The Newfoundland and Labrador government said Friday the province will not lose any benefits even though the Hebron offshore oil project has scrapped a plan to build a pre-drilling structure.

Natural Resources Minister Kathy Dunderdale said that, under the 2008 benefits agreement between offshore oil industry operators and the province, the oil companies have until next summer to replace the cancelled fabrication work with other work of equal value, or compensate the province.

"If they are unable to identify an equivalent amount of replacement work by that time, then they will make a payment to the province equal to the value" of the work that's been cancelled, Dunderdale said. "We have made a commitment that we will use that money for a construction project that would benefit the oil industry."

The province announced the construction cancellation in a news release Friday morning.

"The project operator, ExxonMobil, has informed the provincial government that the original pre-drilling concept will be eliminated because it is uneconomic and has significant execution and schedule risks," the government release said. "As a result of this modification, the fabrication of the sub-sea drilling template and the components of the field mooring system and positioning and docking system will no longer be required."

No other parts of the Hebron agreement are affected, the province said.

Newfoundland and Labrador, through Nalcor Energy, holds a 4.9 per cent equity stake in the Hebron project.