December 19, 1996
(Executive Council)
Premier welcomes Petro Canada
announcments
Premier Brian Tobin commended
Petro-Canada for its progress in the Terra Nova Project, saying that four
announcements by the company today signal another major step in the building
of the oil industry in Newfoundland and Labrador.
"I am very pleased that Petro-Canada has
concluded a strategic alliance agreement with Norsk Hydro. This alliance
will afford both companies a greater opportunity to pursue development of
established reserves on the Grand Banks, as well as additional exploration
work. Norsk Hydro brings leading edge technolgy, expertise and operating
experience that will support Petro-Canada's commitment and expertise,"
said the Premier.
The Premier also complimented Petro-Canada on
its decision to establish an operating headquarters in St. John's for the
Terra Nova Project, which will be headed by Gary Bruce, newly-appointed
Vice- President, Offshore Development and Operations Strategic Business
Unit. "This office represents a major commitment to Newfoundland and
Labrador offshore operations by Petro-Canada and its partners, and we are
pleased to see it happening now."
Petro-Canada's announcement of its selection
of a steel monohull floating production system, to be developed by the Grand
Banks Alliance - the selected prime contractor - was welcomed by the
Premier. "I am pleased that the company has advanced its planning to
the stage that it is able to make a selection, based on its established
technical, environmental, safety and benefits criteria, and that we could
see first production as early as 1999. I am also pleased to know that in the
range of 500 to 800 construction jobs could be created in the province to
outfit the monohull, as well as 400-500 direct long term employment in the
production phase," added Premier Tobin.
"Petro-Canada's announcement today is
more good news for the oil industry in this province. When taken with the
news yesterday in the Globe and Mail that Husky Oil has a plan to go ahead
with the development of the Whiterose oil field, it shows that we are on the
right track. Jamie Blair of Husky has said our groundwork in eliminating red
tape and developing the generic royalty regime has been key to their plans
at this time. This is very positive because it demonstrates that the
industry is here - and here to stay - in this province."
Contact: Cathy Dornan, (709) 729-3564.
______________________
BACKGROUNDER
The Terra Nova Project
Petro-Canada, Norsk Hydro and Husky Oil
Successful Alliance
- Petro-Canada has chosen the Grand Banks
Alliance to engineer and execute the Terra Nova development. The Grand
Banks Alliance will construct, outfit and commission a steel monohull
for the Terra Nova development.
First Production
- First production from Terra Nova is
scheduled for late 1999. The peak design rate is 150,000 barrels of oil
per day.
Construction Phase Employment
- A concrete GBS for Terra Nova is not
suitable because of unfavourable economics. A concrete floating
production system was not chosen because of certain technical concerns
and cost risks. Construction of the selected steel monohull will result
in about 6 million person-hours of employment, of which 2.3 million
person-hours are committed to Newfoundland. Major components of this
work include: drilling; installation of the subsea system, installation
of the upper turret on the monohull; and atshore installation, hook-up
and commissioning of the topsides. Best efforts will be taken to cause
to occur in Newfoundland the following work: topsides modules
fabrication, fabrication of the upper and lower turret, subsea component
assembly and construction, and topsides engineering design. The total
potential incremental pre-production work is 1.5-2.3 million
person-hours. This particular work, however, will be bid on an
international competitive basis.
Operating Phase Employment
- Production phase employment at Terra Nova
compares favourably with Hibernia. 400-600 direct longer term jobs are
expected over the 15-18 year life of the Terra Nova field.
Petro-Canada Office
- Petro-Canada will be setting up a new
business unit in St. John's - the Offshore Development and Operations
Strategic Business Unit, to be headed by Vice President Gary Bruce.
- Future Grand Banks Petro-Canada
operated and joint venture projects, once they have reached the
development plan phase, will be managed by this Unit.
Petro-Canada/Norsk Hydro Strategic
Alliance
- Petro-Canada and Norsk Hydro are
forming a long-term strategic alliance through a swap of interests
and a sharing of technology and offshore operating expertise. Both
companies anticipate that the alliance will add value to their
operations. Petro-Canada will generate immediate cash flow, while
broadening its portfolio of producing assets. Norsk Hydro will
expand its international oil and gas activities and will be able to
take advantage of, and further enhance, core capabilities developed
in North Sea operations.
- Norsk Hydro will acquire a 5 per cent
interest in the Hibernia field, a 15 per cent interest in the Terra
Nova field and 30 per cent of Petro-Canada's interests in all major
Significant Discovery Areas in the Jeanne d'Arc Basin. They will
also contribute to the pre-production capital costs of the Hibernia
and Terra Nova Projects. In exchange Petro-Canada will acquire a 9
per cent interest in the Veslefrikk field and 7.5 per cent interest
in the Njord field.
- Norsk Hydro is a leading North Sea oil
and gas producer and Norway's largest publicly owned industrial
company, with operations in fertilizers, chemicals and light metals.
It currently operates daily production equivalent to more than
800,000 barrels of oil, with its share of production equivalent to
about 250,000 barrels of oil. In Canada, Norsk Hydro has interests
in magnesium smelting, auto parts manufacturing and fertilizer
production.
- This transaction means that Norsk
Hydro will effectively "step into the shoes" of Petro-Canada
with respect to its acquired interests in the various projects. The
Province is entering into agreements with Norsk Hydro for the
Hibernia project which are the same as the current agreements with
the other Hibernia Project Owners. Norsk Hydro also becomes a party
to the Letters of Intent for the Terra Nova Project and the
Transshipment Facility. With respect to the other Significant
Discovery Licenses (SDLs) acquired, Norsk Hydro will be treated the
same as any other company having an interest in an SDL.
- Although there is no direct impact,
the fact that a major offshore oil and gas exploration and
development company is entering into Newfoundland and Labrador's
offshore industry is extremely positive. This will bring a level of
expertise to our industry which will ensure its ultimate success and
it will enhance the international exposure of the Province's oil
industry.
- This is a private transaction
negotiated between two corporations independent of government
involvement. This deal was based on sound business principles and
practices and reflects the merits of the Newfoundland and Labrador
business environment and its offshore oil and gas development
potential.
Husky Oil Ltd. and the Whiterose
Development
- Husky Oil Ltd. (Husky), headquartered
in Calgary, Alberta, is a Canadian-based integrated energy company
serving global customers and is involved in the exploration and
development of crude oil and natural gas. Its primary focus is the
production, purchase, transportation, refining and marketing of
petroleum and sulphur as well as the transportation and marketing of
refined products.
- Husky has assets of about $3 billion
and 1,400 employees. The company is privately held and controlled by
the Hong Kong- based Li Ka-shing Group of Companies.
- Mr. John Lau is the Chief Executive
Officer and Mr. Jamie Blair is Vice-President.
- Husky has established production in
Alberta, British Columbia and Saskatchewan.
- Husky has been an active company in
the Newfoundland offshore area since the early 1980s and was
responsible and/or is involved in a number of significant oil and
gas discoveries including: Terra Nova, Whiterose, North Ben Nevis,
South Mara, Fortune, Springdale, South Tempest, Trave, Bjarni, North
Bjarni, Snorri, Hopedale, North Dana, Gudrid, East Rankin and Kings
Cove.
- Most significantly, they are the
operator for the Whiterose field and a major partner in the Terra
Nova development.
- Husky holds about a 42 per cent pooled
interest in the Whiterose field.
- Other interest holders in Whiterose
include the following:
Petro Canada 25%
Talisman Energy Inc. 17%
Gulf Canada Resources Ltd. 8.5%
Parex 7.5%
- Husky estimates that this field has
crude oil reserves of 250 million barrels. Further drilling and
testing is necessary to confirm reserves and productivity.
- Husky also has a 50 per cent interest
in one exploration licence which is located immediately south of the
South Mara field.
- Husky plans to open an office in St.
John's to manage a three- year program at Whiterose. Husky intends
to conduct extended production tests. An initial 10,000 barrels a
day could be produced in late 1998. This could rise to as much as
40,000 barrels of oil per day in 1999. A permanent production system
for Whiterose could be put in place on or before the year 2004.
NOTE TO EDITORS: A copy of the Premier's
speaking notes are available
- by contacting the Communications and
Consultation
- Branch at (709) 729-3610. They are
also available on
- government's Web site at www.gov.nl.ca
|