As deadline for Terra Nova approaches, pressure mounts to save troubled oilfield

An emergency debate about the future of the Terra Nova oilfield is scheduled for Monday morning, with a public rally also planned for the steps of Confederation Building.

Public rally, emergency debate in the legislature planned for Monday

The Terra Nova floating production, storage and offloading vessel began producing oil in Newfoundland's offshore in 2002. This undated photo was taken before the vessel left the Grand Banks last year. It is now docked in Bull Arm, Trinity Bay. (Todd Churchill/Facebook)

An emergency debate about the future of the Terra Nova oilfield is scheduled for Monday morning in the House of Assembly, with a public rally led by the union representing offshore workers also planned for the steps of Confederation Building.

It's the latest development as the clock ticks toward decision day for the Terra Nova, one of four mature oilfields in Newfoundland and Labrador's offshore oil industry.

The lead oil company in the project, Calgary-based Suncor Energy, is expected to reveal on Tuesday whether the owners will press forward with an expensive refit of the production vessel and subsea infrastructure, or pull the plug on the Terra Nova and decommission the assets after nearly two decades of production.

"I'm very concerned with how all this will end up," St. John's Mayor Danny Breen told CBC News on Friday.

Breen and 11 other mayors representing municipalities on the eastern portion of the Avalon Peninsula issued a joint statement this week, urging the oil companies and the provincial government to reach an agreement that would see the Terra Nova FPSO return to the Grand Banks and resume production for at least another decade.

St. John's Mayor Danny Breen was one of 12 municipal leaders on the Avalon Peninsula to sign a joint statement this week, calling for action to save the Terra Nova oilfield in from being decommissioned and abandoned. (Curtis Hicks/CBC)

"I want to make sure they're at the table. They're working through every possible scenario to find a solution to this. It's vitally important to our economy," Breen said Friday.

Negotiations on a deal to save the Terra Nova suffered a setback Thursday, with Energy Minister Andrew Parsons announcing the provincial government will not become a partner in the oilfield.

Internal government documents from earlier this year revealed that the province was offering to acquire a 15 per cent equity stake in the field in order to fill the gap left by several partners who were not supportive of an asset life extension estimated at $600 million.

On Wednesday, Parsons told CBC News an equity stake was being discussed.

But on Thursday, Parsons announced at a news conference that it was too risky for the province to become a partner, and he called on the seven oil companies who form the joint venture "to work to find an equity solution."

A Suncor spokesperson responded with a statement, expressing "surprise and disappointment" at the province's decision, and said it was hoping the partners would reconsider their positions prior to Tuesday's deadline.

"Unfortunately, abandonment remains a real possibility at this time," the Suncor statement said.

Dave Mercer is president of Unifor Local 2121, which represents unionized workers on the Hibernia oil platform and the Terra Nova FPSO. (Terry Roberts/CBC)

So the future of the oilfield, and the nearly 1,000 workers linked to the project as of late 2019, hangs in the balance.

"Right now this is about the workers. It's not about the oil companies," Dave Mercer, president of Unifor Local 2121, said Friday.

"Right now it's about what government can do for the oil workers."

Local 2121 represents nearly 800 workers in the Hibernia and Terra Nova oilfields, both of which are in the Jeanne d'Arc Basin, about 350 kilometres southeast of St. John's.

But the Terra Nova FPSO production vessel has not produced any oil since late 2019, and is docked at Bull Arm, Trinity Bay.

In a bid to increase pressure on the oil companies and the government, Mercer is calling for supporters to gather outside Confederation Building at 9 a.m. on Monday.

Mercer fears that If the provincial government does not become a partner, it will mean the end of the Terra Nova.

"There's only one reaction: frustration," he said. "If there's not going to be an equity stake by the provincial government, then the problem is, what are we going to do for the workers?"

Mercer said he was told the province was preparing to become a partner, and was shocked by Thursday's announcement.

"We thought the stake equity was there. I was told that," he said.

The interim leader of the Opposition PCs, David Brazil, is also asking why the government changed its stance on equity, and said he hopes to get answers to that and other questions Monday.

Brazil said bureaucrats close to the negotiations are expected provide a briefing to opposition politicians prior to the opening of an emergency debate at 9 a.m.

"It may come to a point where it's not viable for some reason. We can't risk an economic downturn for the rest of the province if it's not a good viable project," said Brazil.

The Terra Nova FPSO is moored dockside at the Bull Arm fabrication site in Trinity Bay, where its fate remains uncertain. (Newfoundland Offshore/Facebook)

CBC News has confirmed that four of the seven oil companies involved with Terra Nova are not aligned with a plan by Suncor to carry out an overhaul of the assets in order to produce another 80 million barrels of oil over 10 years.

While it will not become a partner in the field, the provincial government is offering more than $200 million in cash from an oil industry recovery fund, and promising to forgo some $300 million in royalties from the Terra Nova.

If the Terra Nova fails, Brazil says the money from that fund should be used to support the hundreds of workers who will lose their livelihoods.
"[The fund was created] to enhance the oil industry and ensure that there's longevity. You can't have longevity if your employees are no longer in this province, or their skillset are not being used," said Brazil.

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