Suncor Energy, government say no decision has been made, but information is being gathered for all options
The Newfoundland and Labrador Oil and Gas Industries Association (Noia) says it is concerned for the future of the Terra Nova offshore oil project given recent action by Suncor Energy, the project operator.
A Noia news release stated that last Friday Suncor Energy issued expressions of interest (EOI) related to the Terra Nova floating production, storage and offloading (FPSO) vessel located on the offshore field. Two expressions of interest were to prepare for the decommissioning of the FPSO and the field, and another was an update to a previous expression of interest preparing for remediation of the FPSO to support the asset life extension project.
The asset life extension project is one Noia and the provincial government hope can be achieved, as it would extend the working life of the FPSO to 2031 and allow the vessel to capture another 80 million barrels of oil.
A potential end to the project would be devastating for hundreds of workers and for the province, Noia says.
“Noia members and our board of directors are deeply concerned for the future of the Terra Nova project and the far-reaching impacts decommissioning and abandonment would have upon our industry, the people who work in it and our province,” Noia CEO Charlene Johnson stated.
However, Sneh Seetal of Suncor Energy said the recent procurement activity is not indicative of a decision on the future of the project, and is instead part of the work and analysis required to help inform the company’s options, and support planning and execution readiness when a final decision is made.
“Over the past year, Suncor has worked diligently with all stakeholders to determine an economically viable path forward for Terra Nova,” Seetal said. “As part of this work we need to look at the options before us. And we needed to advance critical work that could support either outcome. That’s why we have posted ads asking suppliers and vendors to submit proposals for both options — subsea remediation and vessel services to support (asset life extension), and safe abandonment and decommissioning activities.
“We will continue to work with the Government of Newfoundland and Labrador and joint venture partners to evaluate and progress options for Terra Nova.”
Noia stated that on Jan. 14 the provincial government announced a non-binding memorandum of understanding had been reached with the project owners.
The province also committed up to $175 million on a matching contribution basis, and possibly modifying the royalty regime, should an agreement be reached. The commitment was based on an agreement for long-term production via the Terra Nova project.
“The Terra Nova project employs about 900 people directly and thousands more when you consider the indirect and induced employment of those involved in the supply and service sector who lend their expertise in areas such as transportation, maintenance, environmental protection, health and safety, catering and so much more,” Johnson said.
“I understand the deadline to reach a deal on the Terra Nova project was extended to April 30 — which has now passed — and Noia is encouraging all parties to reach an agreement as quickly as possible.”
Andrew Parsons, the province’s minister of Industry, Energy and Technology, said the end of April was part of a basic timeline established, but wasn’t meant to be a cut-off to communication or work on reaching an agreement.
“It is absolutely an ongoing process. There is a tremendous amount of communication that’s happening, but what happened on Friday with the two EOIs coming out is just Suncor, very prudently, realizing that there are two options here. And one is positive and one is negative,” Parsons said.
“One is the possibility, which is quite real, of abandonment no matter how much we don’t want to see that happen. The other one is a positive outcome and work continuing. We are striving to make that second option the one that happens, the realistic one, but that work continues and we are hard at it.
“There are a lot of people in government and the different partnership companies who are working very hard to come to that space that works for everybody.”
Terra Nova owners and their working interests include Suncor Energy at 37.675 per cent (operator); ExxonMobil at 19 per cent; Equinor at 15 per cent; Husky Energy (Cenovus) at 13 per cent; Murphy Oil at 10.475 per cent; Mosbacher Operating at 3.85 per cent; and Chevron Canada at one per cent.
Decreasing demand for oil, low prices and the COVID-19 pandemic have played havoc with the oil and gas industry worldwide.
Progressive Conservative MHA Lloyd Parrott called on the provincial and federal governments to act swiftly and implement the recommendations of the Oil and Gas Recovery Task Force’s report released last week.
“The report made it clear that immediate and significant support is needed to ensure the future of our oil and gas industry,” Parrott said.
He called on the provincial government to provide updates on the status of the West White Rose, Terra Nova FPSO and Bay du Nord projects.
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Source: The Telegram | This text was excerpted from the media outlet cited on May 3, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.
