The woman in charge of the effort to bring the Terra Nova oilfield in Newfoundland and Labrador’s offshore back to life says a renewed sense of enthusiasm and positivity has been injected into Suncor Energy’s St. John’s operations.
After months of uncertainty, and with an industry bracing for a worst-case scenario, Suncor announced Thursday that an agreement in principle had been reached to save the field from decommissioning and abandonment.
“Everyone is so happy to have reached this key milestone,” said Josée Tremblay, vice-president of Suncor’s eastern Canadian operations, on Monday.
The agreement includes $205 million from a federally funded, but provincially managed, oil industry recovery fund, and a further pledge by N.L. to forgo as much as $300 million in royalties.
It was welcome news for a team that has been working hard for over a year, said Tremblay.
“We had many, many long days, but we’re happy to be where we are today,” she said.
Bull Arm will get busy
Tremblay said the goal is to return a modernized and upgraded Terra Nova floating production, storage and offloading vessel to the Grand Banks in the fall of 2022, and connect to subsea infrastructure that will have also undergone an upgrade by then.
Once that occurs, the Terra Nova is expected to produce another 80 million barrels of oil over the next decade, and sustain hundreds of jobs connected to an oilfield that began production in 2002.
Tremblay said some of the refit work for the Terra Nova will take place at the Bull Arm fabrication facility in Trinity Bay, where the aging vessel has been dockside for months with only a skeleton crew aboard.
“There’ll be a lot of work to be done [at Bull Arm]. And we look forward to working with all the contracting community here to support that work,” Tremblay said.
She said engineering packages are being developed in anticipation of the awarding of contracts, with work to commence this fall once final sanction is approved by the owners.
“We really look forward to working with the community here and the local contracting community to ensure that we … execute the work efficiently here in the next few months.”
Once the Bull Arm work is complete, Tremblay said, the Terra Nova will sail to a drydock in Spain this winter to complete the refit.
Tremblay would not say how much work will be carried out at Bull Arm, the value of that work, or how many jobs it might create. Those details are being finalized, she said.
New ownership structure
Last week’s agreement ended months of uncertainty about the fate of the Terra Nova, which has not produced oil since late 2019 after the offshore regulator ordered a shutdown because of safety concerns.
According to quarterly benefits agreement reports filed by Suncor, there were 1,125 people working on the Terra Nova development as of March 31, 2019. However, that number had dropped to 445 people by March 31 this year.
When asked whether job numbers will return to historic levels, Tremblay said, “We’re absolutely looking forward to continuing to have the same involvement that we had with all our employees.”
The deal to revive the Terra Nova includes a new ownership structure, with as many as four of the seven original oil companies exiting the project and the remaining partners increasing their ownership stakes.
Suncor has said its ownership will increase from 38 to 48 per cent, and that some of the other owners were increasing their ownership of the project for consideration payable from the rest.
CBC has previously confirmed that ExxonMobil (19 per cent), Equinor (15 per cent), Mosbacher (3.85 per cent) and Chevron (one per cent) were looking to leave the Terra Nova partnership.
Government support ‘key pillar’ for Terra Nova deal
Tremblay said a full picture of the new ownership structure will be revealed when the various companies formally agree to the revised structure.
Asked if the outcome would have been different without government help, Tremblay described the cash and royalty relief as a “key pillar” in the effort to save Terra Nova. “We needed to come to an agreement with all of the owners of the asset, as well as as the support from the oil and gas recovery fund,” Tremblay said.
Premier Andrew Furey has described the support for Terra Nova as “prudent and responsible” use of the oil and gas fund money.
“This is a project that was on life support. We gave them life support to get back out in the field now that the price of oil is gone back up.”
Calgary-based Suncor has ownership interests in all four producing oilfields in Newfoundland’s offshore.
Tremblay said she couldn’t comment on why some oil companies chose to leave the Terra Nova partnership. “We are happy that some of the owners that are with us will continue to be with us and we look forward to the next the next phase.”
Source: CBC | This text was excerpted from the media outlet cited on June 22, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.