The Hibernia offshore oil field produced its first oil 10 years ago this week.
The project - regarded as a gamble at the time - was never expected to achieve payout owing to its high cost and the low price of oil. However, it will hit that milestone within the next four years.
With almost double the amount of recoverable oil first estimated to be in the field, the provincial treasury's share of the revenues will jump dramatically just as it did on the lower-cost Terra Nova project and as it will at the White Rose field. That high revenue will continue for the better part of a decade - unless even more oil is found.
It is easy to forget history, even recent history, just as the past four years of super-heated political rhetoric have shown. Politicians, academics and journalists have all displayed an appalling ignorance of Hibernia and the rest of the offshore. Information is deliberately distorted, such as in the provincial figures cited by Canadian press in the link above. Those figures deliberately omit projected revenues flowing after payout.
Far from being the give-away some have simplistically claimed, Hibernia was a gamble by the provincial and federal governments and the oil companies on the first project in what has proven to be a solid and lucrative oil industry. Had the provincial and federal governments not provided a variety of financial breaks through taxation changes and federal loan guarantees, it is doubtful the project would have ever been started in the economic climate at the time. When oil plummeted to US$8.00 a barrel in 1992, Gulf Canada pulled out of the project. Some of the Gulf shares were taken up by other operators but ultimately it was the federal investment and an 8.5% share that kept the project alive.
The gamble paid off for the operators and for the provincial and federal governments. The gamble is paying off each day with the millions in revenues flowing into provincial coffers from the three existing offshore projects. When Hebron starts flowing the lion's share of the revenues from that project - royalties as well as other provincial revenues - will come from the government's generic royalty regime.
That regime evolved from the Hibernia model negotiated first under Brian Peckford and concluded under the Clyde Wells [photo: left] administration. 
Wells' Liberals defeated the Progressive Conservatives under Tom Rideout [Photo: right]. Hibernia had been an issue in the election .
Seventeen years after the Hibernia deal was signed, it's interesting to go back to media reports at the time, like one from CBC television. There was optimism and there were words of caution from economist Wade Locke. Wells himself uttered both, as well, although he was criticised at the time for cautioning people that offshore oil would not produce the thousands of jobs some expected to be available in place of other industries like the fishery.
On the 10th anniversary of Hibernia first oil, it's worthwhile to consider how far the province has come economically as a direct result of decisions taken almost two decades ago. It's also worthwhile to consider how far we have regressed in other terms.
-srbp-
