HIBERNIA SOUTH MOVES FORWARD

"This is about government as stewards of our resources ensuring their proper management in the long term, including maximizing overall benefits for the people of the province," NR Minister K Dunderdale, Jan 17, 2007

Not only are they ready to develop Hibernia South, but the partners proposing the expansion say that the project is just one of a possible six expansions that could occur tied to the Hibernia Gravity Based structure.

The proposed expansion could be up and operational by 2012. The Hibernia South partners filed the new application with the CNLOPB on August 28th. The board must complete an environmental screening before rendering a decision on the proposal. That proposal could take up to eight months to complete.

Hibernia was originally developed with estimated reserves of 525 million barrels of oil. The estimate has been upgraded several times since production began. It is now believed that there's as much as 1.3 billion barrels in the reserves. Hibernia was discovered in 1979 but did not go into production until 1997.

Late in 2006 the CNLOPB conditionally approved an application to develop Hibernia South. HMDC proposed to tap into an estimated 223 million barrels of reserves not part of the original Hibernia development plan.

In January of 2007, the Government of Newfoundland and Labrador rejected an application by the consortium to develop Hibernia South. The government told the CNLOPB at that time that the partners had not supplied enough information to permit a proper assessment of the project. Natural Resources Minister Kathy Dunderdale requested that the companies address concerns about benefit plans. The proposal lacked information on a tax regime, commercial arrangements between the companies involved and any impact that could have on future natural gas development.

Let's hope that the lines of communication with the province are much clearer this time around. I expect that the government will gain a 10 per cent ownership in Hibernia South to add to the Energy Corporation of Newfoundland and Labrador.

The Hebron partners and the provincial government signed off on that development just a few weeks ago paving the way for an increasingly cordial relationship with the energy sector.

The doomsday scenarios of the pundits that the Premier's campaign to ensure we gained more value from our limited non-renewable resources was misplaced. Williams' hard line did not make new oil projects too expensive and/or drive oil companies and their money away. Hugo Chavez must be jealous!