Mammoth Grand Banks Oil Platform Nearly Ready

BULL ARM, Newfoundland — On a remote inlet lined with pine forest, an army of construction workers is putting the final touches on a massive, multibillion-dollar structure that will take North America’s oil industry into new territory.

Next June, a nine-tugboat armada is scheduled to tow the continent’s largest offshore oil platform 195 miles into the North Atlantic to pump oil amid the mammoth icebergs and rich fishing grounds of the Grand Banks.

If all goes as projected, the Hibernia field deep below the ocean floor will yield at least 600 million barrels of oil over the next 25 years, launching an oil boom in the Grand Banks that could pump several billion dollars into the economy of Newfoundland, Canada’s poorest province.

Paul Harrington, an Englishman who worked on many oil projects in the North Sea before joining the Hibernia project, said the Grand Banks has enormous potential.

“When they first started drilling in the North Sea, they didn’t know how big that would be,” he said. “Let’s hope it’s the same kind of thing here. It can be an incredible boost to a region.”

Though bigger offshore platforms are in use in the North Sea, this is the first designed to resist the impact of icebergs.

The platform’s 600,000-ton base is protected by a 4 1/2-foot-thick concrete wall serrated into 16 giant teeth to deflect icebergs. Though few icebergs reaching the Grand Banks are larger than 300,000 tons, the platform is designed to withstand the brunt of a 6-million-ton berg, even though Hibernia’s experts calculate one of that size is unlikely ever to appear.

“We probably over-designed the platform,” conceded Brian Crawley, a Hibernia spokesman. “But the people who are there for three weeks at a time have to have a lot of confidence in where they’re living.”

Oil companies have been eyeing the Grand Banks since 1965, when the first seismic surveys there suggested oil potential. By now, there have been 15 discoveries in the area, representing an estimated 1.6 billion barrels of oil.

But none of the projects planned for the future are as big as Hibernia, discovered in 1979. Construction of the offshore platform will cost $4.2 billion and the total project cost, including operations over the life of the field, is estimated at $10.2 billion.

Partners in Hibernia are Mobil Oil Canada, with a 33% stake; Chevron Canada Resources, 27%; Petro-Canada, 25%; the Canadian government, 8.5%; and Murphy Oil Co., 6.5%.

The consortium says the project can break even with an oil price of $12.95 a barrel, something encouraging with the current price at about $22.80 a barrel.

Ken Hull, president of the project’s management company, says the partners expect at least a 10% return on their investment, possibly more if future Grand Banks projects make use of the processing facilities on the Hibernia platform.

“People in the industry are watching us with great interest in terms of demonstrating the viability of the Grand Banks,” Hull said in an interview.

“In the North Sea, the first field was the most difficult, the most challenging, just as we have experienced at Hibernia,” he said. “With the first field being developed and infrastructure completed, then the subsequent developments tend to roll forward.”

Though the project is now on the home stretch, with initial production expected to begin by December 1997, Hibernia has encountered its share of problems. One of the major partners, Gulf Canada, pulled out in 1992, forcing the projected start-up date to be pushed back 14 months.

There also have been three fatalities among the construction crews at Bull Arm, and recently some of the women among the work force have complained of sexual harassment.

But the work itself has gone smoothly at the 4,000-acre construction site carved out of the forests around Bull Arm.

The so-called topside of the platform, including living quarters, processing equipment and towering oil derricks, is due for completion in November. In March, it is to be joined with the base, which has been built out in a deep-water section of the inlet.

The overall structure will be 735 feet tall. It will be placed in waters 260 feet deep, and will be stabilized with a ballast of ore that will give it a total weight of 1.2 million tons.

Inside the base is storage space for 1.3 million barrels of oil.

As construction winds down, Hibernia’s work force will shrink dramatically from 5,700 at its peak to about 800 for the life span of the oil field. This includes about 400 on-shore employees and about 400 workers alternating three-week shifts on the platform.

The crews will be flown in and out via helicopter on a two-hour flight between the platform and St. John’s, the Newfoundland capital. Supply boats will make two or three trips weekly.

The platform will operate 24 hours a day, 365 days a year, with crewmen working 12-hour shifts. No alcohol consumption will be allowed, even off-duty, and smoking will be tightly restricted.

About 80 wells are planned for the Hibernia field, many of them as deep as 2 1/2 miles. The platform is expected to pump 135,000 barrels a day by 2000, roughly 10% of Canada’s total production.

Back in the 1980s, when the project underwent extensive government review, environmentalists expressed serious concerns about allowing the oil industry into one of the world’s richest fishing grounds.

But there has been little protest since government and industry officials agreed on comprehensive environmental safeguards.