The Hebron megaproject and other large-scale developments should be able to survive the ongoing turmoil in the world's financial markets, Newfoundland and Labrador's premier says.
Premier Danny Williams said even though oil companies are shelving expansion plans in Alberta's tarsands, he is not concerned about a similar effect in the province's offshore oil industry.
"You know, I think we'll be fine," Williams told reporters Tuesday.
"The bigger projects, the tarsands, are much more marginal. The costs have gone up there, escalated with labour costs and material costs," Williams said.
"Hebron is a very viable project. It's viable at a lower price than oil is right now, and I have no reason to believe that it won't go ahead, as will some of the other projects on the horizon."
Hebron is poised to become the fourth field off Newfoundland's east coast to go into productions.
Williams and the Hebron partners, including Exxon Mobil Canada and Chevron Canada Resources, announced a deal in August to develop the field.
Construction, though, is not expected to start on the project until 2012, and first oil is not expected until 2017.
The government estimated at the time that Hebron will produce about $20 billion in royalties for the provincial treasury, although that is based on world oil prices sticking at an average of $87 US per barrel. Oil was significantly more expensive when the deal was announced, but was trading Wednesday below $60 US per barrel.
The Newfoundland and Labrador government has a 4.9 per cent equity stake in the Hebron project.
The global financial crisis is causing some turbulence in the provincial economy.
Last month, the owner of the North Atlantic refinery — Calgary-based Harvest Energy Trust — said it was delaying a planned expansion at its operation in Come By Chance, until turmoil in world markets passes.
As well, Newfoundland and Labrador Refining Corp., which is hoping to build a new refinery in the same area of Placentia Bay, is fighting for survival in Newfoundland Supreme Court, after losing financial backing earlier this year. The company said it is attempting to restructure its proposal so that it can seek new support once the financial crisis clears.