A new agreement to search for oil in deep waters northeast of St. John's is an important step forward for Newfoundland's petroleum industry, an executive said Friday.

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The drilling ship Stena Carron is expected to arrive later this year to work on an exploratory well in deep waters northeast of St. John's. (CBC)

"It's a very significant announcement," Mark MacLeod, Chevron's Atlantic Canada manager, told CBC News.

"We're pretty excited about that. [There's] an opportunity there … We're committed to the region, we believe in the region, we believe it's highly prospective."

Chevron Canada Resources is the operator of the drill and has a 65 per cent stake in the project, which will explore part of the Orphan Basin, more than 400 kilometres northeast of St. John's. Its partners in the drill are Statoil Canada Ltd. and Repsol E&P Canada Ltd.

The three fields now in production off Newfoundland are in the Jeanne d'Arc Basin, further south.

In 2010, Chevron drew criticism from environmental groups for a separate, record-setting deepwater drill in the Orphan basin. The exploration happened to come just weeks after a catastrophic deepwater blowout in the Gulf of Mexico.

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Mark MacLeod: 'You need exploration to lead to the next big development.' (CBC)

The Lona 0-55 drill, though, went off without incident, and MacLeod said Chevron wants the same result in the forthcoming exploration.

"Our focus right now is drilling and planning for a safe and incident-free operation, just like the last well in the Orphan Basin," MacLeod said in an interview.

MacLeod said the exact depth of the drill has not yet been determined, and Chevron is not revealing the budget for the exploration, which will again use the Stena Carron drill ship that had worked on the Lona 0-55 field.

"The cost of the well is proprietary right now," MacLeod said. "These wells, though, I will say are very expensive."

Newfoundland and Labrador's economy has undergone profound changes since Hibernia, the first field to go into production, drew first oil in 1997.

The industry has been concerned, though, that the exploration for Hibernia and other fields — including Hebron, a fourth field which is now being prepared for production — was undertaken decades ago.

MacLeod said Chevron is keen to learn more about what the company thinks is an excellent prospect.

"It's important to say that you need exploration to lead to the next big development," he said.