MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, FEBRUARY 2, 1998 (3)
EAST COAST EXPLORATION
FEATURE STORY
Resolution Near For Disputed Zone
Pat Doyle The Evening Telegram
Premier Brian Tobin is hopeful a boundary dispute which has left an offshore zone between Newfoundland and Nova Scotia dormant for 25 years could be resolved this year.
"Premier Russell McClellan and I have discussed it several times over the last two or three months," Tobin said Thursday in a media briefing following an address at the Newfoundland Ocean Industries Association's (NOIA) annual meeting.
"I'd prefer to see it resolved in 60 to 90 days," said the premier, adding, "I don't know if that's possible."
GULF CANADA RESOURCES, which has long been interested in exploring the zone, could be ready to start as early as this year, Tobin said. He said a number of other players have also indicated an interest.
"It is recognized the zone is highly prospective and there is a desire to resolve the matter to the mutual satisfaction of both provinces," he said.
"We realize that if the dispute remains unresolved, then nobody wins," said the premier. "So it's very much a live issue and we both want to resolve it as soon as possible."
In his address to the 150 representatives of business, industry and government, Tobin said the growing offshore oil and gas industry has begun to take on significance in terms of the province's overall economic growth.
"For Newfoundland and Labrador that means annual direct and indirect revenues from Hibernia (in royalties and taxes) of $45 million in the 1997-98 fiscal year."
That includes $8 million to $10 million in royalties, said the premier.
Tobin pointed out, however, under the equalization formula the province will lose $38 million to the federal government, for a net gain of $7 million.
The premier said that for the first couple of years as an oil producing province, the economy in general will benefit more than the government.
He said the royalty regimes provide for a payback period which allows project owners to recover capital costs from production revenue. During that period, the government's tax and royalty collections are low.
"But once this payback period ends, resource royalties rise as a share of project revenues."
Even then the province will lose as much as 84 cents in federal transfers for each dollar of revenue received from the offshore.
"For that reason, we must remain fiscally prudent and stay the course."
He said growth in fisheries and aquaculture, manufacturing and the information technology sector, coupled with oil and gas and mineral developments, has the province well positioned for the future.
"We are expected to top the country in economic growth this year and into the next century, " Tobin said.
"Once Terra Nova, Whiterose and Voisey's Bay join Hibernia in reaching production, the value of their combined output will be over $4 billion annually. That figure is nearly as much as the province's total exports last year."
FEATURE STORY
Glomar Wins Drilling Contract
Pat Doyle The Evening Telegram
A contract has been awarded for the drilling of an appraisal well at the Hebron site on the Grand Banks this summer.
A consortium of oil companies - MOBIL OIL CANADA, CHEVRON CANADA RESOURCES, PETRO-CANADA and NORSK HYDRO - announced the contract Thursday. Terms and value of the contract were not released.
The contract was awarded to Glomar International (Canada) Drilling Company, a firm owned by GLOBAL MARINE INC. of Houston, Texas for the semi-submersible currently known as the Vinlander.
Glomar Marine recently acquired the rig and plans to rename it.
The company also plans to establish an operations office in St. John's.
The Hebron-Ben Nevis oil field, 350 kilometres off Newfoundland and 30 kilometres southeast of Hibernia , was discovered in 1981 by Mobil.
"Drilling Hebron D-94 in July will be the first step in appraising the commercial viability of Hebron-Ben Nevis," the consortium said.
The consortium said it awarded the contract for Hebron D-94 and other possible wells to " enable the companies to move forward with their plans to identify Grand Banks oil developments to follow Hibernia and Terra Nova." The consortium recently acquired an additional four exploration licenses in the area.
"The well, three kilometres northeast of the Hebron I-13 discovery well, will take about 45 days to drill and test at a depth of 2200 metres," the companies said. The appraisal well was first planned for September 1997.
The Glomar Marine contract is for one year beginning July 1998 and enables the consortium to drill a number of wells on the Grand Banks. Details have not yet been determined.
There are options to renew the contract for a period of up to five years.
Premier Brian Tobin referred to the contract Thursday in an address to the Newfoundland Ocean Industries Association (NOIA).
Tobin said that as a further sign of their commitment, Petro-Canada and Norsk Hydro have set up offices in St. John's and Husky Oil plans to follow suit shortly.
"The establishment of these offices, together with the presence of Hibernia Management and Development Company Limited (HMDC), has completed the third apex of the oil and gas triangle which extends from Texas, west to Alberta and east to Newfoundland and Labrador."
FEATURE STORY
NOIA To Head Study Of Gas Potential
Pat Doyle The Evening Telegram
There is natural gas offshore Newfoundland just waiting to be developed, according to Stephen Henley, newly-elected president of the Newfoundland Ocean Industries Association (NOIA),
Henley, vice-president and shareholder of AMI Offshore Inc., moved up to president of NOIA from vice-president Thursday at the organization's annual meeting.
"Now, before this (gas) resource begins to be utilized, is our window of opportunity," Henley told NOIA members.
`It is already clear that in downstream processes, 1,000 per cent can be added to the value of produced gas," he said. "The potential of this resource must be addressed here and now."
Henley said the association will take a lead in doing just that.
He said NOIA wants to maximize potential benefits to its members and to the region as a whole and to promote growth and development of the east coast oil and gas industry.
"We intend to focus on learning as much as possible about natural gas, particularly its downstream potential and how it might be developed in this province."
Henley said, "NOIA has initiated, identified funding and will project manage a study of this region's natural gas potential, addressing the available resource and the production, transportation and processing challenges associated with a full scale development."
The association will also identify the potential of further downstream processing so value can be added to the resource, he said.
Henley took over the presidency from Paul Adams, director of business development with FGA Consulting Engineers Limited.
In his annual report, Adams said ensuring local benefits from oil and gas developments is the primary objective of the association.
He said being involved in the developments is the best benefit.
"I urge our premier and his government to continue their efforts in this area and to ensure that future projects are from the concept, engineered, procured and constructed right here in Newfoundland to the maximum extent possible."
Mark Turner of the Fisheries and Marine Institute was elected vice-president of NOIA while Dan Herder of Doris Compro was elected treasurer. |
