The Honourable Danny Williams, Premier of Newfoundland and Labrador
Wednesday, August 20, 2008
(Please check against delivery)
Members of the House of
Officials and members of
Members of the business
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
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
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
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
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
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
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
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
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
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
I would like to take just a moment to acknowledge the core negotiating
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
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