Nfld. & Labrador

$38.7M in disputed royalties split 50-50 in Terra Nova settlement

It's the first time we've seen how much money the Newfoundland and Labrador government agreed to pay the companies to settle out of court.

N.L. government provides some details of agreement to resolve lawsuit by oil companies

The Terra Nova platform heads along the Newfoundland coast in this 2001 file photo. (Andrew Vaughan/Canadian Press)

CBC News has obtained some financial details of a settlement that resolved a tangled dispute over royalty calculations between the Newfoundland and Labrador government and partners in the Terra Nova offshore oil project.

The two sides were arguing over roughly $38.7 million, the province said in response to a CBC News access-to-information request.

"This was agreed to be split on a 50/50 basis (approximately $19.3 million value to Terra Nova interest holders and $19.3 million value retained by the province)," the government's response revealed.

In 2015, six oil companies jointly filed a Newfoundland and Labrador Supreme Court action taking issue with how some royalty payments were being calculated, essentially arguing they sometimes paid twice if they moved from one royalty tier to another.

The out of court settlement in December, 2017 ended the dispute, both historically and going forward.

Last month, Natural Resources Minister Siobhan Coady said she couldn't release financial details, citing issues with commercial confidentiality.

CBC News has since acquired some of those specifics, through access to information.

Other details on royalties and tax information related to specific companies were withheld.

Avoids 'continued further legal action'

The access-to-information request reiterated something Coady noted in January, about other disputes being withdrawn by the oil companies. Those were related to tax-remission refund claims, as well as some audit findings related to the project.

"This settlement avoids the likely scenario of continued further legal action and related costs for appeals," Coady said in a statement issued Monday afternoon.

"It also provides royalty certainty to the Terra Nova interest holders making it more favourable for them to proceed with further investments. The settlement will have no material impact on the current or future budgets."

Suncor calls agreement 'fair resolution'

Suncor Energy spokesman Paul Newmarch said the settlement is a "fair resolution" to the dispute, adding that the companies are looking forward to continued work with the government.

The Terra Nova oil field is located about 350 kilometres southeast of Newfoundland and Labrador. Production began in 2002, using a floating system to extract and store oil.

The companies who filed the action and their share of the project, according to court filings, were:

  • Suncor Energy: 37.675 per cent.
  • ExxonMobil Canada: 19 per cent.
  • Statoil Canada: 15 per cent.
  • Husky Oil: 13 per cent.
  • Murphy Oil: 10.475 per cent.
  • Mosbacher Operating Ltd.: 3.85 per cent.