Suncor CEO Offers Little Hope for Terra Nova as ‘Brick Wall’ Date Approaches –

Suncor CEO Offers Little Hope for Terra Nova as ‘Brick Wall’ Date Approaches – fr

Hopes of new life for the Terra Nova oilfield in Newfoundland and Labrador’s offshore industry are fading, Suncor Energy CEO says “it doesn’t look like it’s going to be there. arrive “.
Speaking to investors on Wednesday, Mark Little strongly hinted that the FPSO Terra Nova would be taken out of service because attempts to get the seven partners to agree on a major overhaul have so far failed.

Little was quoted in Upstream Online, an independent oil and gas industry news website, as saying that June 15 is the “brick wall” date on which a decision will be made.

Suncor, of Calgary, operator of the Terra Nova oilfield and 37.8% majority owner, is paying for an expensive overhaul of the floating, production, storage and offloading vessel, which began production on the field in 2002.

However, without the unanimous support of the other six companies for what is called an “asset life extension” which is expected to cost $ 500 million, the only other option is decommissioning and abandonment.

“It is much easier to give up than to get the FTA [approved] Said Petit.

Suncor President and CEO Mark Little is pictured here in May 2019. (Jeff McIntosh / The Canadian Press)

In a TV interview with BNN Bloomberg on Wednesday night, Little said it didn’t seem likely the partners would come to a deal.

“It’s heartbreaking for me to think that this asset and the great people who operate and maintain it that this operation could come to an untimely end of life due to our inability to get alignment,” Little told Bloomberg.

If the field is decommissioned and abandoned, it will be a blow to the province’s oil and gas industry, with oil extraction accounting for nearly 20% of the province’s economy in 2018.

Total direct employment in support of the Terra Nova oil field was around 850 people at the end of 2019, according to the Canada-Newfoundland and Labrador Offshore Petroleum Board, the body that regulates the offshore petroleum industry.

Dave Mercer, president of Unifor Local 2121, which includes workers at the Hibernia and Terra Nova platforms, told CBC News that many people stand to lose a lot if quitting is the decision.

“I appeal to the government. I appeal to the oil companies. You have to do whatever you can. If Terra Nova is unsuccessful, the expansion of White Rose is unlikely to take place. .… Everyone needs to work in this province. What do we have left if we don’t have the oil? Not much. ”

The Newfoundland and Labrador Oil and Gas Industries Association, known as Noia, also made a plea.

“This project provides approximately 1,000 direct jobs and thousands more in the service and supply sector through the use of helicopters, supply vessels, environmental monitoring, catering, maintenance, health, safety and medical services, human resources and much more, ”said Noia. CEO Charlene Johnson in a press release.

“On behalf of the Noia members who are relying on the project, I implore all parties to find a positive solution as soon as possible. “

Dave Mercer, president of Unifor Local 2121, says he’s begging the government and the oil companies to make a deal for the Terra Nova. (Mike Simms/CBC)

Energy Minister Andrew Parsons said the provincial government has done everything possible to provide support, but it has been difficult with seven different partners.

“Trying to get everyone in one place has been tough, and there’s no doubt we’re running out of time now. But as of today, I’m still hopeful that something can happen, ”Parsons said. “Much of this problem is not simply under the control of the province. “

The overhaul has derailed

The Terra Nova is one of four mature oil fields in the offshore, but it ceased production in late 2019 and was due to sail to a Spanish shipyard last year for a major overhaul.

However, the onset of the COVID-19 pandemic last winter derailed those plans, and the Terra Nova has been docked in Trinity Bay for months at the Bull Arm manufacturing site.

In an effort to save the project, the provincial government offered Suncor and its partners $ 175 million to encourage them to extend the lifespan. The money is believed to come from the $ 320 million offshore oil and gas industry recovery fund, which was created with federal cash in September.

The provincial government has also suggested a willingness to give oil companies a break in their royalty payments.

“There is a big difference between billion dollar multinational oil companies and a province like Newfoundland and Labrador. I think we’ve shown, and I think it will be shown, that we’ve done our best, ”said Parsons.

“I really hope this ends on a positive note. At the moment, we are still in the conversation. I know there has been a call from investors, I know there have been discussions, but it’s still not over. “

Energy Minister Andrew Parsons said he hoped a deal could be reached. (Mike Simms / CBC)

But Little said time is running out for the Terra Nova, as weather conditions are an important factor in any plan to improve underwater field equipment and overhaul the Terra Nova.

Suncor’s partners in Terra Nova are ExxonMobil Canada Properties, Equinor Canada, Husky Energy, a subsidiary of Cenovus Energy, Murphy Oil Company, Mosbacher Operating and Chevron Canada Resources.

Little can identify which partners oppose a deal, but industry sources told CBC News that ExxonMobil, the No.2 partner with 19%, is reluctant to sign a plan that would see the Terra Nova to produce 80 million barrels of oil over 10 years.

CBC News has requested a response from ExxonMobil.

Meanwhile, with so much uncertainty, Suncor planned all the scenarios.

Last month, Suncor issued a series of expressions of interest from companies that could carry out abandonment work on the 30 wells associated with the Terra Nova production system, 11 other exploration and delineation wells, and proceed. to the decommissioning of the Terra Nova itself.

But Suncor is also seeking proposals from companies to provide underwater remediation and marine services to support the upgrading of the subsea facility 350 kilometers east of St. John’s.

The second scenario would also require an expensive overhaul of the aging Terra Nova FPSO.

Learn more about CBC Newfoundland and Labrador


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