Suncor restructuring Terra Nova ownership to secure life extension funding

Canadian energy company Suncor and its partners in the Terra Nova FPSO and field are restructuring the project ownership to provide funding for a life extension project with plans to sanction it this fall.

Suncor said on Wednesday that the co-owners of the Terra Nova FPSO and the Terra Nova field had reached an agreement in principle to restructure the project ownership and provide short-term funding towards continuing the development of the Asset Life Extension Project, with the intent to move to a sanction decision in the fall.

In May 2019, Suncor and the Terra Nova joint venture owners sanctioned plans to proceed with a project that would extend the life of the FPSO vessel to approximately 2031. The asset life extension project is expected to allow the facility to capture approximately 80 million additional barrels of oil for the Terra Nova partnership.

Suncor said that a subset of owners would increase their ownership of the project for consideration payable from the other owners. Suncor’s ownership will increase from approximately 38 per cent to 48 per cent.

The agreement is subject to finalized terms and approval from all parties, including the board of director approval where appropriate, and is contingent upon the previously disclosed royalty and financial support from the Government of Newfoundland & 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 the 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”.

Prior to completion of the restructuring, the Terra Nova co-owners are Suncor (operator, 37.675 per cent), ExxonMobil (19 per cent), Equinor (15 per cent), Cenovus (13 per cent), Murphy (10.475 per cent), Mosbacher (3.85 per cent), and Chevron (1 per cent).

In recent company news, Suncor in May 2021 announced its intentions to cut emissions by a third and become a net-zero company as investors and courts start putting pressure on oil companies. The company said it would cut its absolute emissions by 10 megatons per year by 2030.