Journey to Hebron – Newfoundland Offshore is a BOOM!

First discovered in 1981, the Hebron Asset sits squarely in the midst of Newfoundland’s other offshore reserves in the Jeanne d’Arc Basin—around 340 kilometers east-southeast from St. John’s. Situated north of Terra Nova and south of Hibernia, Hebron is estimated to have 400-700 million barrels of recoverable resources at an approximate depth of 92 meters.

The Hebron Development Application is still under review by the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), but there is every indication the project will go forward. Recently, Miller Ayre, the public review commissioner, offered his qualified endorsement—suggesting the project should go forward, but offering 64 recommendations for the proponent.

“This is a good project. It is a good operator. There are lots of wrinkles, but it will go ahead,” he said.

That proponent is a consortium of five partners, including the government of Newfoundland and Labrador, to be led by ExxonMobil, which has a 36 percent stake in the project. Nalcor, the Newfoundland and Labrador Crown Corporation, has a 4.9 percent equity share—a major coup for former Premier Danny Williams when the deal was inked in the last decade.

Hebron’s resources will be extracted using a stand-alone concrete GBS, a construction which is slated to start at the Bull Arm Fabrication site in eastern Newfoundland in the fourth quarter of this year. Platform deployment and drilling should start in 2016, with the first oil predicted in 2017.

Wade Locke, an economist based at the Memorial University of Newfoundland, conducted a report for the government, which concluded that “The Hebron project … will contribute between 60-70 percent of the offshore royalties to the province during its peak production period from 2021 to 2035.” Or in absolutist terms, it amounts to about $20 billion in royalties and taxes over its lifespan—depending, of course, on the cost of oil and the strength of the Canadian dollar.

Newfoundland Premier Kathy Dunderdale said: “As a government, we negotiated successfully to give Newfoundland and Labrador companies first dibs at work on offshore oil projects, such as Hebron. We want local companies to capture as many of those contracts as possible, and we are working to ensure no opportunity to secure that work is left unexplored.”

Hebron will certainly be a major source of local employment, both directly and indirectly in the years to come. However, according to the Locke report, 40 percent of the employment generated by the project will be international— which means ample opportunities for anyone or any firm interested in the work.

Major contracts have been awarded to Kiewit-Kvaerner Contractors to manage the construction of the GBS and WorleyParsons to manage the frontend engineering and design of the topsides.

Kiewit-Kvaerner Contractors is a 50/50 partnership between Peter Kiewit Infrastructure Co. and Kvaerner/Aker. Kiewit is one of North America’s largest construction and mining operations, and Kvaerner/Aker is a highly regarded engineering and procurement firm. Aker has had a role in 20 GBS projects over the last 40 years and has specialized experience in subarctic endeavors. Kiewit and Kvaerner have worked together before in Newfoundland, partnering on the Hibernia GBS and the White Rose FPSO. KKC recently completed a bund wall, creating a drydock near the Bull Arm Fabrication site, and will continue to work on the GBS engineering until the project receives official sanction, slated for the third quarter of this year.

WorleyParsons, a global professional services firm, has been expanding into Canadian markets in the past decade, and has extensive experience in oil and gas engineering projects.

With five more years to the first gas, there remains plenty of work to be done. Both Kiewit-Kvaerner and WorleyParsons are soliciting expressions of interest on procurements, and as the project moves forward, they will be managing most of the contracting opportunities.

Individual trades people can seek employment directly through the main contractors or through the Newfoundland and Labrador Building and Construction Trades Council. Firms seeking procurement contracts should do so at bids.ca.

 Hebron Recent Contracts

Inspection Surveillance Services Awarded to GL Noble Denton Canada Ltd. on March 7, 2012
Inspection Surveillance Services Awarded to Spectrol Energy Services Inc. on March 7, 2012.
Inspection Surveillance Services Awarded to Intertek Moody on March 7, 2012.
Inspection Surveillance Services Awarded to SGS Canada Inc. on March 7, 2012