Hibernia oil production is forecast to drop next year and Hibernia Management and Development is pinning the decline on delay in approving its application to develop the southern Hibernia field.
The development application was held up by wrangling between Danny Williams and Ottawa over the appointment of a new chairman and chief executive officer for the joint board that regulates offshore oil and gas. The board - which now includes chairman/CEO Max Ruelokke and Andy Wells - has taken more than a month to consider recommendations from officials based on their own assessment and results of a public consultation process.
The National Post story linked above notes that no decision had been made as of 16 December 2006. A decision has been made since then. Under the Atlantic Accord (1985), the federal and provincial governments now have 30 days to approve or disapprove the offshore board decision. There's no indication of the board's decision.
The local oil patch has long speculated that the provincial government will quash development of the 300 million barrels in the southern Hibernia structures either to try and force a re-start negotiations of Hebron, as one National Post source speculates, or to have the field treated as a new development.
As a new development, the 300 million barrels would require negotiations to set benefits and royalties. Bond Papers contends the southern field is part of the main project and would not meet any objective criteria to establish it as a separate project.
If the provincial government rejects the application, work offshore Newfoundland and Labrador will grind to a virtual standstill outside of the effort needed to produce oil at the existing fields - Hibernia, Terra Nova and White Rose. Exxon Mobil will drill two exploration holes in the Orphan basin. No other work appears scheduled.
Hibernia is owned by ExxonMobil, Chevron, Canada Hibernia Holding Corporation, Murphy Oil and Norsk Hydro. Norsk Hydro's interest will become part of the new Norwegian oil and gas company created by the merger of Statoil with Hydro's offshore assets.