Suncor CEO offers little hope for Terra Nova as 'brick wall' date approaches
Union raises concerns over potential job loss
Hope for a renewed life for the Terra Nova oilfield in Newfoundland and Labrador's offshore industryis fading, with the CEO of Suncor Energy stating it "does not look like it's going to get there."
Speaking to investors Wednesday,Mark Little strongly hinted that the Terra Nova FPSOwill be decommissioned because attempts to bring all seven partners into agreement on a major overhaul have so far been unsuccessful.
The union representing offshore workers says it'sworried about its members' future.
Dave Mercer, president ofUnifor Local 2121, which includes workers on the Hibernia andTerra Nova platforms, told CBC News people stand to lose a lot if abandonment of the oilfield is the final decision.
"I'm putting out a plea to the government. I'm putting out a plea to the oil companies. You've got to do whatever you can. If Terra Nova fails, White Rose extension more than likely won't go ahead," said Mercer.
"Everybody needs to work in this province. What do we have left if we don't have the oil? Not much."
If the field is decommissioned and abandoned, it will deal a big blow to the province's oil and gas industry, with oil extraction representing nearly 20 per cent of the province's economy in 2018.
Total direct employment in support of the Terra Nova oilfield was roughly 850 people at the end of 2019, according to the Canada-Newfoundland and Labrador Offshore Petroleum Board, the body that regulates the offshore oil industry.
The Newfoundland and Labrador Oil and Gas Industries Association, known as Noia, also issued a plea.
"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, human resources and so much more," said Noia CEO Charlene Johnson in a media release.
"On behalf of the Noia members who rely upon the project, I implore all parties to find a positive resolution as soon as possible."
Noia represents approximately 460organizations worldwide that are involved in, or benefit from, the oil and gas industry in N.L.
Little was quoted in Upstream Online,an independent oil and gas industryInternet news site, as saying that June 15 is the "brick wall" date at which a decision will be made.
Calgary-based Suncor, the operator of the Terra Nova oilfield and a majority owner at 37.8 per cent, supports a costly overhaul of the floating, production, storage and offloading vessel, which began producing in the field in 2002.
However, without unanimous support from theother six companies for what's called an "asset-lifeextension," projected to cost $500 million, the only other option is decommissioning and abandonment.
"It's far easier to go into abandonment than it is to get ALE [approved]," said Little.
During a televisedinterview in BNN Bloomberg on Wednesday evening, Little said it doesn't appear likelythe partners will reach an agreement.
"It's heartbreaking to me to think this asset and the great people that operate it and maintain it that this operation could come to a premature end of life because of our inability to get alignment," Little told Bloomberg.
Energy Minister Andrew Parsonssaid the provincial government has done everything it can to be supportive, but the task has been difficult with seven different partners.
"Trying to get everyone in the same spot has been difficult, and no doubt we're in a time crunch now. Butas of today I still remain hopeful that something can happen," Parsons said."A lot of it is not simply within the province's control."
Overhaul derailed
The Terra Nova is one of four mature oilfields in the offshore, but it stopped producing in late 2019, and was scheduled to sail for 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 moored dockside in Trinity Bay for months at the Bull Arm fabrication site.
In a bid to save the project, the provincial government has offered $175 millionto Suncor and its partners as an incentive to proceed with the life extension. The money would come from the $320-millionoffshore oil and gas industry recovery fund, which was created with federal cash in September.
The provincial government has also suggesteda willingness to give the oil companies a break on their royalty payments.
"There's a big difference between multinational billion-dollar oil companies and a province like Newfoundland and Labrador. I think we've shown, and I think it will be shown, that we've tried our best," said Parsons.
"I truly hope that this will end on a positive note. Right now we're still in the conversation. I know there was an investor call, I know there was talk, but it's still not over."
But Little said time is running out for the Terra Nova, since weather conditions are a big factor in any plans for improvements to subsea equipment in the field, and an overhaul on the Terra Nova.
Suncor's partners in the Terra Nova areExxonMobil Canada Properties, Equinor Canada, Cenovus Energy subsidiary Husky Energy,Murphy Oil Company, Mosbacher Operatingand Chevron Canada Resources.
Little would not identify what partners were standing in the way of an agreement, but industry sources have told CBC News that ExxonMobil, the No. 2 partner at 19 per cent, is reluctant to sign onto a plan that would see the Terra Nova produce another 80 million barrels of oil over 10 years.
CBC News has requested a response from ExxonMobil.
Meanwhile, with so much uncertainty, Suncor has been planning for all scenarios.
Last last month,Suncor issued a series of expressions of interests from companies that could do abandonment work for the 30 wells tied to the Terra Nova production system, 11 other exploration and delineation wells, and carry out decommissioning of the Terra Nova itself.
But Suncor is also seeking proposals from companies for the provision of subsea remediation and vessel services to support a modernization of the subseafacilities, 350 kilometres east of St. John's.
The second scenario would also require an expensive overhaul of the aging Terra Nova FPSO.
_(720p).jpg)
 OFFICIAL HD MUSIC VIDEO.jpg)
.jpg)
