Suncor plans for all scenarios as talks to extend life of Terra Nova FPSO drag on

As discussions over the future of the Terra Nova FPSO dragon, the lead operator of the offshore Newfoundland oilfield, Suncor Energy, is preparing for all contingencies, including decommissioning and abandonment.

That has the lobby group representing the oil and gas supply and service sector in Newfoundland and Labrador deeply concerned about whetherthe idled floating, production, storage and offloading vessel will ever again operate in theoffshore.

"I hope we do not get to a point in the coming months where we are decommissioning the TerraNova FPSO," Charlene Johnson, chief executive officer of the province's oil and gas industries association, better known as Noia, said in a statement Monday.

She saidabandoning the Terra Nova field would be devastatingfor the province, but Energy Minister Andrew Parsons said Monday that hope remains for a successful outcome.

"Even though deadlines have come and gone, there continues to be conversations, and that to me always spells hope," Parsons told CBC News.

According to the offshore industryregulator, nearly 900 people were employed directly with the Terra Nova project at the end of 2019, and many more through indirect activities.

But the Terra Nova has not produced oil in over a year, and hundreds of workers connected to the project have been laid off.

For months, the vessel has been moored dockside at theBull Arm fabrication site in Trinity Bay as Suncor and its six partners struggle to find an economically viable path forward for the project.

Last week,Suncor issued a series of expressions of interests as talks between the companies and the provincial government continue over the fate of the field, and a $175-million grant being dangled by politicians as an incentive to save the project.

Suncor is seeking proposals from companies who could do wellbore abandonment 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 FPSO.

According to Suncor documents, the Terra Nova could be decommissioned later this year, and subsea abandonment work, which would require the services of amobile offshore drilling unit and various support ships, could commence in the fall of 2022.

But Suncor is also seeking proposals from companies for the provision of subsea remediation and vessel services to support a modernization of the subseafacilities, located 350 kilometres east of St. John's.

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

"We needed to advance critical work that could support either outcome,"Suncor Energy spokespersonSneh Seetal wrote in a statement Monday to CBC News.

In its documents, Suncor makes it clear that a final decision on the oilfield's futurehas not yet been made.

Two deadlines have now come and gone for anagreement that would see the life of the field extended for at least another decade, and result inthe production of another 80 million barrels of crude.

The provincial government has offered $175 million in public money to Suncor and its partners, and a break on royalty payments to the province, on the condition that the FPSO undergoes arefit, and that it is returned to production on the Grand Banks.

The province is also insisting that as much of the work as possible be carried out in the province.

The money is part of a$320 million lifeline provided by the federal governmentto help protect jobs and lower carbon emissions in the offshore.

Parsons said talks are ongoing, adding it's a complicated processwith "competing priorities and different objectives" for the seven oil companies with ownership stakes.

He said the province will not give up on the Terra Nova.

"When you have something of this value that means so much to the workforce, the province, our treasury, I think it's incumbent upon us to never give up and have every conversation we can to see if we can explore this further," he said.

Asked what issues are preventing a deal from being reached, Parsons said he was unable to provide any specifics because of confidentiality agreements.

As for the millions in public money on the table, Parsons said there is no formal timeline for a resolution,but acknowledged that extended delays are in no one's interest.

"Every day passing is a day people are not working,we're notproducing [oil]," he said.

Any decision that results in the abandonment of the field would have far-reaching impacts on the provincial economy, said Johnson.

"We are perilously close to losing the 2021 season for maintenance and upgrades to the vessel,which in turn has a significant impact on Noia members in the coming years," she said.

Since beginning production inJanuary 2002, the Terra Nova has produced 425 million barrels of oil.

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