Page 15 - NorthAmOil Annual Review 2021

NorthAmOil JUNE NorthAmOil

The Terra Nova FPSO
has been offline since
late 2019.

“will increase their ownership of the project for “While the provincial government has and
consideration payable from the other owners”. had discussed terms on taking an equity stake
Efforts to save Terra Nova have been under- in the project, the risk has proven to be too great
way for some time. Suncor’s president and CEO, for a project which is so late in its life,” Parsons
Mark Little, said his company had been working said.
with other stakeholders in the project over the According to CBC News, the provincial
past year in order to determine a path forward. government had offered the Terra Nova part-
“Despite numerous setbacks, Suncor, as oper- ners CAD175mn ($141mn) in cash from an
ator, continued to persevere and explore options oil industry recovery fund created with fed-
to achieve an economic return for our investors eral money, and a break on royalty payments
while protecting the employment of hundreds to the governments. Parsons said the prov-
of Newfoundlanders and Labradorians,” Little ince had then upped its offer to CAD205mn
stated. “Although this agreement in principle is ($166mn).
not a guarantee, it sets a path forward in the next According to Parsons, the offer remained
few months to secure a return to operations for on the table after being rejected by the project The Asset Life
many years to come.” partners.
“Our government is and continues to be sup- Extension Project
Ups and downs portive of the province’s oil and gas industry is anticipated
Suncor’s tentative agreement to up its stake in the and the Terra Nova project as demonstrated by
project came as a boost for Terra Nova after the this significant offer that’s on the table,” he said. to help produce
setback represented by the Newfoundland and “However, we as a government and a province
Labrador government’s decision not to invest in have a duty to all residents. Given our fiscal roughly 80mn
the project. situations we cannot support this project at all
Sources familiar with the matter told CBC costs.” additional barrels
News that Suncor had asked the provincial It now appears that at least a preliminary of oil over 10
government to take a 15% stake in Terra Nova. compromise has been reached, but, in an envi-
But according to the sources, the province felt ronment that remains challenging for the oil more years.
the risks were too high, and said it had already industry, it cannot be ruled out that efforts
offered significant support for the project in the to finalise the agreement could yet fall apart.
form of grants and royalty relief. Nonetheless, the latest developments come as a
This was echoed by Newfoundland and Lab- good sign for Terra Nova.
rador Minister of Energy Andrew Parsons, who Indeed, the Newfoundland and Labrador
said in June that there had been a “significant Oil & Gas Industries Association’s (NOIA)
financial offer” from the province, but that no president, Charlene Johnson, described Sun-
agreement had been reached on a government cor’s announcement as “extremely good news
investment. accompanied by immense relief”.™

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