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ST. JOHN'S, N.L. - The government of Newfoundland and Labrador expects the province will gain $20 billion in royalties and up to 3,500 jobs from the Hebron offshore oil project.

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The Canadian Press

DEAL SIGNED: Natural Resources Minister Kathy Dunderdale, Premier Danny Williams, centre, and Mark Nelson, president of Chevron Canada, the designated project operator, celebrate the signing of the Hebron oil project agreement in St. John's on Wednesday. The government of Newfoundland and Labrador expects the province will gain $20 billion in royalties and up to 3,500 jobs from the Hebron offshore oil project.

In a ceremony Wednesday, the province signed an agreement with an oil consortium - including ExxonMobil, Chevron Resources, Petro-Canada and Norsk Hydro - outlining details of the benefits the province will receive during the project's 25-year lifespan.

"With Hebron we are launching a new era of energy projects in which we, the people of Newfoundland and Labrador, are stepping forward and proudly taking our place as full partners and active participants in energy resource development," Premier Danny Williams told a news conference at a hotel in downtown St. John's.

"Never before in the history of our energy industry have we taken the bold steps that we are taking today. Never before in our history as a province have we been prepared to take these important steps toward self-reliance."

The province, which has already secured a 4.9 per cent equity stake in the project, spent the past year negotiating the fine points of a deal that was secured in a memorandum of understanding last August.

The premier described the agreement as a "breakthrough."

"We are soon to become a 'have' province," he said.

The government also confirmed that during the peak construction period there will up to 3,500 jobs created in the province.

The oil is expected to start pumping in 2017 and the royalties estimate is based on a projection that oil would be worth $87 per barrel.

Ed Martin, president of the province's energy corporation, told a technical briefing that the work building the concrete base of the huge rig will be carried out at Bull Arm, N.L., the site where the Hibernia platform was built in the late 1990s.

Portions of the top half of the production platform, known as the "topsides," will be put out to tender.

Asked if that was a loss to the province's local industry, Williams responded that the shipyards and fabrication facilities in the province can only handle so much work.

"This is hardly a giveaway ... You can't work above 100 per cent capacity."

The project is located 310 kilometres southeast of St. John's, and is expected to produce up to 200,000 barrels of heavy oil per day.