The co-owners of the Terra Nova project offshore Newfoundland have reached an agreement in principle to restructure the project ownership and provide short-term funding toward continuing the development of the Asset Life Extension Project, with the intent to move to a sanction decision in the fall. A subset of owners will increase their ownership of the project for consideration payable from the other owners. Full details of the ownership swap were not disclosed, however, as a result, operator Suncor’s ownership will increase to 48% from around 38%.
The agreement is subject to finalized terms and approval from all parties, including board of director approval where appropriate, and is contingent upon the previously disclosed royalty and financial support from the Government of Newfoundland and Labrador.
“Over the past year, Suncor has worked diligently with all stakeholders to determine a path forward for Terra Nova,” said Mark Little, Suncor president and chief executive officer. “Despite numerous setbacks, Suncor, as operator, continued to persevere and explore options to achieve an economic return for our investors while protecting the employment of hundreds of Newfoundlanders and Labradorians. Although this agreement in principle is not a guarantee, it sets a path forward in the next few months to secure a return to operations for many years to come.”
Before completion of the restructuring, the Terra Nova co-owners are Suncor (operator, 37.675%), ExxonMobil (19%), Equinor (15%), Cenovus (13%), Murphy (10.475%), Mosbacher (3.85%), and Chevron (1%).
“To support the long-term viability and benefits attached to the Terra Nova project, we committed over $500 million in financial assistance over the remaining life of the project through the direct contribution of $205 million from the Newfoundland and Labrador Oil and Gas Industry Recovery Assistance Fund, an increase of $30 million from the original MOU [memorandum of understanding] terms, as well as changes to the royalty structure valued at over $300 million,” said Andrew Furey, premier of Newfoundland and Labrador, in a statement. “We are pleased that this financial support has assisted project owners in reaching this interim agreement.”
Terra Nova has been offline since late 2019. Earlier this spring, Suncor was preparing for all contingencies when it came to the future of Terra Nova, including the possible abandonment of the field.
Terra Nova is 350 km southeast of Newfoundland and Labrador. It began production in 2002. Suncor estimates the field has 80 million bbl of producible reserves remaining.
