February 17, 1998
(Executive Council)

Premier pleased Terra Nova Project will proceed

Premier Brian Tobin says he is pleased with today's announcement by the Terra Nova proponents to proceed with the development of the Terra Nova oil field, located 35 kilometres southeast of Hibernia in the Jeanne d'Arc Basin.

"The development of Terra Nova, our second oil field, further strengthens the base of our petroleum sector and is solid evidence of the interest and commitment these companies have in our emerging oil industry," said the Premier.

The Terra Nova oil field, has estimated recoverable reserves of approximately 370 million barrels of crude oil in the Graben and East Flank with the possibility of an additional 100 million barrels of crude oil in the Far East Block. The project will be developed entirely with private capital and will proceed on the basis of a competitive international bidding process. "I am confident that the knowledge gained from Hibernia and the infrastructure currently in place, will put Newfoundland and Labrador firms and individuals in a very competitive position when it comes to reaping the benefits from this $4.5 billion project," said the Premier.

The Terra Nova consortium estimates that approximately 60 per cent of the project budget will be spent in Newfoundland and Labrador. "The Benefits Plan for Terra Nova gives a clear preference to local companies. I fully expect that significant fabrication work, especially topsides fabrication, will accrue to the province," said Premier Tobin. "I also expect and look to the consortium to deliver significant work related to project management and design, subsea system installation, offshore installation including onshore support and drilling to the province.

"In addition to the jobs created as a result of the Terra Nova Project, current economic forecasts indicate that royalty and corporate income tax revenues directly attributable to the project will be in the range of $1.2 to $1.7 billion over the estimated 15-year life of the project. Terra Nova is approximately one-half the size of the Hibernia oil field. As with Hibernia, the province will receive a royalty on every barrel of oil extracted from the Terra Nova oil field. In contrast to the Hibernia Project, the Terra Nova Project is less capital intensive and is being developed on an internationally competitive basis. As a result of these factors and the negotiated royalty regime for Terra Nova, the province is expecting to realize twice as much royalty revenue from the project."

Contact: Heidi Bonnell, Premier's Office, (709) 729-3564.