Suncor removes Terra Nova from 2023 projections, no timelines given for return to production
Investors update gives no indication what went wrong with repair work in Spain
Suncor has removed the Terra Nova oil platform from its 2023 plans, another surefire sign the floating production offloading and storage vessel (FPSO) won't be back in service for the foreseeable future.
The oil giant told investors during a quarterly update on Tuesday that the vessel needs more maintenance before it's considered safe to continue pumping oil off the coast of Newfoundland.
The company said there won't be an update until midway through 2023.
"The FPSO is undergoing additional work quayside in Bull Arm, Newfoundland, to ensure it's ready for safe and reliable operation in the field," said Suncor vice-president Kris Smith. "Based on this and looking forward to the remainder of the year, we are removing any expected production from Terra Nova from our 2023 [exploration and production] guidance."
As a result, Suncor will be lowering its expected production by about 10,000 barrels per day.
Suncor is the largest partner in the Terra Nova FPSO, which hasn't operated since 2019. The vessel was pulled from production to undergo $500 million in repairs, but a downturn in oil prices delayed that project until Suncor, Cenovus and Murphy Oil took ownership in 2021. The provincial government kicked in with up to $205 million, much of which came from the federal government's assistance fund for the oil and gas industry.
The Terra Nova was then sent to Ferrol, Spain, to begin the repair work with an aim to extend the life of the vessel until 2031.
The goal was to get the rig back in production by the end of 2022. The parties involved missed that date, with the Terra Nova returning to Newfoundland waters in February. It's been sitting in Bull Arm of late, with little information from the parties involved on what the problem is with the FPSO.
Cenovus also announced last month that it was taking Terra Nova out of its plans for 2023, but referred questions on the condition of the vessel to Suncor.
Tuesday's investors call didn't provide many answers, only indicating the vessel isn't close to returning to production. CBC News has asked Suncor what the problem is, if the work can be done in Newfoundland and Labrador, and if return-to-service this year is still a possibility.
The FPSO has a significant effect on the economy in Newfoundland and Labrador, employing 570 Newfoundlanders and Labradorians even when the vessel was out of production last year, according to a Suncor report from the third quarter of 2022.
There's an estimated 80 million barrels of oil left in the Terra Nova field, which sits 350 kilometres southeast of St. John's.
On top of the $205-million injection of taxpayer money into the project, the government of Newfoundland and Labrador also changed its royalty structure to give the oil companies another $300 million.
Suncor's net earnings were down 34 per cent in the last quarter compared with the same time period in the previous year, with the oil giant pulling in $2.05 billion over three months.
ABOUT THE AUTHOR
