Talks resuming on Hebron megaproject, Williams says

Newfoundland and Labrador Premier Danny Williams confirmed Tuesday that talks aimed at reviving the shelved Hebron megaproject have resumed.

"These are not negotiations, but in fact meetings to clarify our outstanding issues, and are a true cause for optimism," Williams told delegates to an oil conference in St. John's.

Negotiations on developing the Hebron Ben Nevis field broke off in the spring of 2006, when a consortium led by Chevron Resources Canada would not agree to the Newfoundland and Labrador government's insistence on taking a 4.9 per cent ownership stake in the project.

In return, the consortium had been seeking tax breaks.

Williams said the two sides are exchanging information after "a brief but necessary hiatus.

"The companies are sharing concerns over costs, which are increasing around the world," Williams told the Newfoundland Ocean Industries Association conference.

"They are also updating us on possible scheduling opportunities … [and] at the same time we are continuing to share our thoughts on such issues and equity and royalties."

Williams came under heavy fire from NOIA members last year over the Hebron stalemate, with companies saying that Williams's hard stance was putting the growth of the offshore oil industry at risk.

Williams, who last year criticized the group as "Annoy-a" whenit refused to back his Hebron position, adopted a more conciliatory tone during Tuesday's speech.

"I want to say, with all sincerity, that I am very, very, very optimistic about the future of our province's oil and gas industry, and I do appreciate the contributions of the companies who make the industry tick," he said.

"And though there have been issues of concern on both sides, there are ways to work through them, and I believe that we are all sincerely committed to do just that."

Williams said formal negotiations could start again within a month.

'No project team in place'

The oil companies had few details Tuesday, but confirmed both sides are talking again.

"There are no [formal] negotiations ongoing. There is certainly no project team in place," said Tim Murphy, director of government and regulatory affairs with Chevron Canada Resources, the operator of the Hebron Ben Nevis field.

"But the lines of communications are open between Chevron and the province and the regulator, for sure," he said, referring to the Canada-Newfoundland and Labrador Offshore Petroleum Board.

Williams received a warm round of applause from NOIA members, some of whom have been openly critical of his tactics on developing the offshore oil industry.

"It was positive— very, very positive," said Harry Pride, general manager of shipping supply company Blue Water Agencies.

"Let's get on with it."

Pride said launching Hebron— which would become the fourth offshore oilfield to go into production off Newfoundland's southeast coast— is critical to the marine services industry.

"We need this bad. We need some more exploration and we need to [move] on."

Max Ruelokke, chairman of the CNLOPB, said even if negotiations formally launch again, the project will still need to move from paper to production, including a complex regulatory process.

"It's a significant undertaking, and it won't happen overnight," he said.

The Newfoundland and Labrador government has not yet finished its anticipated paper on energy policy. The province isexpected to include a demand for an equity stake in future energy projects.