Oil Patch Insider

Hibernia owners, Newfoundland government on collision course

The Newfoundland government and owners of its offshore Hibernia project are creating a lot of noise over what may or may not be a significant oil strike.

Without confirming that a find of up to 300 million barrels has been made, Hibernia partner Petro-Canada has squared off against any attempt by the province to extract maximum royalties from the play.

Chief Executive Officer Ron Brenneman says reports estimating the size of the rumored South Hibernia discovery are “pure speculation” and will remain that way until the Hibernia B-16 54 well reaches its targeted depth of 26,800 feet early in 2006.

But that didn’t stop Brenneman from declaring it is “absolutely clear in my mind” that if new oil is confirmed it will be an extension of the Hibernia field, not a new discovery.

Despite the broad hints from Brenneman of possible pay dirt, Hibernia operator ExxonMobil is sticking to its line that any talk of new oil is premature.

If the oil is deemed to be a new field, and Newfoundland Premier Danny Williams says he has been told it is a separate play, it will face the higher royalties.

At the same time, Williams is emphatic that his government should have an equity stake in Hibernia to obtain a “fairer return” from its offshore.

In speeches and interviews over the last two weeks, he has said it is time Newfoundland received a “share of the wealth” from the “very profitable” Hibernia, now pumping more than 200,000 bpd, as well as the Terra Nova and White Rose projects.

Williams has set his sights on establishing a “signature piece” by taking over the Canadian government’s 8.5 percent holding in Hibernia, although Prime Minister Paul Martin flatly rejected that notion.