Hibernia South deal 'almost like a Christmas gift,' businesses say
A multibillion-dollar tentative agreement to develop an extension to the Hibernia field off eastern Newfoundland has ignited a new sense of excitement among companies, even those not directly connected to the offshore oil industry.
Minutes after Premier Danny Williams unveiled news of the Hibernia South expansion to an offshore oil conference in St. John's, the mayor of a nearby municipality was in a hallway outside, negotiating a deal that will bring a new business to his town.
Paradise Mayor Ralph Wiseman was approached by St. John's businessman Bruce Rogers, who was convinced by Tuesday's announcement to open up his wallet to start a new building for his company, Rogers Enterprises, which provides industrial health and safety training.
"We're looking this morning at purchasing two acres of the land and we're going to be constructing a 10,000-square-foot building for the training and consulting work," Rogers told CBC News.
Rogers found an enthusiastic reception with Wiseman, who has been pitching prospects in the town's industrial park whenever possible.
"We've been visiting the oil shows and the other shows that we want to get the message out that Paradise is ready to do business," Wiseman said.
Williams made the announcement at a convention of the Newfoundland and Labrador Oil and Gas Association. At a nearby exhibition hall, the mood was hard to miss.
"I can say it's almost like a Christmas gift," said Bruce Cluett, who moved back to Newfoundland last year after 15 years of living on the mainland. He now works with Atlantic Oilfield and Industrial Supply.
"We see growth within our company, growth within people, within our company, as well as growth for the province and the city," Cluett said.
The Hibernia consortium's partners have accepted the Newfoundland and Labrador government's demand for a 10 per cent equity stake in the Hibernia South expansion, as well as a 30 per cent royalty rate. All told, the government expects to reap about $10 billion in royalties and other revenues.
On Tuesday, Williams also announced that Hibernia had reached payout, meaning that its costs have been covered, and the government will now be able to reap a much more lucrative set of benefits.
For pioneers in Newfoundland and Labrador's offshore oil industry, that milestone comes as a sweet rejoinder to the bitter criticism they endured in the early years of pre-production, when mainland critics frequently slagged Hibernia as a sinkhole.
"Little old Newfoundland, it was a bit of an interesting side story all across Canada," said businessman Fraser Edison.
"Why we were investing all this money down here when oil prices were $13, $14 at the time?" said Edison, adding that the project has proven its worth, delivering billions of dollars in revenues to both federal and provincial coffers.
"This project has put so much not just into Newfoundland but look at what it's given the Canadian government as well."
Businessman Stephen Henley, who was also involved in the lonely years that finally led to Hibernia producing oil in 1997, said he has waited a long time for Hibernia to reach payout.
"It's fabulous news and there's a little, I guess, of heck, 'We told you so,'" Henley said.
"I think one of the biggest benefits Hibernia has ever had for this industry is an attitudinal change for both our young people and our professionals who learned yes, they can do it, and yes, they could do it here. And it was done here," he said.