An agreement to develop the Hibernia South offshore oilfield should be complete this year, Premier Danny Williams said Tuesday in an announcement that builds on his increasingly cordial relationship with the energy sector.
More than a year ago, the Newfoundland and Labrador government rejected a proposal to develop the project, triggering fears that Mr. Williams was alienating the oil industry and scaring away investment.
Mr. Williams, speaking Tuesday to an offshore oil convention in St. John's, said he intends to turn his attention to the Hibernia South project once a deal to develop the Hebron oilfield is finalized, which is expected soon.
"Now is not the time to rest on our past achievements," Mr. Williams told the Newfoundland and Labrador Oil and Gas Industries Association annual conference.
"We fully expect Hibernia South to be concluded by the end of this calendar year."
After his speech, Mr. Williams acknowledged his government's commitment to gain 10 per cent ownership in all future petroleum developments could be a sticking point for the consortium behind Hibernia South.
But he confirmed there has been a more co-operative spirit between his government and the oil industry as of late.
"There's a very good rapport and very good relationship," he said. "I would prefer not to talk about any discussions that are going on because it wouldn't be fair to the companies."
In January 2007, the provincial government overturned a conditional approval granted by a federal-provincial regulatory board to develop Hibernia South, which is estimated to contain 223 million barrels of recoverable oil.
At the time, the government said the proposal lacked information on a tax regime, commercial arrangements between the companies involved and any impact it could have on future natural gas development.
The application was submitted in 2006 by Hibernia Management and Development Corp., which includes ExxonMobil, Chevron, Petro-Canada, Norsk Hydro, Murphy Oil and Canada Hibernia Holding.
ExxonMobil Canada president Glenn Scott said he was optimistic the Hibernia South negotiations would progress swiftly.
"With everybody being aligned and working as hard as they can, I think it's going to move quite quickly."
Mr. Scott said the consortium would have further talks with the province before refiling its application to the Canada-Newfoundland and Labrador Offshore Petroleum Board.
Bob Cadigan, president of the Newfoundland and Labrador Oil and Gas Industries Association, said energy companies are more willing to discuss projects with the province than they were a year ago.
"We're really bullish, really optimistic," Mr. Cadigan said. "Hebron - we can taste it. It's right around the corner."
Speculation was rampant that Mr. Williams would announce a finalized deal to develop Hebron, which he tentatively announced last summer.
"I am fully confident that we will have positive news on that front in the very near future," Mr. Williams said Tuesday. "Stay tuned, folks. Good things come to those who wait and Hebron is very, very, very much on the horizon."
In August, Williams agreed to spend $110-million to secure a 4.9 per cent equity stake in Hebron - a first for the province.
That project is estimated to contain up to 700 million barrels of crude.
Newfoundland's three offshore oil projects are expected to surpass one billion barrels of oil in production this year.
Hibernia, Newfoundland's first offshore development on the Grand Banks, began producing oil in November 1997.