U.S. supermajor ExxonMobil Corporation (XOM - Free Report) along with its partners are moving ahead with the development of Hebron oil field offshore the Canadian province of Newfoundland and Labrador. The development will utilize a gravity-based structure and is estimated to cost about $14 billion.
The development will help in recovering over 700 million barrels of oil, which exceeds the prior projection. The platform is expected to yield its first gas towards the end of 2017 and proposes to produce 150,000 barrels of oil per day.
The Hebron facility will use a stand-alone gravity-based structure comprising reinforced concrete equipped in a manner to endure harsh and glacial environment off Canada’s north-east coast. The base will be designed to store around 1.2 million barrels of crude oil and will support an integrated topsides deck consisting of living quarters as well as facilities to execute drilling and production.
The Hebron project, which received regulatory approval from the government authorities of Canada and the province in May 2012, is likely to fetch 3,500 jobs in Newfoundland & Labrador. Additionally, the facility will yield revenues of C$20 billion for the province over the coming three decades.
Located in the Jeanne d'Arc basin, 350 kilometers south-east of the capital of St John's and about 19 miles south-east of ExxonMobil’s Hibernia project, the Hebron oil field rests in water depth of about 300 feet. Other developments in the region include Hibernia, Terra Nova and White Rose.
ExxonMobil, the operator of the Hebron facility has a 36% interest, while partners Chevron Corporation (CVX - Free Report) , Suncor Energy Inc. (SU - Free Report) , Statoil ASA (STO - Free Report) and Nalcor Energy hold 26.7%, 22.7%, 9.7% and 4.9%, respectively.
In the coming five years, ExxonMobil is expected to commission numerous large-scale oil developments. Hebron represents one of them. The working conditions in the Arctic pose immense difficulties. But ExxonMobil intends to carry out development activities and implement projects to build on the superior resources of the region with its expertise.
ExxonMobil holds a Zacks #3 Rank (short-term Hold rating). Longer term, we maintain our Neutral recommendation.