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Suncor to sanction $500m Terra Nova extension project offshore Canada this month

Company’s east coast E&P boss tells supply chain that the final investment decision on field’s life extension scheme is imminent

Calgary-based Suncor Energy aims to take the final investment decision this month on its US$500 million Terra Nova Asset Life Extension (ALE) project offshore Newfoundland & Labrador, Canada.

There were fears earlier this year that the project would be cancelled amid the oil price collapse caused by Covid-19, which has driven oil companies to slash spending and sell non-core assets.

However, helped by emergency funding from the federal government, the provincial authorities and Terra Nova’s partners in June reached a conditional agreement to revive the 70-million-barrel ALE scheme, which involves subsea wells tied back to the field’s revamped floating production, storage and offloading vessel.

This agreement will see some Terra Nova partners — thought to be Equinor, ExxonMobil, Chevron and Mosbacher — exit the asset, with Suncor boosting its operating stake to about 48%.

Josee Tremblay, Suncor’s head of east coast E&P, said the parties intend “to move ahead with a sanction decision later this month”, assuming the terms and conditions of an agreement are successfully wrapped up.

Speaking at an ALE supply chain event on Tuesday, she said: “I have September in my notes, but really we’re looking to wrap everything up in the next month.”

The ALE development will support 1000 direct and indirect jobs in Newfoundland in the years ahead, said Tremblay, and is set to extend production from Terra Nova by a decade to at least 2031.

The shallow-water field has been offline since 2019 when the FPSO was removed from location pending its then mobilisation to a drydock at Navantia shipyard in El Ferrol, north-west Spain for refurbishment.

ALE’s suspension put paid to that revamp, since when the FPSO has been moored outside Bull Arm yard in Newfoundland.

The Navantia contract has now been revived, with the FPSO — after preparatory work at Bull Arm — due to mobilise to Spain this December and return to its location on the Grand Banks in July or August of next year, ready to restart operations in the fourth quarter of 2022.

As part of the ALE agreement, the province of Newfoundland & Labrador will commit more than C$500 million (US$404 million) in financial assistance over the life of the project via a direct contribution of C$205 million from the province’s Oil & Gas Industry Recovery Assistance Fund, as well as changes to the royalty structure valued at over C$300 million.

Tremblay said Suncor will match the government’s funding pledge by ploughing at least C$205 million into the provincial supply chain.

“We will be spending more than C$205 million in the local community, including employment and project management, ” she added.(Copyright)

Source: Upstream | This text was excerpted from the media outlet cited on August 4, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.