Hibernia size boosted, as eyes move to south field
Last Updated: Monday, January 30, 2006 | 5:24 AM ET
CBC News
A partner in the Hibernia offshore development has confirmed that the size of the oil field is well over a billion barrels, but won't comment on whether an adjacent territory called South Hibernia is involved.
Petro-Canada has revised its estimate of recoverable oil at the field to 1.2 billion barrels, an increase of about 250 million barrels over previous estimates.
The estimate means the production life of the project has been extended, and that benefits – including revenues that will flow to government – will be greater.
The Hibernia platform began producing oil in 1997.
Ron Brenneman, chief executive officer of Petro-Canada, revealed the revision during the company's conference call last week with investment analysts to discuss the fourth-quarter results.
Analyst Mark Gilman of Benchmark Capital asked where the new reserves are located, "in particular, whether the increase in Hibernia at all relates to the South Hibernia."
Brenneman would only say several factors contributed to the increase.
"There's a piece of that that relates to improved performance in already drilled blocks," Brenneman said.
"There's a piece of that that relates to some probable extensions. So we kind of roll that all in together, and the way we do the study, it's not really possible to break that out."
Without getting a direct answer to his question, Gilman can only speculate where the extra oil is coming from.
"The number itself is so big that one has to come to the conclusion that a pretty good chunk of it must be related to the southern extension," he said.
The estimated size – and value – of the Hibernia field has grown substantially over the years.
When the original deal was negotiated, Hibernia's operators pegged the recoverable size of the field at no more than 650 million barrels of oil.
Only two years ago, that estimate was about 750 million barrels, and a year ago it was raised to about 940 million barrels.
Not only oil analysts are intrigued by the potential of the South Hibernia field.
The Newfoundland and Labrador government is also watching the play carefully, as a new field could lead to a new royalty regime, and one that is richer than the original Hibernia deal.
The provincial government accepted a comparatively low royalty rate on Hibernia during negotiations on the province's first offshore field, in return for the jobs that came with construction of the gravity-based platform.
The Hibernia field was announced in 1979. Years of haggling – including court battles between the federal and provincial governments – ensued before the 1990 agreement that launched the deal.
- FROM CBC ARCHIVES: The Hibernia project is launched
Development was delayed by the 1992 pullout of one of the consortium's partners. Hibernia eventually pumped its first oil in 1997.
Terra Nova, which was discovered in 1987, began production in 2002.
White Rose, the province's third field, went into production in November 2005.
Eyes now are on the Hebron field, as well as on exploration activity in the offshore.
- FROM DEC. 16, 2005: Petro-Canada spells out exploration plans
