ST. JOHN’S, N.L. – The proposed Hebron oil project off Newfoundland could generate $20 billion for the province over 30 years, says a public review that supports the development – with conditions.
A report released Tuesday by the Hebron Public Review Commission says the project should only proceed with clearer commitments on safety, environmental protection and local benefits such as skilled jobs and supply contracts.
Commissioner Miller Ayre told a news conference that aspects of the Hebron application by a group of oil companies led by ExxonMobil Canada “are incomplete, withheld or not supported.”
Such gaps should be filled as a condition of approval from the Canada-Newfoundland and Labrador Offshore Petroleum Board prior to government sanction, Ayre said.
“There’s lots of wrinkles, but this is a good project and it will go ahead,” he said. “The C-NLOPB and those who are regulating it will get some level of information that’s better than it is now.”
The review makes 64 recommendations aimed at environmental protection, providing local jobs and ensuring maximum benefits for the province. It was required before the province’s fourth major offshore oil site is approved.
The Hebron oilfield 350 kilometres east of St. John’s is estimated to hold up to 700 million barrels with first oil expected around 2017. The site will be crucial to offset waning production at other installations on which the province relies for about one-third of its revenues.
Development partners are led by ExxonMobil Canada and include Chevron Canada, Suncor Energy, Statoil Canada and provincial Crown corporation Nalcor Energy. Newfoundland and Labrador has a 4.9 per cent equity stake in the project.
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Ayre called for “significant improvements” to the development application, including the benefits plan, the socio-economic impact statement and the safety plan.
“Safety and, especially helicopter safety, should remain a top priority,” Ayre said.
The board’s safety officer must ensure choppers that take workers offshore comply with existing and revised regulations as described in rulings from the Transportation Safety Board of Canada, federal and international regulators, Ayre said.
The Transportation Safety Board has recommended offshore helicopters that can run without oil in the main gearbox for 30 minutes, but regulations do not yet make that requirement.
A union leader representing offshore workers also called for safer helicopters during three weeks of hearings last fall. The issue has been a top concern, especially since the 2009 crash of Cougar Flight 491 that killed 17 of 18 people on board.
Ayre said industry indications are that gearbox improvements will meet that 30-minute run-dry requirement as Hebron develops over the next four years.
Still, the offshore regulator could well require that helicopters can run dry even longer, he said.
Officials with the offshore regulator and ExxonMobil Canada said Tuesday they are reviewing the non-binding report.
Ayre repeatedly cited the need for more detailed labour plans to ensure enough skilled workers for Hebron as it competes with other megaprojects. They include the proposed $6.2-billion Muskrat Falls hydroelectric development in Labrador.
The province has already agreed that two-thirds of the Hebron platform or “topsides tonnage” can be built outside the province. But Ayre said every effort should be made to ensure that other construction and assembly work worth $100 million is done locally.
He also called for improved environmental protections. Extracting and processing the heavy oil found in the Hebron field – other sites off Newfoundland produce lighter crude oil – will require more water that will then have to be treated, Ayre said.
It should be processed using “international regulations to mitigate environmental risks,” says the report.
It also recommends a publicly transparent process to research effects of offshore pollution on sea birds, a measure environmental activists have long awaited.
And the review tackled a concern that contracting procedures could unfairly disadvantage provincial suppliers which are to be given a reasonable chance to land deals.
“Full and fair opportunity can only be assured, however, if there is timely release of detailed procurement forecasts, expressions of interest, bidders’ lists and contract awards,” says the report.
It recommends that ExxonMobil and partners review pending contract notices “to ensure that, where the capacity of local industry permits, bid packages are scaled to suit that capacity.”
The report also stresses that contracts should not necessarily go to the lowest bidder. It cites revised guidelines from the offshore regulator that “first consideration shall be given to services provided from within the province and to goods manufactured in the province” where they are “competitive in terms of fair market price, quality and delivery.”
Lana Payne, president of the Newfoundland and Labrador Federation of Labour, has pushed for another $300 million in the Hebron benefits plan for skills training, early learning and affordable housing.
Failure of ExxonMobil and the other partners to provide more detailed labour, safety and benefits plans is “arrogant,” she said.
Federal and provincial offshore regulators need to be tougher, Payne added.
“Otherwise, we won’t get the benefits out of Hebron that Newfoundlanders and Labradorians are expecting or deserve.”
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