* First production at Hebron set for 2017
* 3,500 construction jobs to be created
* Fourth major offshore Newfoundland project
By Jeffrey Jones
CALGARY, Alberta, Jan 4 Exxon Mobil Corp
said on Friday it is moving ahead with the next major oil
project in the North Atlantic, the $14 billion Hebron
development off the Newfoundland coast, boosting its
already-large investments in Canada's most oil-rich regions.
Exxon Mobil, the biggest U.S. oil major, said it will
produce 150,000 barrels of oil a day at Hebron using a massive
concrete gravity-base structure like the one employed at the
nearby Hibernia project, which has been operating in the
iceberg-prone region since the late 1990s.
First production of the project's heavy crude is scheduled
The green light for Hebron, the fourth major offshore
Newfoundland oil project, encouraged owners of energy operations
in harsh areas in a week during which critics pilloried the
industry for an accident in the Far North.
In the United States, opponents of Royal Dutch Shell's
Arctic oil program called on the Obama administration
to put offshore drilling plans in the region on hold after its
oil rig broke away from tow boats in high seas and ran aground
In a statement, Exxon Mobil said its own experience in
Arctic development would serve it well as it and its partners
develop Hebron in the tough Atlantic operating conditions.
The 700 million barrel project, in the Jeanne d'Arc Basin,
350 km (200 miles) southeast of St John's, Newfoundland, is well
below the Arctic Circle. Discovered in 1980, the development
follows others - Hibernia, Terra Nova and White Rose - in the
region. It won regulatory approval last year.
For Exxon Mobil, Hebron is moving forward just as it is set
to start production from the C$10.9 billion Kearl oil sands
project in Northern Alberta, operated by its Canadian affiliate
Imperial Oil Ltd.. The first phase will pump 110,000
barrels a day of bitumen.
The company's investments extend a trend to bulking up on
more operations in North America, where advances in technology
have reignited an energy production boom, said Fadel Gheit,
analyst at Oppenheimer & Co.
"Exxon has legacy assets both onshore and offshore Canada,
and this project, although it's not a company maker ... it's
obviously positive. A lot of other companies in recent months
have showed interest in Eastern Canada," Gheit said.
Last January, for example, Shell won bids for four blocks of
acreage off Nova Scotia, by offering to spend C$970 million on
In the last decade, Hebron was at the center of a debate
between the Newfoundland and Labrador government and the oil
industry, in which the province complained of being
short-changed as huge energy developments moved forward.
In the end, they agreed to a new fiscal arrangement and the
province paid C$110 million for a 4.9 percent interest. In 2008,
the cost had been estimated at C$5 billion to C$7 billion.
Oil has since become a major driver of the economy in
Newfoundland, which had long had the status of a "have-not"
province due partly to the collapse of the cod fishery.
The government of Premier Kathy Dunderdale estimated that
the project would mean C$23 billion in provincial royalties,
taxes and return on investment through the government-owned
energy company, Nalcor Energy.
"Our goal has been to ensure that Newfoundlanders and
Labradorians are the main benefactors with respect to our
natural resources, and that the development of Hebron maximizes
benefits for the people of the province, Dunderdale said in a
statement. "Hebron will support jobs, the economy and
strengthens our province's position as an energy warehouse."
Exxon Mobil said the production structure, designed to hold
1.2 million barrels of the heavy Hebron crude, is being built at
the Bull Arm construction site in Newfoundland. It will provide
3,500 construction jobs.
The largest logical market for the Hebron crude is the U.S.
Gulf Coast, where numerous refineries have the equipment needed
to process heavy oil, said Greg Haas, manager of research for
Houston-based Hart Energy LLP.
Some East Coast plants, including PBF Energy's Paulsboro,
New Jersey, and Delaware City refineries, also have capacity to
run such supply, Haas said.
Exxon Mobil shares were up 53 cents at $89.08 on the New
York Stock Exchange late in the session.
The other partners in Hebron are Chevron Corp,
Suncor Energy Inc and Statoil ASA.