ExxonMobil ties N.L. industry’s future to results today

The future of Newfoundland and Labrador’s offshore oil industry depends on getting the projects of today done on time and on budget, the president of ExxonMobil Canada says.

“The eyes of the world are on us to deliver,” Andrew Barry told delegates at the NOIA conference in St. John’s this week.

He specifically referenced the Hebron project, which has seen cost estimates spiral in recent years, as key.

“I do believe that our future will be impacted by the performance of the Hebron project,” Barry told delegates.

The eyes of the world are on us to deliver.- ExxonMobil Canada president Andrew Barry

“The confidence that we and others will have to invest here will depend on whether we meet our cost and schedule commitments at Hebron.”

In 2011, ExxonMobil indicated that it would cost $8.3 billion to build Hebron, plus another $5.8 billion to operate it until the oil runs out in three decades, for a total of just over $14 billion.

But in January 2013, the oil giant said capital costs alone — not including operating expenses — would account for $14 billion.

• Hebron oil project gets OK as costs balloon by billions

At the time, company officials told CBC News that included some additional capital costs thrown into the mix, related to tying a separate pool of oil back to the Hebron platform. They could not break out those specific numbers.

This week, Barry declined to say whether cost estimates have again escalated since, although he stressed that Hebron timelines are being met.

“The $14 billion is the cost of the project, and at this stage we don’t talk about where we are from a cost perspective,” Barry said in an interview with CBC News.

“But from a schedule perspective, as I mentioned, we’re extremely proud of the team and the efforts and their accomplishments to get where we are today.”

He noted, for example, that ExxonMobil is on track to meet a commitment made three years ago to tow the Hebron GBS out of drydock into a deepwater site this summer.

First oil from Hebron is expected in 2017.

‘No doubt we are in boom times’

In his speech to delegates, Barry stressed that Newfoundland and Labrador must demonstrate that it can be internationally competitive.

“There is no doubt we are in boom times, and the challenge is to ensure that the demands of the local facilities and labour supplies during these times aren’t stretched so far that they impact the project we are working on today,” he said.

“If they do, then you can be assured that the legacy that comes along with that will impact the future growth of the province.”

Barry’s comments followed other concerns about cost expressed earlier Wednesday by another player in the Newfoundland offshore.

• Suncor bullish on Terra Nova future, but costs a concern

Brent Janke, East Coast vice-president at Suncor Energy, warned that costs will be a “key consideration” in decisions about future development in the Newfoundland offshore.

“Rising development costs may negatively impact ultimate development potential and benefits to the province,” he told delegates.