Terra Nova FPSO overhaul will preserve jobs, extend flow of revenues to N.L. treasury
Suncor says extension will allow company to produce additional 80 million barrels of oil
Hundreds of much-needed jobs will be maintained — and a critical flow of cash to the provincial treasury will be extended — with an overhaul of the aging Terra Nova FPSO in Newfoundland and Labrador's offshore.
A decision by Suncor Energy and its partners last month to extend the life of the Terra Nova by 10 years will ensure production continues until at least 2031.
"The FPSO is reaching the end of its expected viable life, and for us to continue to produce from the Terra Nova field we have to do this work to take us 10 years down the road," Suncor spokesman Paul Newmarch told CBC News Tuesday from his office in Calgary.
But there's also a big benefit for the seven companies with ownership stakes in the floating, production, storage and offloading vessel: an additional 80 million barrels of oil from the Terra Nova field, 350 kilometres east-southeast of St. John's.
Work to be done in Europe
The long-awaited decision follows a campaign to evaluate the extent of recoverable reserves in the field using the semi-submersible drill rig Transocean Barents. The rig began drilling nearly two years ago, and is expected to remain in the field until a year from now, according to government documents.
Encouraged by the amount of recoverable oil remaining in the field, Suncor is now preparing to carry out significant upgrades to the nearly 300-metre vessel, which is one of the largest FPSOs in the world.
Newmarch said the overhaul will take between six and seven months, and will occur sometime next year. The vessel must be dry-docked in order to refurbish some key components, including the swivel, which connects the vessel to subsea components such as wells and flowlines.
There will also plans to carry out hull repairs and replace the waste heat recovery unit.
"All of these … are key components for the long-term health and viability of the FPSO," said Newmarch.
A tender call for the work is ongoing, but Newmarch did confirm the overhaul will be carried out at a yard somewhere in Europe.
"We are exploring all potential locations to determine the most cost-effective and efficient option," he said.
The cost of the overhaul has not yet been finalized, said Newmarch, and will be split among the companies with ownership stakes in the project: operator Suncor (37.675 per cent); ExxonMobil (19 per cent), Equinor (15 per cent), Husky Energy (13 per cent), Murphy Oil (10.475 per cent), Mosbacher Operating (3.85 per cent) and Chevron (one per cent).
Exxonmobil confirmed Tuesday that it is still trying to sell its share of the field.
Second of four producing fields
The Terra Nova field was discovered in 1984, and first produced oil in 2002, making it the province's second producing oil field on the Grand Banks, after Hibernia.
Since then, the number of producing fields has grown to four, with the addition of the SeaRose FPSO in the White Rose field, and more recently, the Hebron field.
Between 2015 and 2017, the oil industry contributed some $4 billion in royalties and taxes to government, according to a report released earlier this year.
Last year, according to the provincial government, the Terra Nova produced 11.4 million barrels, with a combined 84 million barrels from all four fields.
The total workforce at Terra Nova as of the end of last year was just more than 1,000 people, nearly all of them Newfoundland and Labrador residents.
As of the end of 2018, recoverable reserves were estimated at more than 92 million barrels.
"By extending the life of the asset by 10 years we will be able to provide both local benefits and benefits to the province. These benefits obviously include additional taxes and royalties to the province, additional procurement and pre-fabrication work in Newfoundland, and local employment," said Newmarch.