Terra Nova production rate increase

I rise in the House today to advise honourable members that the Canada-Newfoundland Offshore Petroleum Board (C-NOPB) has granted an increase to Terra Nova�s annual rate of production. This production increase will see Terra Nova�s average daily oil production rate of 100,600 barrels per day increase to 150,000 barrels per day. The decision also allows the C-NOPB to further increase the average daily rate up to a maximum of 200,000 barrels per day after the consideration of appropriate regulatory, administrative and technical criteria.

This production increase for Terra Nova will be positive for this province. The Terra Nova royalty rate increases as production increases, or as the project becomes more profitable. This production rate increase will trigger the higher royalty rates earlier than expected, and result in substantially more royalty revenues for the province. Under current assumptions this is estimated to be an additional $300 to $400 million over the life of the project, and this does not include any potential new discoveries in the far east block of the field. In addition, improved profits will likely result in higher provincial tax revenues and increased investment in the province.

In their application to the C-NOPB, the Terra Nova proponents have stated that this production increase will have minimal effect on the life of the project. After reviewing the application and the facts, government agrees with this position. Government expects employment to be unaffected by this change.

The proponent, as well as the province, wish to see this project become as profitable as possible. This will provide further incentive for industry to explore and develop new projects, leading to new and sustained benefits for the people of Newfoundland and Labrador. It also sends a positive message to our industry partners that this province is a good place to invest.

Government believes that this is a win-win situation for both the proponents and government. Government will receive positive benefits to the provincial treasury and increased investment. The proponents will be given the opportunity to generate more capital to invest in their provincial interests. Government will continue to support initiatives such as this when the people of Newfoundland and Labrador are the beneficiaries.

2002 12 03                                        1:40 p.m.