Suncor extends lifeline for Terra Nova offshore project, ups stake to 48%

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CALGARY – Suncor Energy Inc. will increase its stake in the Terra Nova offshore oil project after reaching a tentative agreement with the Newfoundland and Labrador government to save the troubled project and extend its life.

Calgary-based Suncor, Canada’s largest integrated oil company, is increasing its stake in the Terra Nova project to 48 per cent from 38 per cent and has agreed to extend the life of the offshore oil facility. The company had said it would scrap the project unless an agreement could be reached with the Newfoundland and Labrador provincial government by this past Tuesday.

“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,” Suncor president and CEO Mark Little said in a release Wednesday night, adding the company had worked over the past year to find “a path forward” for the project.

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“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,” Little said.

A final decision is expected in the fall.

The details of the agreement were not released but Suncor said continued work on the project is “contingent on royalty and financial support” from the project. The provincial government had previously offered tax incentives and royalty breaks to extend the life of the offshore project, which supported an estimated 1,000 jobs in a province of 520,000 people.

The Newfoundland and Labrador Oil and Gas Industries Association (NOIA) called the tentative agreement between the province and Suncor a source of “immense relief.”

“This announcement is long-awaited positive news for our offshore oil and gas industry, and indeed our province,” NOIA CEO Charlene Johnson said in a release. “For NOIA members involved in the supply and service sector and the thousands of people who rely on this project for their livelihood, this is extremely good news accompanied by immense relief.”

Similarly, labour groups that staged demonstrations this week demanding the provincial government support the project applauded the agreement.

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“The investment in Terra Nova is a win for good jobs and a win for the people of Newfoundland and Labrador,” Unifor national president Jerry Dias said in a release Wednesday. “Jobs, royalties, corporate taxes, GDP boost. There were a lot of reasons to say ‘yes’ to renewing Tera Nova.”

In a statement Wednesday night, reported by CBC.ca, Premier Andrew Furey said: “Our government is, and continues to be, supportive of the province’s oil and gas industry and we are pleased on behalf of workers and their families that project owners have reached this interim equity solution and continue to work to secure this project for the next 10 years.”

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