the Hebron oilfield off Canada’s east coast.

The spending will further extend Newfoundland and Labrador’s recent good fortune, with the province collecting millions of dollars in royalties and taxes. Oil production is slated to begin in 2017, and the platform is designed to suck 150,000 barrels of oil a day out of the ocean floor.

The project could put $20-billion in the province’s treasury, according to previous estimates. Exxon and Newfoundland and Labrador have been battling over construction of the project, with the government pushing for all of it to be built within its borders.

The province is one of Exxon’s Hebron partners.

Exxon’s Friday statement announcing its plans did not clarify whether the two sides have settled their differences over benefits. Exxon, however, addressed how its work would boost the province.

“Hebron’s development will provide significant benefits to the province, including employment for up to 3,500 people during construction in the province, and royalties and taxes to fund provincial infrastructure, social programs and services,” the statement said.

“Construction of the gravity-based structure is under way at the project’s primary construction site in Bull Arm, Newfoundland and Labrador.”

It is unclear, however, whether this will satisfy the government.

Exxon estimates it can extract 700 million barrels of oil from the offshore field, an increase over previous estimates.

The energy powerhouse argues it can safely operate in the region despite obstacles.

“Exxon Mobil will employ its expertise in Arctic development and project execution to develop this world-class resource in challenging operating conditions,” Neil Duffin, president of ExxonMobil Development Co., said in a statement.

The project has already been approved by the federal and provincial governments.

Neither Exxon nor Newfoundland and Labrador were immediately available for comment.

Exxon’s Hebron partners are Chevron Corp., Suncor Energy Inc., Statoil ASA, and Nalcor Energy, which is owned by Newfoundland and Labrador.

(Globe and Mail)