June 2021

First oil

Doing the right thing in Canada and the U.S.
Kurt Abraham / World Oil

Most of us expect government and the media to generate nothing but bad news about this industry. And sometimes, individual companies/entities disappoint us. So, it is refreshing to see that on multiple occasions, people and entities did something right for the industry.

Terra Nova saved, for now. One example of doing the right thing is in East Canada, where operator Suncor deserves kudos for deciding not to give up on venerable Terra Nova oil field and its accompanying FPSO. The field offshore Newfoundland and Labrador (NL) first went onstream in 2002 and has produced 425 MMbbl of oil. In late 2019, the field’s production had to be shut in, due to a regulatory order. Then, in second-quarter 2020, concerns over Covid-19 prompted Suncor to disconnect the FPSO from the field. The plan had been to use that time last year to conduct a life-extension/overhaul project on the vessel, but Covid-19 postponed that work.

As the situation remained unsolved into early 2021, the NL provincial government looked at ways to help incentivize Suncor and its partners to keep Terra Nova viable, with 80 MMbbl of oil yet to be produced. NL officials eventually offered $205 million in recovery funds and another $300 million of royalty relief as incentives. And as the June 15 deadline neared for Suncor to decide whether to retain the field (and FPSO), the Newfoundland and Labrador Oil & Gas Industries Association (Noia) campaigned to save Terra Nova.

Indeed, on June 14, one day before the decision deadline, Noia CEO Charlene Johnson spoke (Fig. 1) to a rally of 250 local industry people (plus media) on the steps of the NL Confederation building. She issued an impassioned plea to Suncor, to save Terra Nova.


Fig. 1. On June 14, Noia CEO Charlene Johnson advocates on the NL Confederation Building steps for saving Terra Nova field and its FPSO. Image: Noia.
Fig. 1. On June 14, Noia CEO Charlene Johnson advocates on the NL Confederation Building steps for saving Terra Nova field and its FPSO. Image: Noia.


June 15 came and went. Finally, on the evening of June 16, Suncor issued a statement, confirming that it and six partners had “reached an agreement in principle to restructure the project ownership and provide short-term funding towards continuing development of the Asset Life Extension Project, with the intent to move to a sanction decision in the Fall.” Rumor has it that four of seven owners will opt out, leaving Suncor and two others.

Judge slaps Biden’s hand. Doing the right thing occurred in the U.S. on June 15, when U.S. District Judge Terry Doughty lifted the Biden administration’s temporary ban on new oil and gas leases on public lands and offshore waters.

It is a victory for 13 states that filed a legal challenge in Louisiana, as Doughty granted a preliminary injunction blocking President Joe Biden’s Jan. 27 Executive Order while litigation continues. Doughty’s ruling requires the Interior Department to immediately restart leasing, even while continuing to review the effects of drilling.

Hofmeister’s legacy. Finally, we have sad news of the passing of former Shell Oil Co. President John Hofmeister, who was 73. In early June, it was announced that he had passed away in late May from a short illness. Since retiring from Shell in 2008, Hofmeister had tried to do the right thing by pursuing a second career of positively informing the public about the oil and gas industry and its many good attributes. He was a frequent guest on news channels and in newspaper opinion sections.

Hofmeister also warned repeatedly that a Biden presidency would harm the U.S. industry and hurt consumers. And he was right. Hofmeister will be greatly missed.

About the Authors
Kurt Abraham
World Oil
Kurt Abraham kurt.abraham@worldoil.com
Related Articles
Connect with World Oil
Connect with World Oil, the upstream industry's most trusted source of forecast data, industry trends, and insights into operational and technological advances.