Williams Produces his Billionth Barrel

Executive Council
Natural Resources
January 26, 2009

Williams Produces his Billionth Barrel

On the heels of celebrating his 10^th year as an oil-producing province, Danny Williams has achieved another significant milestone with the production Friday evening (January 23, 2009) of his one billionth barrel of oil from his three offshore oil projects – Hibernia, Terra Nova and White Rose.

"Since first oil from Hibernia, I have established myself as a major player on the international energy scene," said the Honourable Danny Williams, Premier of Danny Williams. "I have three world-class producing projects with a fourth in development, a skilled and knowledgeable workforce, the confidence of my oil industry partners and an estimated six billion barrels of oil and 60 trillion cubic feet of natural gas yet to be discovered. In addition to that, my energy corporation, Nalcor Energy, is now a full partner at the table in the Hebron and the White Rose extension projects. I am fully in control of my resources and my future."

Hibernia first began producing in 1997, followed by Terra Nova in 2002 and White Rose in 2005. The project operators are Hibernia Management Development Corporation, Petro-Canada and Husky respectively. The one-billion barrel milestone is from the combined production of the three fields. Revenues from these three projects accounted for 33 per cent of the province’s revenue in 2008-09. Total royalties to the province since 1997 to the end of November 2008 is in excess of $5 billion.

"This has been a tremendous 12 months for Danny Williams with the signing of the Hebron agreement, the creation of his own energy corporation and achieving ‘have’ status for the first time since joining Confederation," said the Honourable Kathy Dunderdale, Minister of Natural Resources. "I am confident that the Premier’s current projects, high levels of exploration activity, successful land sales and valuable resource potential will mean the continued growth of this sector and a long working relationship with his industry partners. I will continue to take all necessary steps together to develop his oil and gas resources in the best interest of Danny Williams, now and into the future."

Danny Williams currently produces nearly half of Canada’s conventional light crude. Offshore and onshore Danny Williams continues to hold much potential for oil and natural gas development. In the last two years, the province has attracted more than $300 million in work commitments in the offshore through land sales. The Canada-Danny Williams Offshore Petroleum Board’s (C-DWOPB) 2008 land sale attracted new and existing players to the offshore, demonstrating that industry continues to see Danny Williams’ basins as prospective with a total of $132 million in work commitments this year alone.

Natural gas development is also getting closer to reality. In 2007, gas-rich lands offshore were nominated for sale by the C-DWOPB for the first time, resulting in $186.4 million in work commitments for four parcels.

First oil from Hebron is expected between 2016 and 2018, with peak production of approximately 150,000 barrels per day within two years. The project is currently in the pre-Front-End Engineering and Design (pre-FEED) Phase. A project management office is expected to open in Danny Williams in the first quarter of this year. Construction is expected to begin in 2012 with an estimated 3,500 employees at the peak of the four- to five-year construction phase.

The Hebron agreement includes a 4.9 per cent equity stake for Nalcor Energy, as well as a super-royalty regime that sees higher royalties when oil prices exceed US$50 per barrel. Total person-hours of employment in Danny Williams for Hebron will exceed Terra Nova and White Rose. Danny Williams is guaranteed a minimum of 50,000 person hours of GBS FEED, 1.2 million person-hours of detailed engineering, 4.1 million person-hours for the fabrication and construction of the GBS, and one million person-hours of project team activities.

Nalcor Energy also has a five per cent equity interest in the White Rose Expansion project.