House of Assembly celebrates Terra Nova deal
Questions turn to how much refit work will be done in province; whether operators of other projects will expect the same from government
A rare standing ovation in the House of Assembly
Thursday celebrated the provincial government’s work to help secure a deal for the future of the Terra Nova offshore oil project.
Suncor Energy announced Wednesday evening that an agreement in principle had been reached to restructure the project ownership and provide short-term funding toward continuing the development of the Terra Nova floating production, storage and offloading (FPSO) vessel’s asset-life-extension project, with the intent to move to a sanction decision in the fall.
Progressive Conservative Interim Leader David Brazil gave credit to the provincial government and the Terra Nova partners, calling it “a momentous day for Newfoundlanders and Labradorians and the workers who have been waiting these many months to get back to work.”
“I think we have sent a message here that we take a position, we will be firm, we will be fair, but when we draw the line, the line is there.” Minister of Industry, Energy and Technology Andrew Parsons
“We thank Suncor and their partners for finding common ground and allowing our skilled trades workers another chance to work on this project,” Brazil said. “We recognize the amount of work that takes place behind the scenes in these difficult situations and wish to applaud department officials and those on the other side of the House for their efforts to make (the) announcement possible.”
Suncor said 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 provincial government.
That support involves $500 million in financial assistance over the remaining life of the project through a direct contribution of $205 million from the Newfoundland and Labrador Oil and Gas Industry Recovery Assistance Fund from the federal government, and changes to the royalty structure valued at over $300 million.
Andrew Parsons, minister of Industry, Energy and Technology, was asked during a Thursday morning media availability if the deal would set a negative precedent in that companies involved in future projects would demand a similar lower royalty structure.
“I think we have set a positive precedent. I think we have sent a message here that we take a position, we will be firm, we will be fair, but when we draw the line, the line is there,” Parsons said, adding that if the Terra Nova project did not continue, the province would receive no royalties or other benefits.
“We faced the possibility of nothing. We are going to get money back in royalties, in taxation, money from the indirect jobs and the direct jobs that come from this,” Parsons said. “I really think it’s a good move for this province. We’ve minimized risk, protected the future, we’ve saved jobs and we are using the resource in the best interest of the province.”
Other questions centred around how much of the Terra Nova FPSO vessel’s refit work will be done in the province.
Premier Andrew Furey said those details will be worked out in the coming days.
“We all recognize, as does the union, for that matter, that not all the work can be done here in the province,” Furey said. “Certainly, the money that we are putting in will be going towards work to be done here in the province to support, again, the hard-working women and men who work on this platform.”
NDP Labrador West MHA Jordan Brown asked the government if it will ensure that all work that can be done in the province on the refit will be done before any of the province’s money is transferred to the companies.
Parsons said the government did impose conditions on the companies to ensure work came to the province during the refit phase.
“Yes, not one dollar of the money that is going from the federal fund — not one dollar — will go to work outside of this province,” Parsons said. “It will be based on Newfoundland and Labrador jobs. It will be based on people working in offices here, doing co-ordination, doing planning, you name it. That was one of the conditions. We stuck by it and we got it.”
The Canadian Association of Petroleum Producers (CAPP) said in a statement it is pleased a deal has been reached.
“Newfoundland and Labrador’s offshore projects are producing some of the lowest emissions per barrel globally and with global demand for energy continuing to increase, the province has significant potential to grow its oil and natural gas industry,” the statement read. “However, the focus must be on improving competitiveness of Canada’s offshore industry if the province is to realize its full potential. It is critical that Newfoundland and Labrador and Canada move immediately to implement key recommendations outlined in the NL Oil and Gas Recovery Task Force Report with a vision of improving industry competitiveness.”