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Cablegate: Newfoundland-Labrador's Offshore Hebron Project Going

VZCZCXRO5141
PP RUEHGA RUEHMT RUEHQU RUEHVC
DE RUEHHA #0060 2331908
ZNR UUUUU ZZH
P 201908Z AUG 08
FM AMCONSUL HALIFAX
TO RUEHC/SECSTATE WASHDC PRIORITY 1324
RUEHOT/AMEMBASSY OTTAWA PRIORITY 0556
INFO RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHHA/AMCONSUL HALIFAX 1412

UNCLAS HALIFAX 000060

SIPDIS

STATE FOR WHA/CAN, EB/ESC/ISC
USDOE FOR IA (DEUTSCH)

E.O. 12958: N/A
TAGS: EPET ENRG PGOV HEBRON CA
SUBJECT: NEWFOUNDLAND-LABRADOR'S OFFSHORE HEBRON PROJECT GOING
FORWARD

REF: HALIFAX 0045

1. SUMMARY: Premier Danny Williams of Newfoundland-Labrador has
signed a lucrative deal with a Chevron-led consortium of oil
companies to develop the Hebron oil field. Daily production
will be 150,000 to 170,000 barrels of oil with the majority
available for export to the U.S. market. The first oil is
expected to flow from the project sometime between 2016 and
2018. END SUMMARY.

2. The Government of Newfoundland-Labrador has successfully
concluded an agreement to see the Hebron Oil field developed,
making this the province's fourth offshore oil project (reftel).
On August 20 Premier Danny Williams, accompanied by his Natural
Resources Minister Kathy Dunderdale, signed the deal with Hebron
project partners, Chevron Canada (the designed project
operator), Exxon Mobil, Petro-Canada and Statoil-Hydro Canada.
With estimated recoverable reserves in the range of 400 million
to 700 million barrels, Hebron will have a daily production of
150,000 to 170,000 barrels of oil, the majority of which will be
available for export to the U.S. marketplace. Revenues to the
province will be approximately $28 billion, adjusting for
inflation, over the 20-25 year lifespan of the project.
Construction of the Hebron gravity-based production platform and
spin-offs will create an estimated 3,000 jobs. The first oil is
expected to flow from the project sometime between 2016 and
2018. Full details of the agreement including the fiscal,
benefits, and construction arrangements are available on the
province's web site:
www.releases.gov.nl.ca/releases/2008/exec/082 0n04.htm

3. Comment: Accolades are already pouring in for Premier
Williams, praising him for his dogged determination to get his
province the best possible deal on development of its natural
resources. The Premier's stance to hold out for a more lucrative
deal on Hebron had put him at odds, not only with the oil patch,
but often with local industry stakeholders who were anxious to
see the Hebron project move along. Now all that is forgotten
with one commentator saying there is nothing but smiles around
St. John's. While it will take some time to analyze all the
details of what the Premier calls a breakthrough agreement for
his province, one thing that is immediately apparent is that
Hebron will push the Premier's approval rating sky high. With
87 percent of the voters already approving of his leadership,
any increase will guarantee the Premier a unique place in the
province's history books. End Comment.

FOSTER

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