ST. JOHN'S, N.L. - Newfoundland and Labrador's waning offshore oil industry received a much-needed boost Friday as a consortium of partners led by ExxonMobil Canada Properties announced it has approved the Hebron offshore oil project.

The partners will spend $14 billion to develop the oilfield, which is estimated to contain more than 700 million barrels.

ExxonMobil says it expects Hebron to begin producing oil before the end of 2017 and up to 3,500 people will be employed during its construction phase. The offshore platform is being designed to produce 150,000 barrels of oil per day.

The sanction comes as the province's oil sector — which includes the White Rose, Terra Nova and Hibernia offshore oil sites — battles a decline in production.

Last month, Newfoundland and Labrador's Finance Department said oil flow was down 28.5 per cent in the first three quarters of last year compared to the same period in 2011 mostly due to maintenance and refits.

The drop has taken a toll on the province's revenue, with a projected $725.8 million deficit — nearly triple its last forecast — which the government partly attributes to plunging oil production and an average price per barrel that's less than the US$124 on which its budget last April relied.

"The development of Hebron will result in an increase to offshore production, provincial royalties and provide tremendous opportunity for employment and businesses in the province," Natural Resources Minister Jerome Kennedy said in a statement.

The province expects to collect about $23 billion in royalties, returns on its investment and corporate income tax, he said.

"We are optimistic that the development of Hebron will lead to further offshore opportunities and additional developments in the future."

Hebron is in the Jeanne d'Arc Basin, about 350 kilometres southeast of St. John's, N.L., and 32 kilometres further offshore than the Hibernia oilfield.

Partners led by ExxonMobil Canada include Chevron Canada, Suncor Energy, Statoil Canada and provincial Crown corporation Nalcor Energy. The province acquired a 4.9 per cent equity stake in the venture after a battle over revenue sharing between former premier Danny Williams and ExxonMobil.

The company, one of the world's largest oil producers and a major player in Canada's energy industry, said it would use its expertise in Arctic development to handle notoriously hostile conditions in Hebron's North Atlantic location.

Construction of the gravity-based structure for the offshore platform is under way in Bull Arm, N.L. Fabrication of the topside structure is expected to begin later this year, the company said.

The federal and provincial governments approved the project last May.

The field is the second largest discovery in the province's offshore, second to Hibernia.

"It's a very significant project that's obviously going to generate significant royalties over an extended period," said Fred Bergman, a senior policy analyst with the Atlantic Provinces Economic Council.

"Like the existing projects, it's going to help the province fiscally and it's going to help the province (in the) longer run to reduce its debt."

Newfoundland and Labrador has a projected net debt of about $8.9 billion, down from a high of almost $12 billion in 2004.

The Canadian Association of Petroleum Producers also welcomed the news.

"With production in decline right now from the three current production facilities, this project is coming at an important time," spokeswoman Jill Piccott said in an email.

"To ensure that Newfoundland and Labrador continues to see the major benefits from the offshore industry, increasing exploration and developing new projects is key."

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  • 10. Oil And Gas Accounts For 4.8 Per Cent Of GDP

    The oil and gas industries accounted for around $65 billion of economic activity in Canada annually in recent years, or slightly less than 5 per cent of GDP. Source: <a href="http://www.ceri.ca/docs/2010-10-05CERIOilandGasReport.pdf" target="_hplink">Canada Energy Research Institute</a>

  • 9. Oil Exports Have Grown Tenfold Since 1980

    Canada exported some 12,000 cubic metres of oil per day in 1980. By 2010, that number had grown to 112,000 cubic metres daily. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=9&SheetID=224" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 8. Refining Didn't Grow At All As Exports Boomed

    Canada refined 300,000 cubic metres daily in 1980; in 2010, that number was slightly down, to 291,000, even though exports of oil had grown tenfold in that time. Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=7&SheetID=104" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 7. 97 Per Cent Of Oil Exports Go To The U.S.

    Despite talk by the federal government that it wants to open Asian markets to Canadian oil, the vast majority of exports still go to the United States -- 97 per cent as of 2009. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 6. Canada Has World's 2nd-Largest Proven Oil Reserves

    Canada's proven reserves of 175 billion barrels of oil -- the vast majority of it trapped in the oil sands -- is the second-largest oil stash in the world, after Saudi Arabia's 267 billion. Source: <a href="http://www.ogj.com/index.html" target="_hplink">Oil & Gas Journal</a>

  • 5. Two-Thirds Of Oil Sands Bitumen Goes To U.S.

    One-third of Canada's oil sands bitumen stays in the country, and is refined into gasoline, heating oil and diesel. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 4. Alberta Is Two-Thirds Of The Industry

    Despite its reputation as the undisputed centre of Canada's oil industry, Alberta accounts for only two-thirds of energy production. British Columbia and Saskatchewan are the second and third-largest producers. Source: <a href="http://www.nrcan.gc.ca/statistics-facts/energy/895" target="_hplink">Natural Resources Canada</a>

  • 3. Alberta Will Reap $1.2 Trillion From Oil Sands

    Alberta' government <a href="http://www.huffingtonpost.ca/2012/03/27/alberta-oil-sands-royalties-ceri_n_1382640.html" target="_hplink">will reap $1.2 trillion in royalties from the oil sands over the next 35 years</a>, according to the Canadian Energy Research Institute.

  • 2. Canadian Oil Consumption Has Stayed Flat

    Thanks to improvements in energy efficiency, and a weakening of the country's manufacturing base, oil consumption in Canada has had virtually no net change in 30 years. Consumption went from 287,000 cubic metres daily in 1980 to 260,000 cubic metres daily in 2010. Source: Source: <a href="http://membernet.capp.ca/SHB/Sheet.asp?SectionID=6&SheetID=99" target="_hplink">Canadian Association of Petroleum Producers</a>

  • 1. 250,000 Jobs.. Plus Many More?

    The National Energy Board says oil and gas employs 257,000 people in Canada, not including gas station employees. And the Canadian Association of Petroleum Producers says the oil sands alone <a href="http://www.capp.ca/aboutUs/mediaCentre/NewsReleases/Pages/OilsandsaCanadianjobcreator.aspx" target="_hplink">will grow from 75,000 jobs to 905,000 jobs by 2035</a> -- assuming, of course, the price of oil holds up.