Exxon Mobil Corp. and four partners will spend about $14 billion to develop the Hebron oil field off the coast of Canada that has lain fallow since its discovery more than three decades ago.
The field, located about 350 kilometers (218 miles) southeast of St John’s, Newfoundland and Labrador, will produce more than 700 million barrels of crude during its lifespan, Irving, Texas-based Exxon said in a statement today. At current prices, that oil would be worth about $77.8 billion.
Daily output from the field is expected to peak at 150,000 barrels after production begins in 2017, Exxon said. Discovered in 1980, Hebron is one of a string of multibillion-dollar projects Chief Executive Officer Rex Tillerson is pursuing to reverse production declines. Exxon’s output has fallen five straight quarters, the longest run of declines since 2008-2009, according to data compiled by Bloomberg.
“Exxon has been growth-challenged for some time,” Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, said in a telephone interview today. Hebron can “potentially help jump-start growth going forward.”
Exxon is operator of the Hebron development and owns a 36 percent stake, according to the project’s website. Other partners include Chevron Corp., Suncor Energy Inc., Statoil ASA and Nalcor Energy Corp.
The Hebron field is located about 30 kilometers southeast of the Exxon-operated Hibernia development, the largest single source of crude in Newfoundland and Labrador province.
Previous plans to develop Hebron collapsed in 2006 amid a dispute with provincial officials over ownership stakes. Chevron, the second-largest U.S. oil company, later ceded control of the project to Exxon.
Oil production from Newfoundland fields declined 29 percent during the first nine months of 2012, the provincial department of finance said on its website.
Exxon rose 0.5 percent to $88.96 at the close in New York.