First oil pumped at Hebron offshore platform
Natural Resources Minister Siobhan Coady says royalties to province will come 'over time'
ExxonMobil confirmed Tuesday that the Hebron offshore oil platform has produced its first oil.
Through a live video link from the platform, offshore installation manager Paul Dwyer announced that the facility had pumped what is expected to be the first drop of hundreds of thousands of barrels of oil.
"On behalf of ExxonMobil Canada and all of the workers here on the Hebron platform, I'm very pleased to announce that as of 11:03 on November 27th, the Hebron platform successfully and safely achieved first oil," he said.
"This is a very important and impressive milestone. It's what we came here to do, and all of the workers at the platform were very excited to share this news with you."
The official announcement of first oil from the Hebron platform <a href="https://twitter.com/hashtag/cbcnl?src=hash&ref_src=twsrc%5Etfw">#cbcnl</a> <a href="https://t.co/Q8MgLo6acS">pic.twitter.com/Q8MgLo6acS</a>—@PeterCBC
The milestone was reached a month ahead of schedule and to celebrate, all of the staff who worked on the project were given jackets for the event at ExxonMobil's office at Cabot Place in St. John's Tuesday morning.
Right now, the platform is drilling one well but in coming years as it reaches full capacity it will be drilling 20 or 30 wells and producing 150,000 barrels of crude per day, according to ExxonMobil.
The $14-billion platform was towed to its site 350 kilometres southeast of Newfoundland in June after seven years of construction at Bull Arm, Trinity Bay.
The Hebron oil field was first discovered in 1980, and is estimated to produce more than 700 million barrels of oil throughout the lifespan of the project.
The structure is 278 metres high, has a 130-metre diameter through the base, weighs 750,000 tonnes and has living quarters for 220 people.
The platform took 40 million work hours to build, and it's expected to produce 150,000 barrels of oil per day at peak production.
There's cake and grey fleece jackets for all the staff <a href="https://twitter.com/hashtag/cbcnl?src=hash&ref_src=twsrc%5Etfw">#cbcnl</a> <a href="https://t.co/PjBMEIrshc">pic.twitter.com/PjBMEIrshc</a>—@PeterCBC
While the oil may be flowing at the platform, the revenue for the Newfoundland and Labrador government won't be for some time.
That's because the first money generated by Hebron will go towards paying off the cost of building the platform, which was agreed to by the province and ExxonMobil in the early days of the project.
Revenue to 'grow over time'
But provincial Natural Resources Minister Siobhan Coady says as production ramps up government will get billions of dollars over the course of the project.
"It will certainly be a number of years before we get the larger revenues in terms of the royalties," she told CBC following the announcement.
"They will grow over time because the capacity of the oil and gas will develop and they'll also have the payback of the platform itself."
Carbon pricing and the bottom line
As Newfoundland and Labrador prepares to announce its provincial carbon pricing plan this spring, it remains to be seen how that will affect the bottom line of the Hebron project.
Paul Barnes, the director of Atlantic Canada and Arctic for the Canadian Association of Petroleum Producers, is advising the province to be cautious in its plan so as not to scare away future investment in the oil and gas industry.
Barnes said new projects like Hebron use state of the art methods such as reduced-flaring technology which redirects gas into the running of the platform instead of just it burning off.
"The best thing about new projects, especially Hebron, is they are availing of the best available technology when it comes to emissions," he said
"Our emissions are generally low compared to older platforms or other jurisdictions."
With files from Peter Cowan