September 5, 1996
(Executive Council)

Transshipment Terminal for Offshore Oil to be Built at Whiffen Head

Premier Brian Tobin announced today that the Government of Newfoundland and Labrador has signed a Letter of Intent with Mobil Oil Canada Properties, Chevron Canada Resources Limited and Petro-Canada, along with members of the Hibernia consortium, which clears the way for the construction and operation of an oil transshipment terminal in the province. The terminal will be located at Whiffen Head in Placentia Bay.

Premier Tobin said: "This is an integral part of the foundation of the oil industry in this province. It will allow us to maximize the benefits from the development of our oil resources. The net income benefit to the economy of this province from the construction and operation of the transshipment terminal will be about $500 million for the Hibernia and Terra Nova projects."

The terminal, consisting of several large storage tanks, a causeway and a fully equipped pier, will have initial capacity for storage of up to 1.5 million barrels of oil. It will cost in excess of $100 million and will employ approximately 300 people at the peak of construction. Completion of the terminal is expected in the fall of 1998.

The Minister of Mines and Energy, Dr. Rex Gibbons, observed that this terminal will be constructed in such a manner to allow expansion. He said: "This is critical to accommodate transshipment of oil from other future field developments such as Terra Nova, Whiterose and others."

The fact that the terminal will be located in the province will facilitate the allocation of corporate income taxes to the province. Because the tankers will be coming ashore here, Newfoundlanders and Labradorians will have first chance at the jobs available on the tankers, in addition to those at the terminal.

Charles Furey, Minister of Industry, Trade and Technology, said: "It is very important to realize that other downstream activity, such as dewaxing, is now possible in the province. The synergies with the Come By Chance refinery, such as the possible sale of oil to the refinery and potential sharing of infrastructure, also enhances the competitiveness of that facility."

Hibernia oil will be transported to the terminal by two 127,000 dead weight tonne shuttle tankers from the Hibernia oil field. Construction of these tankers is well underway. Other tankers ranging in size from 35,000 to 155,000 dead weight tonnes, called "second leg tankers", will take the oil to markets in Canada, the United States east coast and Gulf coast, and even Europe.

This terminal is an integral infrastructural component that will support the growth of our oil industry.

Contact: Karen McCarthy, (709) 729-0110.

TRANSSHIPMENT TERMINAL PROJECT Background Information
1. PROJECT SUMMARY

• Mobil Oil Canada, Chevron Canada Resources Limited and Petro- Canada, along with members of the Hibernia consortium, have reached an agreement with the Government of Newfoundland and Labrador which will provide for the construction and operation of a transshipment terminal at Whiffen Head in Placentia Bay. The terminal will be used for the transshipment of Hibernia oil and oil from other offshore projects.
  
  Transshipment is a two-stage transportation process for moving crude oil to market. Crude oil will be transferred from storage in the Hibernia production platform to two 127,000 dead weight tonne purpose-built shuttle tankers. These tankers will carry the oil to the terminal at Whiffen Head where it will be stored until it is transferred to conventional (second leg) tankers and shipped to market. Some of the oil will be taken from the Hibernia production platform and shipped directly to final market destinations.
  
  A transshipment terminal will reduce the number of shuttle tankers required (from three to two); increase market opportunities beyond the range of two shuttle tankers; and allow cargo sizes to be tailored to meet individual customer needs.
  
  Mobil and Chevron evaluated several potential transshipment terminal site locations in Newfoundland before deciding on Whiffen Head in Placentia Bay as the best location.
  
  The shuttle tankers will each have a cargo capacity of 850,000 barrels of oil and are double hulled and ice strengthened. The conventional "second leg" tankers will range in size from 35,000 to 155,000 dead weight tonnes and have segregated ballast systems to eliminate the need for ballast water treatment.
  
  The terminal at Whiffen Head will have one berth to handle Hibernia production and up to two additional berths to accommodate production from other fields. An access causeway to the berths will be approximately 300 to 600 metres long. Onshore storage capacity will be 1.5 million barrels for Hibernia oil. It is estimated that up to 2.0 million barrels of additional storage capacity will be needed to accommodate production from other fields.
  
  

2. BENEFITS TO NEWFOUNDLAND AND LABRADOR

• Business and employment opportunities related to the engineering design, construction and operation of the terminal will be governed by economic growth and development provisions similar to those of the Atlantic Accord. This means that first consideration will be given to the people of this province for employment. It also means that local companies will be given first consideration for services provided from within the province and to goods manufactured in the province, where those goods and services are competitive in terms of cost, quality and delivery.
  
  During construction, the average staffing requirements will be approximately 150 people, with a peak staff of around 300 people. Expertise will be required in diving, marine construction, electrical installations, instrumentation, welding, pipefitting, earth moving, concrete, asphalt paving, painting and insulating. During operations, approximately 20 to 40 people will be employed at the terminal and the two Hibernia shuttle tankers will provide about 100 seagoing jobs. Opportunities will include tug and dock crews, operators, maintenance and mechanical workers, painters, electrical technicians, and office and administration staff.
  
  During terminal operations, it is expected that contracts will be let for various supplies and services such as ships' provisions, fuel and lubricants, parts and equipment, inspections, maintenance and repairs.
  
  In addition to the above, there are prospects for further processing (i.e., dewaxing). The terminal will be expandable to accommodate transshipment of oil from other fields. The crewing of shuttle tankers by residents of Newfoundland and Labrador will be facilitated by the very fact that these tankers will be coming to shore in this province.
  
  

3. UNDERTAKINGS BY THE PROVINCE

• The province has negotiated an agreement which provides for an exemption of the 4% retail sales tax on Hibernia related operating expenses and the retail sales taxes related to the terminal itself.
  
  The province provided a fuel tax exemption for the terminal and for the Hibernia and Terra Nova projects.
  
  

4. ENVIRONMENTAL AND SAFETY ASSESSMENT

• Before proceeding with construction of the terminal, the proponents will have to satisfy both the federal and provincial assessment processes. It is expected that a comprehensive study will be required under the Canadian Environmental Assessment Act due to the size of the marine terminal. Also, because of the size of the onland oil storage facilities, a registration will be required under the province's Environmental Assessment Act. In consultation with both the federal and provincial assessment advisors, a strategy has been developed to address both processes with a single thorough environmental assessment report.
  
  Public consultation sessions have been held in local communities to gauge any possible issues and concerns surrounding the project. There have been ongoing meetings with fishers in recognition of the potential for the project to interact with commercial fisheries activities. Several field studies have been undertaken to define the existing biophysical environmental conditions. Oil spill trajectory modelling has been conducted for the Whiffen Head site.
  
  The proponents will also conduct a safety assessment to ensure that all hazards associated with the project are addressed and determine the necessary measures for keeping risks as low as possible.
  
  Governments will assess all of the information submitted before project environmental permits are provided.