Hebron on the Horizon

On the final day of May, the Hebron project achieved a significant milestone with approval of its development application by the Canada-Newfoundland and Labrador Offshore Petroleum Board. In this issue, Geoff Parker, Hebron senior project manager and vice-president of ExxonMobil Canada Ltd. provides Natural Resources Magazine with a project status report.

Background: First discovered in 1980 and further delineated in 1999, Hebron is a heavy oil field comprised of five major pools with an estimated 660 to 1,055 million barrels of recoverable resources. Currently under development, Hebron is Newfoundland and Labrador’s fifth offshore project and is expected to deliver first oil in 2017. The production system will use a gravity-based structure (GBS). The Hebron co-venturers are: ExxonMobil Canada Properties (36 per cent), Chevron Canada Resources (26.7 per cent), Suncor Energy Inc. (22.7 per cent), Statoil Canada (9.7 per cent) and Nalcor Energy (4.9 per cent). ExxonMobil Canada Properties is the operator of the Hebron Project.

NRM: You’ve just received approval from the Canada-Newfoundland and Labrador Offshore Petroleum Board for the project’s development application. What’s next on the project timeline?
GP: We’ve commenced detailed design for both the topsides and GBS. The topsides design, we have a design office here in St. John’s and there’s some pieces of that being done in Houston. The GBS, all of the detailed design is being done here in St. John’s. We’ve moved from the Front End Engineering and Design, FEED phase, to the detailed design phase. This means we’ve really developed the concept. That’s a major milestone and it’s great to be wrapping up those detailed design details here in the province.

At the same time as we’re doing that, moving the engineering forward, we’re also continuing the early site work at the Bull Arm site. We’re getting the Bull Arm site ready to start building the GBS. That requires us to reinstate the dry dock there at Bull Arm. We have the … wall in place that will form the barrier between the dock and the outside ocean. We hope that after summer of this year we will be having a dry dock. We’ll be able to pump the water out of the dock and start building the GBS at the end of the year.

NRM: Is the Offshore Loading System still on schedule?
GP: That’s the piece that we’ll need in place when we install the platform. Overall, from the project point of view, we’ve still got time to optimize that at the moment. There’s work ongoing here at the moment and the detailed design of that will commence probably later in the year.

NRM: What are the latest indications of your labour requirements?
GP: We’re pulling those together at the moment on the labour histogram. We’ll be sharing those with all of the stakeholders. At the moment, we have numbers in the benefits plan and we’ll be updating those and publishing them. As we do our design development, we’re also doing our execution plans. Now we know more about what we’re going to need in terms of the demand side of the labour equation. Within the next few months we will have updated labour demand data that we will be able to share with all the stakeholders.

We have a labour agreement that we think gives us the flexibility to respond to some of the challenges on labour supply. Part of that, as you’ll notice through the website (bullarmtrades.com) is being able to allow people who are interested in applying – regardless of whether they’re a member of the union, they can apply on this trades database. The way the labour agreement provides flexibility is, once the union has exhausted its list of qualified in-province members, the process allows us to seek qualified workers in the province who are not in the union. In that way, we make sure we’re able to draw on all of the qualified labour supply in Newfoundland and Labrador first.

NRM: Will there be opportunities for apprenticeships and jobs for new college graduates?
GP: We’ve been working … with the College of the North Atlantic. We have some scholarship funds there. We’re funding process engineering labs at the College to enhance the training. Labour supply is a long-term issue so we’ve started programs that are educating women on the benefits of pursuing careers in the skilled trades. Even things like working with the Association for New Canadians to fund energy sector language training, to help people who’ve been trained elsewhere become familiar with some of the language we use in the industry here in Canada. Our intention is to hire as many apprentices as we can under all applicable rules and regulations.

NRM: We’ve heard that you’ve been revisiting the project design and topsides weights. How does that affect your overall schedule for project completion?
GP: I’m not sure what you’re referring to, but the schedule hasn’t changed in terms of delivering oil in 2017. During the FEED, we have the normal design development of the topsides. You’ve seen pictures of it. It looks the same as it always has. It’s not like we’ve changed the concept, it’s just the normal design development during FEED. And we’re still on track for delivering first oil in 2017.

NRM: Is the subsea tieback for pool 3 included in your development and construction plans?
GP: The plan for that (pool 3) is to try and move on the very first phase of pool 3 that will allow us to understand more about the pool 3 reservoir. We’ll eventually try to do a full field development. The development application approval allows us to go ahead with that first phase subsea tieback. It’s a small first phase to understand that reservoir and we’re looking at that at the moment. We have the approval for it; we have to see if we can fold it into the overall project plan.

NRM: How would you characterize the opportunity in that area?
GP: It’s very hard to characterize. That’s why we need to do it in this phased approach. We’re pretty sure there’s oil there; we’re not sure how producible that oil would be. That’s why it’s not something where we’re able to jump to a full field development.

NRM: When can we expect to see contracts awarded for the major topsides modules?
GP: Soon. Very soon – a month or two – we’re hoping to award the living quarters module. That will be the largest living quarters ever built in Newfoundland. That, to me, is something that will really create some sustainable capability here in the province. We’ve been going through a bid process on that and that bid process is coming to an end.

NRM: How will Newfoundland and Canadian companies be able to access the successful bidders for those modules?
GP: We had two bidders and they were both Newfoundland companies. So there’ll be a Newfoundland and Labrador company winning the work regardless of which bidder wins. Then we’ll publicize our successful bids on our website and they also go on the NOIA (Newfoundland and L
abrador Ocean Industries Association) website. Companies that are hoping to be suppliers to the successful bidders can find out the names of successful bidders and also the contact details for them. They can do that during the bid phase and after the contract award phase.

NRM: How many modules will be built in the province?
GP: What we’ve said before is we’ve confirmed that we can build two in the province, the living quarters being one of those. The third one, we’ve talked about at the public reviews; we really haven’t got anything to add on that one at the moment. (Editor’s note: During the public reviews, Mr. Parker indicated that the Drilling Equipment Module might be built outside the province due to insufficient local industrial capacity.)

NRM: What do you consider to be the biggest challenge to delivering a successful project?
GP: We talked about the labour side, that will be a challenge. That’s definitely a challenge we’re working to address with some of the things we just talked about. I think, overall, Hebron is a very large project with lots of pieces that will come together for integration at the Bull Arm site. Trying to keep all of those pieces moving along at the right pace and the right safety and the right quality to all come back together, that’s what makes one of these mega projects.

NRM: There has been some criticism about the project and local benefits, particularly with regards to building the Drilling Equipment Module elsewhere. Do you think expectations here are unrealistic in terms of local benefits?
GP: I think there’s expectations, and I think the way the project is set up, we will be providing a lot of benefits. We think that with all of the work that we’ll be doing in-province, the engineering that we talked about – that’s going to keep the engineers in the province very busy. During the construction, not just the major contractors, but the other suppliers, other fabricators who can support these main contractors, that’s going to keep all of the fabrication yards … it’s going to create a lot of jobs for Newfoundlanders and Labradorians. I think we’re going to have to just keep increasing that supply pool.

I think the expectation is that we should create as many jobs as we can and we should use the available facilities. That’s what we’re doing. That’s an expectation that we’ll meet.

NRM: How does this province compare to other jurisdictions in terms of local capacity and ability?
GP: One of the challenges here is the cyclical nature of the work. There was work done for Hibernia, then there’s a bit of a gap and then there’s more work done for other projects. For us, the best thing we think we can do is build sustainable capability and capacity. We get a lot of feedback in public consultations that people don’t want peaks and troughs. They’d rather get a more steady work flow. That is a challenge when you’ve had these peaks and troughs. Then, when a new project comes along, it’s hard to get back to where we were before.

NRM: What can we expect from the Hebron project for the remainder of this year and beyond?
GP: The detailed design is our key focus. We need to have that detailed design sound so we can move forward with construction. We talked about the Bull Arm dry dock and completing work to have that dry dock ready to start GBS construction at the end of the year. Then we’ll be moving into next year when we’ll be getting started on Topsides fabrication.

Over the next several years, throughout the project, there’s a lot of local firms providing support on the engineering side at the moment. Next year the fabrication will start moving forward and that’ll go on for several years. There’ll be opportunities next year. There’ll be opportunities the year after. Towards the end, we’ll be getting into integration and hook-up and commissioning. This is a long-term project that will continue to provide a lot of opportunity.

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