The federal-provincial board regulating the oil and gas industry offshore Newfoundland and Labrador today released revised estimates of the proven and probable reserves at two of the offshore fields that increase the total by about 700 million barrels.
The Canada-Newfoundland and Labrador Offshore Petroleum Board now estimates that Hibernia holds 1.244 billion barrels of oil, an increase of 379 million barrels. Hebron Ben Nevis now stands at 731 million barrels. That is 317 million barrels more than previously estimated.
Natural gas estimates for the offshore also increased. There are now estimated to be 10.234 trillion cubic feet of natural gas and 478 million barrels of natural gas liquids.
Among other implications, this means that the failed Hebron deal was likely worth twice as much to Newfoundland and Labrador as previously thought. Talks collapsed in early April over the provincial government's insistence on a 4.9% equity stake in the operating consortium and its rejection of $500 million in construction phase tax concessions.
Estimates in April were that the provincial government would have received over $10 billion in royalties and other income during the production phase of the project in addition to a considerable portion of the $3.0 to $5.0 billion to be spent in the construction phase.
It isn't clear if that revenue projection was based on the low-range estimate of Hebron at 400 million barrels or the upper part of the range - now confirmed - at over 700 million barrels. If the projection was based on the lower reserve estimate, then it would be safe to nearly double the provincial government revenue; that would have made provincial government revenues almost $20 billion, which is double the provincial accrual debt and approximately the same size as the annual gross domestic product. The tax concessions seem even more puny now than they did before.
The provincial revenue estimate apparently also did not include the 0.858 Tcf of natural gas or the 60 million barrels of natural gas liquids also present in the Hebron complex.
