If you were wondering how the province ended up with an anticipated $725-million deficit, as Fin-ance Minister Tom Marshall announced in his mid-year economic up-date last week, there is new information available to further explain at least one area of year-over-year change.
Looking specifically at oil profits, oil prices have been at issue for some time. The provincial estimate in April for a $124-per-barrel price of crude oil overshot the mark. However, the Department of Finance has also released oil production numbers for most of the year to date.
Production should go hand in hand with price, when talking about overall profit or loss from non-renewable resources.
On production, the economic research and analysis division within the Department of Finance posted its review of the provincial numbers Thursday.
The department is predicting oil production, from the province’s three producing fields, will fall from 97.3 million barrels in 2011 to 76.7 million barrels.
In total, 52.4 million barrels of oil were produced in the province from January to September, it notes. That is a drop of 20.9 million barrels, or 28.5 per cent, when compared to the same period last year.
With the floating production vessels Terra Nova and SeaRose out for maintenance and upgrades, a drop in production was expected this year. The fact the ships would be offline was highlighted at budget time, when the provincial government was estimating a $258-million budget deficit.
As it turns out, the Terra Nova field produced 7.9 million barrels from January to September, down by 4.3 million barrels or about 35 per cent from the year before.
The SeaRose is being used for the White Rose oilfield. That field, including the North Amethyst project, produced 10.1 million barrels January to September, a decrease by 8.6 million barrels or about 46 per cent.
The SeaRose resumed production Aug. 16 and the Terra Nova returned to the offshore Oct. 6. Production ships aside, the Hibernia project also had a drop in production to date in 2012.
From January to September, Hibernia produced 34.4 million barrels of oil. That’s down from 42.4 million for the same time last year.
“This was due to natural declines, as well as a maintenance shutdown in late August/early September,” states the departmental analysis.
On a brighter note in terms of provincial benefits, an economic review for 2012 also published Dec. 18 states the Hebron project employed about 780 people from the province as of Sept. 30, out of just over 1,100 employees total.
When Hebron construction is complete and the project comes online, it is expected to boost the otherwise declining production offshore.