Decision day for Terra Nova project?
Suncor Energy set a June 15 deadline, but government, workers still hope project partners will iron out a deal
Concern about the future of the Terra Nova offshore oil project came at the provincial government from all directions Monday.
There was a rally by workers, their union and supporters on the steps of Confederation Building in the morning, a technical briefing for MHAS, an emergency debate in the House of Assembly and repeated questions during question period in the House of Assembly in the afternoon.
While the government remains hopeful the companies who are partnered in the project will try to find a solution, Suncor Energy (the operator) has previously stated that today is the deadline for a decision.
The provincial government announced last Thursday it had reached “an impasse” with the partners of the Terra Nova project after the province decided against taking a 15 per cent equity stake in the project.
The provincial government has offered, however, up to $500 million in aid to the project over its remaining life span.
Progressive Conservative Interim Leader David Brazil asked Premier Andrew Furey what negotiations took place over the weekend to try to finalize a deal for the workers and their families.
“How many hours did they last?” Brazil asked. “Who was at the table?”
Furey replied that whether the project continues is an issue among the private equity investors, as the province is not a partner.
The project owners are Suncor Energy, Exxonmobil, Equinor, Husky Energy, Murphy Oil, Mosbacher Operating and Chevron Canada.
“We have put a healthy deal on the table for them. We’ve set the table for them with over $500 million of value,” Furey said. “This is an alignment issue amongst stakeholders — the private equity owners, the multinational, billion-dollar, profitable companies.
“I will not bend a knee to them. They need to sort this out themselves.”
Brazil said the Opposition has been asking the government “from Day 1” to share information on negotiations so the people of the province can determine whether or not everything is being done to try to salvage the project.
“Our caucus, through the access of information, informed the public of the government’s offer to buy a 15 per cent equity share in the project,” Brazil said.
“What changed between April and today to shift (the government’s) position on the equity stake in Terra Nova?”
Andrew Parsons, minister of Industry, Energy and Technology, has said the risk of the provincial government taking on an equity stake has proven to be too great for a project late in its useful life, given that it would also come with the associated costs of abandonment, and given the financial situation facing the province.
“We have three (equity stakes) right now in various projects, but I would note that they were all done at the ground floor of those projects, coming in early,” Parson said. “In this particular case, an equity stake would be coming in — as I’ve said before — on a project that is 85 per cent completed. So, essentially what the province would be doing is assuming a significant amount of risk for a field that is significantly depleted. Equity was something that, obviously, has been considered through this. We always have said that we would do anything that we could, but in the long run we decided, as a government, that this was not the right path forward.”
Noia, the Newfoundland and Labrador Oil and Gas Industries Association, announced last week it had conducted an analysis that found a continuation of the Terra Nova offshore oil project would have the potential to support more than 1,700 jobs and $138 million during the assetlife-extension project stage, and almost 3,400 jobs and $139 million in wages annually during its 10 years of operation in Newfoundland and Labrador.
It also found that under the base case scenario of $11 per barrel for royalties, the provincial and municipal governments would receive a total of $1.49 billion over 10 years, including $880 million in royalties, $120 million in corporate income taxes and $485 million in other taxes.
Jupia Consultants was asked to model the economic effects of the asset-lifeextension project and the continued operation of the Terra Nova FPSO (floating production, storage and offloading vessel) for 10 additional years.
NDP Leader Alison Coffin said Monday it is time for the provincial government to develop a “just transition plan” in response to what is unfolding with the Terra Nova FPSO project.
Coffin said it is clear that oil companies are not putting workers first, despite the half a billion dollars offered by the province.
“This morning I stood on the steps in solidarity with workers from the oil and gas industry,” Coffin said.
“Workers fear for their jobs, for their families, and it is clear they do not trust the government to navigate this effectively. Successive governments have squandered opportunities at the peak of oil to start a just transition, and now achieving that will be more difficult and require collaboration at all levels of government to ensure workers don’t suffer undo harm.”