Up to $100M Hebron work could leave Newfoundland

Up to $100 million in planned work for the offshore oil industry's Hebron project could leave the province, Newfoundland and Labrador Natural Resources Minister Jerome Kennedy said Wednesday.

The Marystown shipyard was set to build two modules for the project. But now Kiewit, which owns the shipyard, will only construct one there.

The other module — which involves drilling equipment and a derrick, and is valued between $75 million and $100 million — will be have to be done elsewhere.

Kennedy conceded the work could leave the province.

He said the government is meeting with Hebron operator ExxonMobil to try to keep the work here, but said capacity issues are limiting the province's options.

"We're pushing them hard, as hard as we can, to ensure that as much of the work remains in this province as we can keep here," Kennedy told reporters.

He stressed that the the Hebron benefits agreement is structured to see the maximum amount of work done in the province.

Kennedy and Premier Kathy Dunderdale met with top Kiewit officials in New York City last week.

The government requested the meeting, Kennedy said, because officials wanted to nail down Kiewit's future plans for its Newfoundland operation.

According to Kennedy, Kiewit's CEO outlined productivity concerns in Marystown that had been highlighted by an ExxonMobil audit.

But he said the company is confident a recent deal with unionized workers will assauge most of those worries.

And Kiewit officials, he said, confirmed they are in Newfoundland for the long term.

"They did commit to the future in Marystown," Kennedy said.

The province is currently in talks with ExxonMobil about where the work in question could be done. Bull Arm — which is set to build a third Hebron module — does not appear to be an option.

'We're pushing them hard, as hard as we can, to ensure that as much of the work remains in this province as we can keep here.' —Natural Resources Minister Jerome Kennedy

"We're looking at various alternatives," Kennedy said.

The government expects to know within a week what will happen.

Kennedy said construction of the other planned module at Marystown remains on schedule.

Tow-out of the Hebron GBS is scheduled for 2016, with first oil set for 2017.

'Soften the blow'

Opposition politicians said Kennedy's announcement wasn't good enough.

"I think the minister is trying to soften the blow for all of us today, to try and prepare the province for the fact that we are going to see some of this work going outside," Liberal natural resources critic Yvonne Jones said. "And for me, that's not acceptable."

Jones said the province has had years to plan for Hebron. She is now questioning where the work will be done.

Meanwhile, NDP Leader Lorraine Michael said the news about Kiewit was "very disconcerting."

She noted that the provincial Tories have been in power for eight years, and also cast doubt on their preparations for growth fuelled by the oil and gas industry.

"My concern is, if they aren't putting out a concrete plan, that the long term is going to be a continual disappointment," Michael said.

ExxonMobil officials said they have issued a new call for expressions of interest to see if they can keep the work within the province. They expect to conclude that process within a week.