The Honourable Danny Williams, Premier of Newfoundland and Labrador

Hebron Announcement
Wednesday, August 20, 2008
(Please check against delivery)

• Industry partners;

• Members of the House of Assembly;

• Officials and members of NOIA;

• Members of the business community;

• Municipal leaders;

• Members of the press;

• Ladies and gentlemen.

Good afternoon everyone and thank you for coming out today for an extremely historic announcement in our province�s history.

Well, as oil pioneer J. Paul Getty once said, �the formula for success: Rise early, work hard, strike oil.� Ladies and gentlemen, we are in the oil business.

At long last, the day for which we have worked so hard has finally arrived.

It was 27 years ago, in 1981, that the bold commercial explorers who plumb the depths of our oceans in search of petroleum first discovered the Hebron oil field.

It was more than two decades later that talks began in earnest to bring these riches to the surface and to market.

And now, today, we are delighted to announce and celebrate the successful conclusion of negotiations to develop the vast resources of Hebron � Newfoundland and Labrador�s fourth offshore oil project, and it is our most important in many ways.

And here�s why I am convinced it is our most important. With Hebron, we are launching a new era of energy projects in which we, the people of Newfoundland and Labrador, are stepping forward and proudly taking our place as full partners and active participants in energy resource development.

Never before in the history of our energy industry have we taken the bold steps we are taking today. Never before in our history as a province have we been prepared to take these important steps toward self-reliance.

For five long years, ever since the fine people of this province expressed their belief in our vision of no more giveaways, we have been preparing for this moment. The Hebron agreement we are announcing today embodies the fundamental principles that, since 2003, have been guiding our new approach to governance � principles that lie at the heart of the tenacious, new attitude that has taken hold across Newfoundland and Labrador.

Firstly, this agreement reflects our most basic of principles: our steadfast commitment to stand with pride, strength and determination � maturely and confidently � as masters of our own destiny.

Secondly, this agreement reflects our resolute determination to maximize the benefits that Newfoundland and Labrador receives from the development of all our resources.

Thirdly, this agreement reflects our clear objective of achieving a real and meaningful ownership role in the development of our resources so that we are well-positioned and well-experienced to harness a steady stream of opportunities.

In so doing, we will secure our energy, fabrication, supply and services sectors and the communities that rely on them for generations to come.

In our 2003 election platform, we spelled out our objective of achieving ownership roles in energy projects and we reaffirmed this when we unveiled our province�s first-ever comprehensive energy plan in 2007.

Last August, this objective became a key part of the agreement-in-principle [the Memorandum of Understanding] that we signed with our development partners to guide the Hebron negotiation process which has been ongoing ever since.

And now, as a result of these sound principles and sound negotiating, we have achieved a breakthrough agreement that signals a new era of partnership in the development of the province�s energy resources for the long-term benefit of the people of Newfoundland and Labrador.

With this agreement, we have achieved an unprecedented 4.9 per cent equity stake in the Hebron project, giving us the real and meaningful ownership role that we were seeking.

To purchase this 4.9 per cent equity stake through our energy corporation, we are investing $110 million and will also pay our share of the project costs. In return, we will receive our share of the profit.

We have negotiated a new super royalty regime of 6.5 per cent that will kick in after net royalty payout when monthly average prices exceed $50 US for West Texas Intermediate crude.

This is in addition to the current generic 30 per cent net royalty, and something our province has never, ever had before.

Based on our conservative Budget 2008 oil price projection of $87 per barrel, the Hebron development will generate approximately $20 billion in revenues for Newfoundland and Labrador over the 20- to 25-year life of the project.

At today�s prices, and allowing for inflation of 2 per cent, this could be a project worth approximately $28 billion to the province.

The deal we are signing today will result in local benefits that will exceed those provided by White Rose or Terra Nova. Hebron will result in more revenues and will also see more engineering hours than either White Rose or Terra Nova.

At peak construction, some estimate there could be more than 3500 people working on the project at peak employment. And I thank our industry partners for recognizing the outstanding skilled work force Newfoundland and Labrador has to offer.

Our industry partners have committed to investing $120 million in research and development here in Newfoundland and Labrador. In addition to this, we have negotiated an unprecedented agreement regarding gender requirements on the project. Minister Dunderdale will speak more to this in a few moments.

We will have a minimum of 50,000 person hours of GBS feed engineering in the province; a minimum of 1.2 million person hours of detailed engineering in the province; and a minimum of 1 million person hours of project team activities prior to first production performed in the province.

These are just some of the highlights of this agreement, and of course, added to all of that, we will once again in this province be constructing a massive GBS structure which will create an estimated 4.1 million person hours of employment and further define our province as a quality and preferred place to do business. There will also be significant employment benefits from the topsides work over and above these hours.

In an era when record demands and record prices are yielding extraordinary profits for energy sector developers, Newfoundland and Labrador has taken an important strategic step toward long-term prosperity and self-reliance.

The Government of Canada and our fellow Canadians across the country are also expected to benefit from more than $8 billion in revenues from Hebron. Another one of several provincial projects which have contributed tens of billions of dollars to Canada.

This is a day that all Newfoundlanders and Labradorians, whether they live here or away, can take pride in and celebrate.

The benefits of this development will be felt in very direct ways by our supply and services sector and by the many workers who will operate our key fabrication facilities at Bull Arm and Marystown.

In addition � and this is very important for the long-term health of this industry � Hebron will provide more fabrication work in this province than either Terra Nova or White Rose, and our reputation for excellence will continue to grow.

To promote the key benefits of technology transfer and industrial development, this agreement will enable our local contractors and suppliers to access a travel fund to visit facilities outside our province as they work to acquire the knowledge and develop the expertise they need to generate lasting successes here at home.

Suffice it to say, we are tremendously pleased to be part of this historic negotiated agreement that will be instrumental in securing a future of long-term, sustainable financial security for Newfoundland and Labrador.

We have turned a financial corner, and our economic prospects have never been brighter. We are soon to become a have province, and finally Newfoundland and Labrador is being recognized for the long-standing contributions we have made to this the federation. These contributions will continue and expand as the Hebron project comes on stream.

With this formal Hebron development agreement in place, all parties now have the clarity and certainty to move forward with confidence and optimism in developing this project in a timely manner.

As a partner in this agreement, our government is extremely pleased to see this project come to fruition on terms that will truly provide meaningful and long-lasting benefits to the people of the province.

In addition, I would like to reaffirm our commitment both as a government and a partner, to ensuring the Hebron project moves forward in a safe and environmentally friendly manner.

I thank our negotiating team for their tireless efforts and dedication to this process over the past year, and in particular, the past several months.

Someone once said that, �Determination, patience and courage are the only things needed to improve any situation.� And those are the very characteristics exhibited by our team that resulted in our success today.

Thanks are also due to their families. These individuals have spent many hours away from home over the past number of months finalizing today�s historic agreement that will bring tremendous benefits to the people of this province. Their sacrifices of time and effort will help shape our collective future.

I would like to take just a moment to acknowledge the core negotiating team.

The team consists of officials from the Department of Natural Resources, Department of Justice, the Energy Corporation and our outside legal counsel. They are here to day, and I ask them to stand.

This team was fully supported by officials throughout government and the Energy Corporation, including the Departments of Natural Resources, Justice, Finance, Cabinet Secretariat and my staff. I invite each and every government official who participated in this success to also stand.

To our partners, we thank you for your commitment to this province and our burgeoning energy industry. We look forward with pride and confidence to working with you as �partners for success� as this project ramps up toward production.

Great partnerships may sometimes have rocky starts. But they almost always have successful conclusions.

As JFK once said, ��a rising tide lifts all the boats. And a partnership, by definition, serves both partners, without domination or unfair advantage. Together we have been partners in adversity - let us also be partners in prosperity.�

I look forward to being your partner in prosperity.

To the people of our province, I give my most sincere thanks. It is because of your faith in our government, your newfound attitude of optimism in our future, and your resounding vote of confidence in our new approach that we have been able to achieve this monumental agreement and welcome the major benefits that it will mean for you, your families, your communities and all of us.

Churchill said it best, �If we are together nothing is impossible; if we are divided all will fail.�

We stood boldly together in the face of nay-sayers; we raised the bar; we stood firm; and we won the respect of the energy industry and, most importantly among them, the fine entrepreneurs who we are now proud to call our partners and our friends.

Thank you for helping us make this tremendous day a reality. I have never looked forward to the future as much as I do today. It is a proud moment for us ll. Thank you.
 

News Release - Hebron Agreement Signals New Era in Province�s History