August 5, 1996
(Executive Council)

Agreement Reached on Terra Nova Development

The Province of Newfoundland and Labrador and the Terra Nova participants today signed a letter of intent which signals the start of the process towards the development of the Terra Nova Oil field.

The announcement was made by Premier Brian Tobin, on behalf of the Government of Newfoundland and Labrador, and Norm McIntyre, Executive Vice-President of Petro-Canada, on behalf of the companies participating in the project. The letter of intent covers the fiscal terms and benefits principles, and clears the way for the filing of a Development Plan Application with the Canada-Newfoundland Offshore Petroleum Board (CNOPB).

Premier Tobin said: "This announcement marks a major milestone in the development of this province's emerging oil industry. Building on our experience in the construction of the Hibernia production platform, the province is now poised to benefit from yet another large oil field development."

The premier said this major step towards development of the Terra net\Nova field is very encouraging, and holds out the prospect of many new opportunities for the people of this province. "With the expertise gained from Hibernia, Newfoundland and Labrador companies should be in a good position to capitalize on the many contracts to be awarded. And equally important, revenues to the provincial treasury from royalties and corporate income taxes will ultimately strengthen the government's ability to provide services to all the people of this province."

A key element of the benefits principles is an undertaking from the Terra Nova partners to provide opportunities for local industry to fully participate in the engineering and fabrication work to take place in this province. Charles Furey, Minister of Industry, Trade and Technology said: "I believe existing fabrication facilities in this province will be competitive and produce the quality of work demanded by the oil industry."

Dr. Rex Gibbons, Minister of Mines and Energy, added: "The companies' intention to proceed with development is a positive reflection of the success of government's efforts to provide a competitive environment for exploration and development in the offshore area."

A Memorandum of Understanding concerning a joint environmental assessment for the project is in place. This will facilitate a smooth and efficient regulatory approval process once the development plan is filed.

The Terra Nova Oil field was discovered in 1984 and is located 350 kilometres east southeast of St. John's. Petro-Canada is the majority interest holder and operator of the project. Other interest holders are Mobil Canada Properties, Husky Oil Operations Ltd., Murphy Oil Company Ltd., and Mosbacher Operating Ltd. Final interests will be dependent on conclusion of an agreement between Petro-Canada and Norsk Hydro, who have recently announced their intention to acquire an interest in the project. The field is estimated to contain in excess of 400 million barrels of recoverable oil.

Contact: Cathy Coady (709) 729-3564.