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Newfoundland reaches for Hibernia stake Province interested in Canadian government share, but premier says price must be right; minister hints government open to talks Gary Park For Petroleum News
The Newfoundland government is eager to become a larger equity partner in its offshore by acquiring the Canadian government’s 8.5 percent share of Hibernia — but only “if the price is right,” said Premier Kathy Dunderdale.
The two governments have tap danced around each other for many years over a possible transfer of ownership, although the topic has gone quiet since 2011 when word leaked out that the price tag was C$1 billion for a field that it estimated to contain 407 million barrels of proved and probable reserves, with the most recent production averaging almost 1250,000 barrels per day.
Hibernia led Newfoundland’s offshore production in 1997, followed by Terra Nova and White Rose. Hebron is now on track to join the club, delivering its first oil in late 2017 or early 2018.
Nalcor Energy, an arm of the Newfoundland government, has a 4.5 percent interest in Hebron and 10 percent of the Hibernia South extension project.
Murphy eying exit? The other shareholders in the main Hibernia field are ExxonMobil 33.125 percent, Chevron Resources 26.875 percent, Suncor Energy 20 percent, Murphy Oil 6.5 percent and Statoil Canada 5 percent. There has been persistent speculation that Murphy is eying the exit door.
Canada’s Finance Minister Jim Flaherty dropped the latest hint in mid-February that his government is open to talks over its stake, but stopped short of saying when a deal might be done and at what cost.
Dunderdale told reporters a purchase “would be expensive, but you can imagine the return on investment would be very significant as well.”
In 2009 Flaherty made the chances of a deal sound remote, noting that Canadian taxpayers through a costly series of grants and loans had “incurred significant costs to develop the Hibernia project and assumed significant risks.”
“In this context, the federal government will manage this investment in order to maximize its value to all Canadians and in accordance with best commercial practices,” he said.
During the 2011 federal election, Dunderdale asked the leaders of Canada’s three major political parties if they would consider a sale, but she conceded “we just weren’t able to bridge the gap so negotiations fell apart.”
But interest has been revived since word that Hebron is proceeding, along with satellite extensions to the Hibernia and White Rose fields.
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