Kennedy says he’s ready to fight for He­bron

The Southern Gazette - - NEWS - BY JAMES MCLEOD TC ME­DIA

In a sig­nif­i­cant re­ver­sal for the provin­cial govern­ment, Nat­u­ral Re­sources Min­is­ter Jerome Kennedy said Thurs­day he in­tends to fight to make sure as much work as pos­si­ble on the He­bron oil plat­form is done in the prov­ince.

Mr. Kennedy said how much fabri­ca­tion is done in the prov­ince has be­come a stick­ing point be­tween the govern­ment and Exxon-Mo­bil, the lead com­pany on the project.

Un­der the He­bron De­vel­op­ment Agree­ment, three of the mas­sive mod­ules mak­ing up the pro­duc­tion plat­form are to be built in the prov­ince if it’s pos­si­ble.

The min­is­ter said “(Exxon) still, as of a cou­ple weeks ago, take(s) the po­si­tion that one mod­ule has to be built out­side of the prov­ince.

“I’ve in­di­cated to them in no un­cer­tain terms and in very strong lan­guage that we, as a prov­ince, as a peo­ple, are to ben­e­fit from our nat­u­ral re­sources.”

The dis­agree­ment over fabri­ca­tion comes as the He­bron oil de­vel­op­ment took a ma­jor step for­ward last week, with both fed­eral and provin­cial govern­ments for­mally giv­ing their bless­ing for the de­vel­op­ment to pro­ceed.

The Canada-New­found­land and Labrador Off­shore Pe­tro­leum Board (CNLOPB) an­nounced Thurs­day the He­bron de­vel­op­ment ap­pli­ca­tion has been ap­proved, a ma­jor de­ci­sion that needed to be rat­i­fied by both lev­els of govern­ment.

Mr. Kennedy said “It’s the green light for the project, but there are still is­sues that we have to fi­nal­ize such as the gen­der di­ver­sity pro­gram and the He­bron ben­e­fits agree­ment. The other is­sues that have to be fi­nal­ized, we will work our way through them, but this means that He­bron is a go.”

Each of the mod­ules rep­re­sents be­tween $60 mil­lion to $100 mil­lion worth of work. It’s a big chunk of work, but only a frac­tion of the $4.66 bil­lion in cap­i­tal costs Exxon and its part­ners will have to spend be­fore first oil in 2017.

Orig­i­nally, the provin­cial govern­ment en­vi­sioned two of the mod­ules would be built at the Peter Kiewit Off­shore fa­cil­i­ties in Marys­town, and one would be built at the fabri­ca­tion site at Bull Arm.

But in Novem­ber, Kiewit an­nounced it would only be pre­pared to build one of the mod­ules, not two.

In Jan­uary, af­ter meet­ings with Kiewit, Mr. Kennedy seemed to in­di­cate Marys­town and Bull Arm could each only build one of the mod­ules. At the time, he left the door open for the third to be built some­where else in the world.

“A cou­ple months ago, I was some­what equiv­o­cal. I said, ‘ Well, you can’t build it in Marys­town, maybe there’s no choice’.” That’s not the case any­more.”

The provin­cial govern­ment let Exxon know a few weeks ago as far as it’s con­cerned, two of the mod­ules can be built at Bull Arm.

If Exxon dis­putes that as­sess­ment, it can sub­mit a ‘ca­pac­ity re­port’ ar­gu­ing it’s not pos­si­ble for all three mod­ules to be built here. If that hap­pens, there’s a dis­pute res­o­lu­tion process laid out in the de­vel­op­ment agree­ment, and the govern­ment and the com­pany can set­tle it that way.

Ul­ti­mately, Exxon could de­cide to build the third mod­ule some­where else any­way, but de­pend­ing on how the dis­pute res­o­lu­tion process goes, they could have to pay penal­ties to the govern­ment for get­ting the work done out­side New­found­land and Labrador.

Mr. Kennedy said he doesn’t be­lieve any of this will hold up the sched­ule for the over­all He­bron project.

“There’s al­ways been the tar­get of tow-out in 2016 and first oil in 2017. From our per­spec­tive, noth­ing is on hold.”

St. John’s Tele­gram

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