The Honourable Andrew Furey, Premier of Newfoundland and Labrador, today announced support for the Hibernia Project – the second proposal to be funded under the Oil and Gas Industry Recovery Assistance Fund. Premier Furey was joined virtually by the Honourable Andrew Parsons, Minister of Industry, Energy and Technology; the Honourable Seamus O’Regan, federal Minister of Natural Resources; and Stephen Edwards, President, Hibernia Management and Development Company Ltd. (HMDC).
HMDC will receive up to $38 million (approximately 40 per cent of total project costs) to restart well work, perform drill rig upgrades, and invest in new digital technology, resulting in an estimated 300,000 hours of work over an estimated 18 month period. The investment will result in 77 additional, full time equivalent (FTE) positions in 2021, and maintain employment for 44 FTE positions in 2021 and 27 FTE positions in 2022, for a total commitment of 148 FTE positions.
The $93.7 million project includes the following scopes of work:
• Restart Well Work – Restart well intervention activity to increase production and enable potential future drilling.
• Drill Rig Upgrade – Rig upgrades will unlock resources currently not reachable, and enable an additional 10+ years of future drilling.
• Digital Transformation – Implement offshore wireless connectivity though 5G LTE and pervasive WiFi to become a global leader in offshore technology. This will establish new specialized telecommunications services in Canada, developing expertise for offshore NL.
HMDC has submitted a proposal for an additional scope of work which is currently being evaluated. If approved, it would bring the total funding commitment for the Hibernia Project to $66 million.
On September 25, 2020, the Federal Government announced $320 million to be administered by the Province to support direct and indirect employment in the Newfoundland and Labrador oil and gas sector and activities that generate environmental and co-benefits. The Oil and Gas Industry Recovery Task Force, established by Premier Furey, was asked to develop recommendations on eligibility parameters and priority criteria for the fund.
The fund includes three target areas: maintenance of existing installations; increasing productivity in the basin; and accelerating investment. Key evaluation criteria for eligible proposals include employment impacts; amount of applicant contribution; environmental benefits, and sustainability.
A total of $288 million has been allocated for operators of existing offshore installations with the remaining $32 million allocated for projects to support the local oil and gas service and supply community.
The Provincial Government has received funding proposals from all project operators. The Hibernia proposal is the second to receive support from the fund, with a total of $79.5 million committed to date. Approved activities are funded on a reimbursement basis with funds disbursed as costs are incurred. All funded activities will take place in the province or in the offshore area.
The $32 million in funding for the local service and supply community will be allocated to approved applicants in response to a government issued, time-limited Call for Proposals which is expected to be released in the coming weeks.
Newfoundland and Labrador’s offshore oil and gas industry represents one of the lowest carbon per barrel footprints in the world. It has contributed more than $22 billion in royalties (to the end of 2019) and directly employed over 6,000 people as well as thousands more in supporting industries (at the end of March 2020).
The agreement between the Government of Canada and the Government of Newfoundland and Labrador will work to re-affirm Newfoundland and Labrador’s commitment to achieve net zero carbon emissions. In May 2020, the Provincial Government committed to net zero emissions by 2050. Newfoundland and Labrador fully supports protecting the environment, reducing carbon emissions and achieving net zero by 2050. In support of the Provincial Government’s commitment, the well work and rig upgrade work will reduce greenhouse gas (GHG) intensity at Hibernia; the digital technology will enable remote execution, real-time analytics, and enhanced reliability leading to flare reduction and logistics efficiencies at Hibernia.
Quotes
“We are pleased to announce the second project under the Oil and Gas Industry Recovery Assistance Fund to support the Hibernia project. This project will create and maintain jobs in the near term for Newfoundlanders and Labradorians and create a boost across a number of supply and service sectors including well services, engineering, procurement, fabrication, construction, logistics and telecommunications.”
Honourable Andrew Furey
Premier of Newfoundland and Labrador
“As we continue to work towards providing support that will benefit the oil and gas industry of our province, today’s announcement is another step in the right direction. The work proposed by HMDC will create employment for our oil and gas industry workers and create new cutting-edge technology in our offshore, allowing us to remain globally competitive.”
Honourable Andrew Parsons
Minister of Industry, Energy and Technology
“We believe in the future of our offshore and in the people who build it. Today’s announcement on how our government’s investment will be put to work is welcome news. We are proud of our offshore, and proud of its workers.”
Honourable Seamus O’Regan
Minister of Natural Resources and MP for St. John’s South-Mount Pearl
“Hibernia isn’t immune to the global challenges and market conditions caused by the COVID-19 pandemic. We reduced spending in 2020 and this has impacted our contractor complement and drilling activities. We have an opportunity to change direction with this funding announced today, to introduce more than $93 million of new activity and spending and that will be felt by industry overall.”
Stephen Edwards
President, Hibernia Management and Development Company
Issued by the Government of Newfoundland and Labrador on December 23, 2020.
