No final decision has been made, but it appears as though the Newfoundland oil patch is about to take a major hit.
In May 2019, Suncor and the Terra Nova joint venture owners sanctioned plans to proceed with a project that would have extended the life of the FPSO to approximately 2031. Then came COVID-19 and a significant downturn in the industry.
Suncor, the lead on the project, is part of a consortium but President and CEO Mark Little says they need all the partners aligned or Terra Nova will come to a premature end.
Little told BNN that they have spent months trying to achieve alignment, but time is running out. He says it doesn’t look like there’s a high probability that will occur. The decision to pull the plug is expected June 15.
(Mark Little, Suncor.)
Little said, “It’s heartbreaking to me to think that this asset and the great people that operate it and maintain it and such… that this operation could come to a premature end of life because of our inability to get alignment.” He says they’ve been working on it for a long time and just aren’t seeing the alignment between all the owners to move forward.
The Government of Newfoundland and Labrador conditionally dangled $175-million from the oil fund provided by the federal government but it doesn’t appear as though Suncor will leverage the money by resuming activity.
The FPSO remains docked in Bull Arm, Trinity Bay but Expressions of Interest on decommissioning of the platform are expected to begin coming in next week.
Noia says it is encouraged that Suncor has indicated it would like to proceed with the project and they are imploring the parties to find a resolution before the looming June 15th deadline.
CEO Charlene Johnson says Noia understands the business requirements of Suncor Energy to set a deadline for a decision on the Asset Life Extension Program for the Terra Nova FPSO, and they remain hopeful that an agreement can be reached before mid-June.
“The project has provided billions of dollars in revenue to both the operating partners and the federal and provincial governments, and I do not believe anyone can simply walk away. 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. 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 CEO Charlene Johnson
Difficult Decisions Ahead
(File photo: Andrew Parsons.)
Natural Resources Minister Andrew Parsons acknowledges some difficult decisions are ahead.
He says while it’s too early to say whether the project will face a permanent shutdown, the province is doing what it can.
That said, Parsons says the province’s role is limited since the decision ultimately lies with the operators, all of whom have to be aligned in moving forward with the project.
PCs say Every Effort Must be Made to Prevent a Shut Down
(Photo courtesy Suncor Energy Inc.)
The Opposition Tories, meanwhile, claim there is a path to reviving the project, but they don’t say what that path is.
They do say the Liberals have so far failed to find it, citing the Greene report which slammed the federal and provincial governments for not supporting the oil and gas industry.
About 900 families would be directly impacted if the project is mothballed, plus spinoff jobs and businesses.
The Tories say every effort must be made to stop that from happening.
