Oil majors to restart stalled offshore projects

Suncor Energy Inc. and Cenovus Energy Inc., two of Canada’s largest oil companies, have announced plans to restart stalled offshore oil projects and boost job prospects in Newfoundland and Labrador.

The Calgary-based oil majors announced agreements to restructure both the Terra Nova FPSO and West White Rose projects off the province’s coast. The agreements, supported by $205 million in funding from the provincial government, mean work will restart on the Terra Nova project this fall and the companies will evaluate the feasibility of restarting work on West White Rose by the middle of 2022.

Suncor said in a news release the agreement is expected to extend production life at Terra Nova by approximately 10 years, providing an additional 70 million barrels of oil. The floating production, storage and offloading (FPSO) vessel has not produced oil since late 2019. Most of the more than 1,000 jobs linked to the oilfield have been lost.

Suncor president and CEO Mark Little said in the news release the Terra Nova life extension provides “strong economic returns and will provide long-term value for investors.”

The project is expected to return to operations in 2022 and will continue operating until 2033.
Suncor will increase its ownership stake in the project to 48 per cent from 38 per cent, the release states. Cenovus will increase its stake to 34 per cent from 13 per cent and El Dorado, Ark.-based Murphy Oil Corp. will boost its ownership to 18 per cent from 10 per cent.

The concentrated ownership structure will lead to four international oil companies – Exxon Mobil Corp., Chevron Corp., Norway’s Equinor SA and Mosbacher Operating LLC – exiting the project.

Suncor is also boosting its ownership interest in the West White Rose project to 40 per cent from 27.5 per cent in exchange for a cash payment from Cenovus, which is reducing its stake to 60 per cent from 72.5 per cent.

The FPSO will undergo maintenance work at the Bull Arm Fabrication site in Trinity Bay, N.L. starting in September prior to sailing to dry dock in Spain later this year, according to the news release. Since beginning production in January 2002, the Terra Nova has produced 425 million barrels of oil.

The two agreements are cause for celebration in the Atlantic province’s struggling offshore oil industry and for a province which had been expected to face the slowest economic recovery from the COVID-19 pandemic.

Source(s) and Image(s): Suncor Energy Inc., Cenovus Energy Inc, Atlantica Center for Energy