Exxon Mobil, the U.S. oil major, said it will produce 150,000 barrels of oil a day at Hebron using a massive concrete gravity-base structure like the one employed at the Hibernia project, which has been operating in the iceberg-prone region since the late 1990s.

First production is scheduled for 2017.

The green light for Hebron, the fourth major offshore Newfoundland oil project, is a positive development for energy operations in harsh operating conditions in a week in which the industry came under intense fire for an accident in the Far North.

In the United States, opponents of Royal Dutch Shell's Arctic oil program called on the Obama administration to put offshore drilling plans in the region on hold after its oil rig broke away from tow boats in high seas and ran aground off Alaska.

In a statement, Exxon Mobil said its own experience in Arctic development would serve it well as it and its partners developed Hebron in the tough Atlantic operating conditions.

The 700 million barrel project, in the Jeanne d'Arc Basin, 350 km (200 miles) southeast of St John's, Newfoundland, is well below the Arctic Circle. Discovered in 1980, the development follows others - Hibernia, Terra Nova and White Rose - in the region.

Exxon Mobil said the production structure, designed to hold 1.2 million barrels of the heavy Hebron crude, is being built at the Bull Arm construction site in Newfoundland. It will provide 3,500 construction jobs.

Hebron won regulatory approval last year.

In the last decade, the project was at the center of a heated debate between the Newfoundland government and oil industry, in which the province complained of being short-changed as huge energy developments moved forward.

In the end, they agreed to a new fiscal arrangement and the province paid C$110 million for a 4.9 percent interest. In 2008, the cost had been estimated at C$5 billion to C$7 billion.

For Exxon Mobil, the project is moving forward just as it is set to start production from the C$10.9 billion Kearl oil sands project in Northern Alberta, operated by its Canadian affiliate Imperial Oil Ltd..

The other partners in Hebron are Chevron Corp, Suncor Energy Inc, Statoil ASA and government-owned Nalcor Energy Oil And Gas.

(Editing by Gunna Dickson)

By Jeffrey Jones