OPINION: News that Suncor Energy could abandon its Terra Nova oilfield offshore eastern Canada has put government officials in the Newfoundland & Labrador provincial capital of St John’s on edge.
The upstream sector is a major economic contributor to the province, but has been treading water for a year due to low oil prices, Covid-19 and the energy transition that have combined to exert pressure on operators to preserve cash, focus on low-cost assets and revamp strategies.
Suncor is threatening to close down Terra Nova, claiming the cost of a life-extension project is too much, while Cenovus has adopted the same approach for its West White Rose development, in which Suncor is a partner.
Equinor’s Bay Du Nord scheme — where Cenovus is the major partner — is also on hold because the operator is focused on projects in Norway, Brazil and its energy transition drive.
Even if Calgary-based Suncor abandons Terra Nova, it seems certain to retain its interests in the prolific Hibernia and Hebron oilfields in Newfoundland for the foreseeable future.
The strategy for Cenovus is rather more opaque, although, just like Suncor, it does seem to be gradually retrenching to its oil sands-rich heartlands in Alberta.
If Cenovus and Suncor decide they will not fund Terra Nova, West White Rose and Bay du Nord, these projects will be jeopardised.
Willing buyers may be found for the Suncor and Cenovus stakes, but new investors will still look to the Newfoundland & Labrador government for incentives to make it worth their while. Over to you, St John’s.
Source: World Oil | This text was excerpted from the media outlet cited on May 7, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.