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Tuesday, Jun 22nd, 2021

Newfoundland and Labrador oil industry association pushing for Suncor’s Terra Nova decision

ST. JOHN’S, N.L. — The Newfoundland and Labrador Oil and Gas Industries Association (Noia) says a deadline of June 15 has been set for a decision on whether the Terra Nova floating production, storage and offloading (FPSO) vessel is to continue with its work in the offshore or hit the retirement button.

A Noia news release states that, during a recent call with investors, Suncor Energy CEO Mark Little commented on the future of the Terra Nova FPSO and the efforts to confirm the asset-life extension project of the vessel.

That project, if it gets the nod to proceed, would extend the working life of the FPSO to 2031 and allow the vessel to capture another 80 million barrels of oil.

“Noia understands the business requirements of Suncor Energy to set a deadline and we remain hopeful that an agreement will be reached prior to June 15,” Noia CEO Charlene Johnson stated in the release.

“This project provides approximately 1,000 direct jobs and thousands more through the service and supply sector through the use of helicopters, supply vessels, environmental monitoring, catering, maintenance, health, safety and medical services, and human resources.

The commitment was based on an agreement for long-term production via the Terra Nova project.

“Every effort must be made to ensure we maximize resource recovery and value for our province,” Johnson said. “In January, an MOU between the parties was announced and it seemed a deal was a strong possibility. We need to get back to that place.”

Andrew Parsons, the province’s minister of Industry, Energy and Technology, has said the government is working hard to come to an agreement. He has said there is “a tremendous amount of communication that’s happening.”

The Progressive Conservative party, however, sees things differently.

Lloyd Parrott, PC shadow minister of industry, energy, and technology, said time is ticking and the project is in jeopardy because of the Liberal government’s inaction.

“There are thousands more employed through spinoffs such as restaurants, accommodations like hotels and campgrounds, car and real estate sales, and struggling local businesses that will be greatly impacted, along with hundreds of organizations in the community and volunteer sectors.”

Johnson noted that on Jan. 14, 2021, the provincial government announced that a non-binding memorandum of understanding (MOU) 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.

“Every effort must be made to ensure we maximize resource recovery and value for our province,” Johnson said. “In January, an MOU between the parties was announced and it seemed a deal was a strong possibility. We need to get back to that place.”

Andrew Parsons, the province’s minister of Industry, Energy and Technology, has said the government is working hard to come to an agreement. He has said there is “a tremendous amount of communication that’s happening.”

The Progressive Conservative party, however, sees things differently.

Lloyd Parrott, PC shadow minister of industry, energy, and technology, said time is ticking and the project is in jeopardy because of the Liberal government’s inaction.

“It’s clear the Liberals have not done enough to facilitate these discussions and guide the parties to a path that ensures jobs for Newfoundlanders and Labradorians,” Parrott stated in a news release. “The $175 million agreement announced the day before the election has expired without results.

“There is a pathway to an agreement here and the Liberals have failed to get there to date.”

Terra Nova owners and their working interests include Suncor Energy at 37.675 per cent (operator); ExxonMobil, 19 per cent; Equinor, 15 per cent; Husky Energy, 13 per cent; Murphy Oil, 10.475 per cent; Mosbacher Operating, 3.85 per cent; and Chevron Canada, one per cent.

Decreasing demand for oil, low oil prices and the COVID-19 pandemic have played havoc with the oil and gas industry worldwide.

Suncor Energy operates the Terra Nova field, which is located offshore approximately 350 kilometres southeast of the island of Newfoundland. Discovered in 1984, the oilfield was the second to be developed on the Grand Banks in Newfoundland’s offshore.

Production from the field began in 2002, using the FPSO vessel, which is 292.2 metres long and 45.5 metres wide — approximately the size of three football fields laid end to end — and from the keel to the helideck stands more than 18 stories high.

Source: Saltwire | This text was excerpted from the media outlet cited on May 28, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.