Hibernia receives government funds

$93.7-million N.L. project involves restarting well work, drill rig upgrades

The Hibernia project received an early Christmas gift from government Wednesday that will upgrade infrastructure and boost employment.

Hibernia Management and Development Company Ltd. will receive $38 million from the Oil and Gas Industry Recovery Assistance Fund to restart well work, conduct drill rig upgrades and invest in digital technology. It's the second proposal approved under the $320-million federal fund, following an announcement this month of $41.5 for Husky Energy's stalled West White Rose project.

HMDC'S proposed work has a total cost of $93.5 million, with the government contribution representing about 41 per cent of that amount.

Stephen Edwards, president of Hibernia Management and Development Company Ltd., joined Newfoundland and Labrador Premier Andrew Furey, federal Natural Resources Minister Seamus O'regan and Industry, Energy and Technology Minister Andrew Parsons for Wednesday's announcement. Edwards said the activities, scheduled to take place over the next 18 months, simply would not have happened if not for support from the fund.

"Our joint investment in well work, drill rig upgrades and digital technology will help get us through this current downturn and position Hibernia for success as we emerge from it," he said.

The impact of commodity price turmoil and low demand for oil as a result of the pandemic has hurt the Hibernia project. HMDC reported 2020 first-quarter employment for Hibernia of 1,479 full-time equivalents. By the third quarter, that figure was down to 840.

Likewise, spending has taken a tumble, with the value of Hibernia-related purchase orders falling from $63.4 million in the first quarter of this year to $21.5 million in the third quarter.

JOB IMPACT

According to Wednesday's announcement, HMDC'S proposal will support 148 full-time equivalent positions.

Edwards said the well work restart will lead to immediate jobs and increase production, likewise increasing royalties for the province.

Drill rig upgrades would allow HMDC to drill deeper for resources, creating the potential for 10 or more years of additional drilling.

Hibernia drilling activity has been grounded for months, and Edwards did not indicate whether it will resume in the near term.

HMDC has an additional funding proposal awaiting evaluation. Edwards would not comment specifically on what it entails but said the company looks forward to working with government as it assesses the plan.

Furey said Hibernia's proposal will reduce greenhouse gas intensity at the site.

"Supporting our offshore oil and gas industry ensures some of the lowest-emission production in the world can continue to be a part of the global energy mix," he said.

Parsons said the news was good for the province.

"The jobs that this funding supports will obviously help many families across our province and will provide a boost to our economy," he said, adding that two or three proposals are still under evaluation and there is about a year to go before the submission deadline.

HMDC is jointly owned by a variety of oil and gas companies, with Exxonmobil Canada holding just over one-third of its shares.