March 5, 1998
(Executive Council)

Bull Arm site to be used for Terra Nova

Premier Brian Tobin announced today that a significant amount of work for the Terra Nova project will be carried out at the site formerly used for the Hibernia project at Bull Arm. PCL Industrial Constructors Inc., a Terra Nova Alliance member, will use the Bull Arm site to build various modules for the floating production vessel for the Terra Nova project. The $470 million Bull Arm site was handed over to the province from the Hibernia Management and Development Company (HMDC) after production reached the three million barrel threshold.

In making the announcement today, Premier Tobin was joined by Harvey Smith, President of Hibernia Management and Development Company; Alan Bodie, President of PCL Industrial Constructors Inc.; Mr. Vince Burton, Executive Member of the Newfoundland and Labrador International Building Trades Petroleum Development Association; Gary Bruce, Vice President of Offshore Operations for Petro Canada; and Judy Foote, Minister of Industry, Trade and Technology.

The Bull Arm Site Corporation (BASC), on behalf of the province, has now entered into a lease agreement effective March 2 that will allow PCL Industrial Constructors Inc. to reactivate the Bull Arm site, providing employment opportunities associated with the fabrication and assembly of components of the production system for the Terra Nova oil field.

Premier Tobin said: "I am pleased to see that a major portion of the topsides work for Terra Nova will be done in Newfoundland by Newfoundlanders at Bull Arm. Today's announcement means that we can build on the skills and expertise gained from the Hibernia project which will be applied to Terra Nova. I am confident that this work will be done on an internationally competitive basis, positioning the province to capitalize on other oil and gas opportunities in the future."

The Bull Arm Site Corporation leased Bull Arm Site to PCL for a period of 34 months for $1 per year. PCL will pay all costs related to maintenance and operations. As a result, government will not incur an estimated cost of $2.5 to $3 million per year for maintenance and security, which it would otherwise have had to pay if the site had remained unoccupied. PCL intends to make certain modifications and upgrades to the Bull Arm Site to improve utilization and cost effectiveness of any work carried out. These costs, at approximately $2.5 million, will be borne solely by PCL.

The work associated with fabrication, hookup and commissioning at Bull Arm will account for at least 70 per cent of all the topsides work for the Terra Nova FPSO (floating production storage and offloading) vessel. This will include two major modules (the water injection/utilities module and the separation/compression module), each in excess of 1,000 tonnes. Also included is the fabrication of the flare tower and other topsides components. In total, approximately 3,000 tonnes of fabrication work will take place.

"We are pleased that Bull Arm is one of two main sites for fabrication work for Terra Nova," said Alan Bodie, President of PCL Constructors Inc. "While we assessed a number of local, national and international yards for fabrication capability, selecting Bull Arm for topsides fabrication meant we could deliver on Terra Nova's benefits commitments while maintaining our focus on cost and schedule."

In addition to the above, all of these modules and components, along with other modules fabricated outside the province, will be installed, hooked up and commissioned on the FPSO at Bull Arm. The FPSO is scheduled to arrive at Bull Arm from South Korea in January of the year 2000, and installation work will take place. Actual fabrication work on the Terra Nova modules will commence in the fourth quarter of this year.

The work package will cost approximately $100 million and result in approximately 1.6 million person hours of employment. Peak employment is estimated at 600 people in the summer of 1999.

The BASC and HMDC have been working cooperatively over the past several years with the objective of having a smooth transition in the handover process of the site from HMDC to the provincial government. Final inventories and inspection were carried out and all legal agreements between the province and HMDC have been finalized providing for the handover of the Bull Arm Site for $1.

Mr. Smith said: "The Bull Arm site is a truly world class fabrication and assembly facility which we are passing on in excellent condition. We take many memories with us from the seven years spent on site constructing the Hibernia offshore platform, but the one which will live on is the people. Their commitment and their determination to show the world that they had the skills and resolution to succeed was outstanding."

Contact:

Heidi Bonnell, Premier's Office, (709) 729-3564
Mona Rossiter, Terra Nova, (709) 724-2962
John Doody, Industry, Trade and Technology, (709) 729-0050