The woman in charge of efforts to revive the Terra Nova oil field off Newfoundland and Labrador says a renewed sense of enthusiasm and positivity has been injected into Suncor Energy’s operations in St. John’s .
After months of uncertainty, and with an industry bracing for a worst-case scenario, Suncor announced Thursday that a tentative deal has been reached to save the field from decommissioning and abandonment.
“Everyone is very happy to have reached this milestone,” said Josée Tremblay, Suncor’s vice president of operations in Eastern Canada on Monday.
The deal includes $ 205 million from an oil industry stimulus fund funded by the federal government but managed by the province, and another pledge by NL to forgo $ 300 million in royalties.
It was good news for a team that has been working hard for over a year, said Tremblay.
“We have had many, many long days, but we are happy to be where we are today,” she said.
Bull arm will take care
Tremblay said the goal is to return a modernized and improved Terra Nova production, storage and offloading floating vessel to the Grand Banks in the fall of 2022, and to connect to the subsea infrastructure that will also have undergone an upgrade by then.
Once that happens, the Terra Nova is expected to produce an additional 80 million barrels of oil over the next decade and maintain hundreds of jobs related to an oilfield that began production in 2002.
Tremblay said some of the Terra Nova’s refit work will take place at Bull Arm’s manufacturing plant in Trinity Bay, where the aging vessel has been docked for months with only a reduced crew on board.
“There will be a lot of work to do [at Bull Arm]. And we look forward to working with the entire entrepreneurial community here to support this work, ”said Tremblay.
She said engineering packages are being developed in anticipation of contract award, with work scheduled to begin this fall once the final sanction is approved by the owners.
“We really look forward to working with the community here and the local entrepreneurial community to ensure that we… get the job done efficiently here over the next few months. “
Once Bull Arm’s work is complete, Tremblay said, the Terra Nova will sail to a dry dock in Spain this winter to complete the refit.
Tremblay wouldn’t say how much work will be done at Bull Arm, the value of that work, or how many jobs it could create. Those details are being finalized, she said.
New ownership structure
Last week’s deal ended months of uncertainty over the fate of Terra Nova, which has not produced oil since late 2019 after the offshore regulator ordered the shutdown due to security concerns.
According to quarterly benefit agreement reports filed by Suncor, 1,125 people were working on Terra Nova development as of March 31, 2019. However, that number had fallen to 445 people as of March 31 of this year.
When asked if the number of jobs would return to historic levels, Tremblay said, “We are absolutely looking forward to continuing to have the same involvement we had with all of our employees.
The deal to relaunch the Terra Nova includes a new ownership structure, with up to four of the original seven oil companies leaving the project and the remaining partners increasing their stakes.
Suncor said its stake would drop from 38 to 48 percent and that some of the other owners were increasing their stake in the project for consideration payable by others.
CBC has previously confirmed that ExxonMobil (19%), Equinor (15%), Mosbacher (3.85%) and Chevron (1%) are looking to exit the Terra Nova partnership.
Government supports ‘key pillar’ of Terra Nova deal
Tremblay said a full picture of the new ownership structure will be revealed when the various companies formally accept the revised structure.
When asked if the outcome would have been any different without government help, Tremblay described the cash and royalty relief as a “key pillar” in the effort to save Terra Nova. “We had to come to an agreement with all owners of the asset, as well as the support of the oil and gas recovery fund,” Tremblay said.
Prime Minister Andrew Furey described supporting Terra Nova as a “prudent and responsible” use of oil and gas fund money.
“It was a project that was on life support. We gave them life support to get back into the field now that the price of oil has come back up.”
Calgary-based Suncor owns interests in the four producing oil fields off Newfoundland.
Tremblay said she couldn’t explain why some oil companies chose to leave the Terra Nova partnership. “We are pleased that some of the owners who are with us continue to be with us and look forward to the next phase.”
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