Natural Resources
January 17, 2007

Province Does Not Approve CNLOPB�s Decision on Hibernia South

The Provincial Government announced today it has not approved a Canada-Newfoundland and Labrador Offshore Petroleum Board (CNLOPB) decision which would have allowed an amendment to the Hibernia development plan.

On December 19, 2006, the CNLOPB informed the province of its decision to conditionally approve a May 17, 2006, application to amend the development plan for the Hibernia oil field. In its application, the Hibernia Management and Development Corporation (HMDC) sought permission to begin extracting oil from an area known as Hibernia South. The CNLOPB currently estimates that Hibernia South contains approximately 223 million barrels of recoverable oil and there is potential that the reserve is considerably larger.

"There are too many important unanswered questions in the application as put forward by HMDC," said the Honourable Kathy Dunderdale, Minister of Natural Resources. "Without additional information, we cannot make an informed decision on whether the amendment to the development plan is in the best interests of the people of Newfoundland and Labrador."

While the CNLOPB decision includes conditions which support the province�s position that key information is missing from the application, the province does not agree that attaching conditions is the best mechanism to ensure the province�s concerns are addressed.

"In some cases, these conditions could effectively transfer the province�s decision-making power of this particular development to the CNLOPB. We are not prepared to abandon that responsibility," said Minister Dunderdale. "Furthermore, the conditions attached to the CNLOPB decision very clearly reflect that critical information has not been provided by the proponents. It would not be prudent for the province to approve this decision, given this lack of information."

Among the reasons why the province is not approving the CNLOPB decision are:

  • The province needs a better understanding of how HMDC plans to resolve concerns regarding the platform�s current processing capacity and limited slot availability and the impact those solutions will have on the overall development of the Hibernia field.
  • The province needs more information on what options exist for other modes of development to extract the oil from Hibernia South. This may have implications for overall benefits.

  • The lack of a Benefits Plan Amendment. This is a departure from the normal process and the CNLOPB did not require it in the "interest of expediency."
  • The province has not been advised if commercial arrangements have been concluded by the licence holders. If arrangements have been reached, the province has not been advised of those terms. Such commercial arrangements could impact royalties and taxes from the proposed development.

"We fully support the CNLOPB�s decision that these pieces of information are important, but we disagree that we should approve first and get information later," said Minister Dunderdale. "This is about government as stewards of our resources ensuring their proper management in the long term, including maximizing overall benefits for the people of the province."

When the Hibernia development was approved in 1986, the license-holders estimated the field contained 522 million barrels of recoverable oil. Since then, those estimates have increased significantly. Today, the CNLOPB estimates that recoverable reserves total 1.2 billion barrels with the potential to reach 1.9 billion.

The provincial and federal governments have the right to approve or not approve the decision because it is a fundamental decision under the Accord Act, but the province has final say on this decision.

"We are very encouraged by the company�s commitment to developing Hibernia South," said Minister Dunderdale. "We look forward to working with the project owners to resolve the province�s concerns."

A copy of the minister�s response to the CNLOPB can be accessed at: //


Media contact:
Corey Snook
Communications and Marketing Manager
Department of Natural Resources
709-729-5777, 728-2837

2007 01 17                                                        1:45 p.m. 

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