The Economy 1998


Oil & Gas

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The emergence of the Grand Banks as an oil producing region has provided many benefits to the Province. New infrastructure, technical knowledge and expertise, and an experienced labour force are direct results of the development of Hibernia. In addition, the production of oil is providing the direct benefits of employment and income as well as creating indirect benefits through the purchase of a wide array of goods and services.

HIBERNIA

Hibernia began pumping oil on November 17, 1997, signalling the beginning of a new era for the oil industry in this Province. Production for the year was approximately 1.3 million barrels–one shipment of oil took place before year-end. Employment for the year averaged about 1,500 persons, down substantially from the 4,400 recorded in 1996 when the project was still in the more labour intensive construction phase.

Hibernia Milestones

Sep 1979 Hibernia discovery well drilled
Sep 1990

Hibernia agreement signed

Oct 1990 Work began at Bull Arm
Aug 1994 GBS slipforming began
Nov 1994 GBS towed to deep water site
Nov 1996 Topsides and GBS mechanically complete
Feb 1997 Topsides and GBS mated
Jun 1997 Platform towed offshore
Jun 1997 Pre-production activities began
Jul 1997 Started drilling
Nov 1997 Increased recoverable reserves and
production announced
Nov 1997 First oil
Dec 1997 First Shipment

Targetted production for 1998 is about 25 million barrels. About 700 persons are expected to be employed year-round in "steady-state" operations.

TRANSSHIPMENT FACILITY

Part of the infrastructure created to service the oil industry is the oil transshipment facility at Whiffen Head. The terminal will be used for the transshipment of Hibernia oil with the capability for expansion to accommodate oil from Terra Nova and possibly other projects as well. The facility is scheduled to be completed by the fall of 1998.

p10-3.jpg (29127 bytes)EXPLORATION ACTIVITY

Indicative of the industry's confidence, both the Grand Banks and the West Coast experienced exploration activity last year with expenditures more than double those recorded in 1996. Delpet Resources drilled the Big Spring #1 well in the Hare Bay area of the West Coast. On the Grand Banks, Amoco Canada drilled a well on its West Bonne Bay holding. Also, considerable seismic work was carried out in both areas.

Interest in the exploration potential of the Province was further validated by industry's response to the 1997 Call for Bids for exploration rights in the Newfoundland offshore. The Call for Bids received responses on all seven parcels offered. Four of the parcels are located in the Jeanne d'Arc Basin on the Grand Banks and three are located off the West Coast of Newfoundland. Bids representing a total work expenditure commitment of $98 million were selected for the seven parcels.

p11-1.jpg (25995 bytes)OUTLOOK

The outlook for the oil industry is very bright. This year will see a full year of oil production from Hibernia, investment and employment related to the Terra Nova project, and an increasing level of exploration activity. A delineation well will be drilled at both the Hebron field and the White Rose field on the Grand Banks this year and up to four wells could be drilled on the West Coast. The development of Terra Nova will add to oil production in the future and the continued development of infrastructure should provide an incentive for further exploration.

TERRA NOVA

The Terra Nova development proponents announced on February 17, 1998 that they would proceed with the development of the oil field on the Grand Banks at a cost of approximately $4.5 billion.

Contracts for the design and construction of the steel hull of the floating production storage and offloading (FPSO) vessel; for the drilling and completion of wells; and for the construction of glory holes (holes in the sea floor to protect wellheads and subsea templates from iceberg scouring) have been awarded. Construction of glory holes will begin this summer and development drilling is expected to start in June 1999.

The Bull Arm Site has been selected for fabrication of topsides modules for the FPSO vessel. Two of the four major modules required for the vessel will be fabricated at Bull Arm as well as the flare stack and deck assemblies. Hook up and commissioning of the FPSO and topsides will also take place at Bull Arm. Topsides fabrication will begin in September 1998.

Between 900 to 1,100 persons will be employed in Newfoundland during peak pre-production activity. The operations phase will generate in the range of 400 to 450 direct long-term jobs. An estimated 370 million barrels of oil will be recovered from the field over the 15 year life of the project. First oil is expected by year-end 2000.

The Terra Nova development proponents are: Petro-Canada (operator), Mobil Oil Canada Properties, Husky Oil Operations Ltd., Norsk Hydro Canada Oil & Gas, Murphy Oil Company Ltd., Mosbacher Operating Ltd. and Chevron Canada Resources.

 

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TERRA NOVA PROJECT PRODUCTION FACILITIES

24 wells will be drilled to exploit the Terra Nova oil field. These wells, located in glory holes, will be drilled in clusters from a separate conventional drilling unit. Oil will flow from the wells through flexible flowlines and risers to the production facility. The oil will be offloaded from the production facility to tankers that will transport the crude oil to markets.

Courtesy of Terra Nova Project


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