The Honourable Andrew Parsons, Minister of Industry, Energy and Technology, today provided an update to the people of the province on the status of negotiations of the Terra Nova project. Despite significant efforts on the part of all parties and a significant financial offer by the Provincial Government, the future of the Terra Nova project remains uncertain.

To support the long-term viability and benefits attached to the Terra Nova project, the Provincial Government had 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 terms, as well as changes to the royalty structure valued at over $300 million. However, these terms have not been accepted by project owners and parties are currently at an impasse.

The Provincial Government is, and continues to be, supportive of the province’s oil and gas industry and the Terra Nova project, as demonstrated by the significant financial offer on the table. However, the province has a duty to all residents and, given the province’s fiscal situation, cannot support a project at all costs. While the Provincial Government had discussed terms on taking an equity stake in the project, the risk has proven to be too great for a project which is late in its useful life, given an equity share would come with the associated costs of abandonment.

In excess of 85 per cent of current oil reserves for the Terra Nova project have already been produced. Unlike the current project owners, taking on an equity stake as a new partner involves significant risk to the Provincial Government. While the current project owners are already committed to abandonment costs at a future date, the Provincial Government, as a new equity owner, would be committing to costs in the hundreds of millions of dollars without any guarantee of a return.

Minister Parsons is calling on project owners to continue to negotiate over the coming days to find an equity solution.

The Terra Nova, discovered in 1984, was the second oilfield to be developed on the Grand Banks; production started in 2002. Suncor holds a 37.675 per cent ownership in the Terra Nova project and is the project operator. The remaining project partners are; ExxonMobil Canada Properties (19 per cent); Equinor Canada Ltd. (15 per cent); Husky Energy, a subsidiary of Cenovus Energy (13 per cent); Murphy Oil Company Ltd. (10.475 per cent); Mosbacher Operating Ltd. (3.85 per cent); and, Chevron Canada Resources (1 per cent).

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“Our government committed to exploring every avenue possible to ensure the long-term sustainability of the oil and gas industry and its workers. We have made a significant financial offer to project owners to secure the Terra Nova project; however, given our fiscal situation, we are unable to take on the significant risks associated with an equity investment. I call on project owners to continue to work to find an equity solution. These companies have significantly more financial resources available to them than the Provincial Government.”
Honourable Andrew Parsons
Minister of Industry, Energy and Technology

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News Release – Provincial Government Provides Update on Status of Terra Nova Project

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Eric Humber
Industry, Energy and Technology
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