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Newfoundland oil field jolted back to life
Gary Park Petroleum News Calgary Correspondent
The Hebron-Ben Nevis oil project offshore Newfoundland is staging a rapid recovery from a near-death experience.
Fourth in line after Hibernia, Terra Nova (Newfoundland’s two producing fields) and White Rose (which could be on stream by late 2005), Hebron-Ben Nevis seemed headed for the scrapheap when planning was discontinued in February 2002.
But a flurry of activity this year has seen progress on an operating agreement, the choice of a production system and efforts to make headway on tax credits and reduced royalties.
Ron Brenneman, chief executive officer of Petro-Canada, said an announcement to proceed could be made within a “couple of months.”
Chevron Canada Resources was unwilling to commit to a “firm timetable,” but spokesman Dave Pommer told Petroleum News that “we are hopeful we can reach closure in the near future.”
The partners are ExxonMobil 38 percent, Chevron 28 percent, Petro-Canada 24 percent and Norsk Hydro 10 percent.
Although Chevron is currently designated as operator, Wilf Gobert, vice chairman of Peters & Co., told the Financial Post there is a tug-of-war taking place over who will actually be operator if the venture proceeds.
Also unresolved is which of four production systems will get the nod. There are two versions of the gravity-based structure used at Hebron, a floating production, storage and offloading vessel, which were selected for Terra Nova and White Rose and a sub-sea tie-in to Hebron, although Brenneman does not think that is likely given that Hibernia is now operating at capacity. Seeking tax credits To improve the economics, the partners are also seeking tax credits and reduced royalties from the Canadian and Newfoundland governments.
Hebron-Ben Nevis has an estimated 600 million barrels of recoverable oil, but 75-80 percent is 18-21 degree API gravity. In addition, the complex reservoir requires more wells than Hibernia’s other fields, putting the project in a different economic category and increasing pressure on the governments to agree to different terms.
Pommer said the partnership has been “communicating openly” with the two governments and is encouraged that both seem ready to identify opportunities to lower operating costs.
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