Nfld. & Labrador

New shuttle tanker contract changes landscape in Newfoundland's offshore

A British Columbia company has been awarded a 15-year contract for shuttling crude being pumped from oil fields off Newfoundland's east coast.

Teekay Offshore will load crude at Hibernia, Terra Nova, White Rose and Hebron

A signing ceremony took place Monday to ratifiy a new 15-year contract that will see Teekay Offshore Partners L.P. become a major player in the shuttling of crude oil pumped from offshore fields on Newfoundland's east coast. (Teekay Shipping)

A British Columbia company has been awarded a 15-year contract for shuttling crude being pumped from oil fields off Newfoundland's east coast.

The company is called Teekay Offshore Partners L.P.

The deal, announced Monday, signifies a major shift in the offshore, where St. John's-based Canship Ugland Limited has been a dominant player in transporting oil since production began at the Hibernia field in 1997.

Long-term shuttle contract

Details of the agreement are outlined on Teekay's website.

According to Teekay, the company has entered into a long-term shuttle contract with a consortium of oil companies that operate in Newfoundland's offshore, including ExxonMobil Corporation, Chevron Corporation, Statoil ASA, Husky Energy, Suncor Energy and Murphy Oil.

Teekay will provide shuttle tankers for loading crude at three existing oil platforms, Hibernia, Terra Nova and White Rose, and Hebron, which is expected to begin production in 2017.

The tankers will ferry the crude to the Newfoundland Transshipment Limited facility at Whiffen Head, Placentia Bay.

This is the first time that a company other than Canship Ugland  a joint venture of two Norwegian companies — will provide the service.

A spokesperson for the oil companies who awarded the contract said they initiated a competitive bidding processing, and "this is the outcome."

Financial details of the contract have not been released, but it's meant to be a "long-term, cost-efficient way to manage tanker traffic and the shipment of crude oil. It's co-operative in nature among the nine parties," the spokesperson explained, referring to the nine companies, including Nalcor Energy, with ownership stakes in offshore production facilities.

Teekay is in the process of establishing permanent offices and ship operations in St. John's, and is aggressively hiring for onshore and offshore positions.

Peter Evensen, president and CEO of Teekay Corp., said the contract "marks Teekay Offshore's entrance into the growing Eastern Canada offshore market, which is a focal point for the Canadian oil and gas development."

"We now have a leading market position in all three dynamic positioning shuttle tanker basins, which includes the North Sea, Brazil and East Coast Canada," Evensen added.

Deal moves Teekay into new territory

The contract commenced on June 1, and Teekay officials say the contract demonstrates a "natural expansion" of the company.

According to reports, the company will enter into contracts to construct three new shuttle tankers with a Korean shipyard, with an option for a fourth.

The vessels are scheduled to be delivered late in 2017 and into 2018.

The contract will initially be serviced by one of Teekay's existing vessels, the Navion Hispania, which is scheduled to arrive in September.

Three other tankers, Heather, Jasmine and Mattea, are being chartered from Canship.

A statement released by Canship Ugland Tuesday afternoon said the company does not see a major impact on its crews in the short-term.

In the longer term, the company said it will continue to work with its other clients and explore new opportunities.

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.

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