Loss of project would have big impact: Noia

Analysis shows thousands of jobs, about $1.5B in wages, royalties and taxes would be lost to province

A continuation of the Terra Nova offshore oil project would have the potential to support over 1,700 jobs and $138 million in wages during the asset-life-extension project stage, and almost 3,400 jobs and $139 million in wages annually during its 10 years of operation in Newfoundland and Labrador, Noia said in a statement Friday.

Noia, the Newfoundland and Labrador Oil and Gas Industries Association, engaged Jupia Consultants to model the economic effects of the asset-life-extension project and the continued operation of the Terra Nova FPSO (floating production, storage and offloading vessel) for 10 additional years.

The provincial government announced Thursday it had reached an impasse with the partners of the Terra Nova project after the province pulled back on buying a 15 per cent equity stake in the project.

The provincial government has offered, however, up to $500 million in aid to the project over its remaining life span, but no deal has been reached, though the province remains hopeful before a Tuesday deadline imposed by the operator Suncor Energy.

Noia’s analysis also found that under the base case scenario of $11 per barrel for royalties, the provincial and municipal governments would receive a total of $1.49 billion over 10 years, including $880 million in royalties, $120 million in corporate income taxes and $485 million in other taxes.

“As we get into the final hours available for the parties involved to find a resolution that puts the Terra Nova FPSO back into production, the financial impacts of this project must be considered,” Noia CEO Charlene Johnson said.

The Progressive Conservative party questioned the governing Liberals about Terra Nova in the House of Assembly Thursday.

“(Thursday’s) news is disappointing, to say the least. Government should be keeping oil production in the province and growing our industry, not watching it die,” PC Interim Leader David Brazil said. “Is (Premier Andrew Furey) willing to admit that (Thursday’s) news is his failure?”

Furey said the province has been negotiating with the Terra Nova partners to try to strike a deal, but could not risk taking on an equity stake.

“We have what is, I think, in anyone’s estimation a good offer on the table. I’m frankly not willing to roll the dice with a massive equity investment in oil firms that continue to make money.”

Newfoundland and Labrador’s representative in the federal cabinet, MP and Natural Resources Minister Seamus O’regan, said Friday he had contacted the heads of the project owners — Suncor, Exxonmobil, Equinor, Husky Energy, Murphy Oil, Mosbacher Operating and Chevron Canada — to see what willingness there is to reach a deal.

“I have been speaking with the premier, with (Andrew Parsons, minister of Industry, Energy and Technology) and the head of the union, and I’ve also been speaking with the CEOS of the various partners, hoping that we can come closer to a deal,” O’regan said. “I think there is a will and a want there.

“I refuse to give up on it. Terra Nova is a seminal project in our province and in our province’s history, and it is good project that employed a lot of good people that we need in this province and this industry.”

Parsons said Thursday that the provincial government had committed more than $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, as well as changes to the royalty structure valued at more than $300 million.

He said the risk has proven to be too great for the province to take on an equity stake in the project.

Parsons noted the decision on whether to proceed with the project is not the province’s to make, but the partners’. The province is offering what help it can to move it along, he said.

The asset-life-extension project was expected to enable the Terra Nova FPSO to capture approximately 80 million additional barrels of oil to 2031.