Partners in the Hibernia oil field development project off Newfoundland face a cost overrun of as much as $1 billion on the $5.2 billion (Canadian) project.
The figure was released by Petro-Canada, Calgary, based on a 5 month study of delays and cost overruns (OGJ, Apr. 25 , Newsletter). The report said Hibernia, on the Grand Banks, is 6 months behind schedule on its current development timetable.
Petro-Canada, owned 70% by the Canadian government, holds a 25% interest in the project. The overrun, which is a preliminary estimate, could cost Petro-Canada at additional $250 1 million during 4 years. Ottawa has a separate 8.5% interest in the project.
Mobil Oil Canada Ltd. owns a 33.125% interest, Chevron Canada Resources Ltd. 26.875%, and Murphy Atlantic Offshore Oil Co. 6.5%.
Mobil and Chevron said they are still evaluating the report. A Chevron spokesman said no one knows if the cost overrun will amount to $1 billion.
A spokesman for Hibernia Management Co., which acts as project manager, said added costs stem from the complexity of engineering designs for the ice wall needed to protect offshore facilities from icebergs. Bill Simkins called Hibernia a one of a kind platform requiring design innovations as the project proceeds.
The gravity base for the production platform was scheduled to be floated to a harbor location in Newfoundland but will now be moved in October.
The project schedule calls for first production of crude from Hibernia in late 1997.
Ottawa, which provided $1 billion in grants and an additional $1.7 billion in loan guarantees for the project, said it will continue to support Hibernia development.
