The Terra Nova oilfield off the coast of Newfoundland and Labrador will remain operational after its owners reached a last-minute restructuring deal.
The oilfield's seven owners will shuffle their shares and provide short-term funding for the oil project rather than abandon the field entirely, according to a news release from Suncor Energy (TSX:SU).
The announcement comes a day after the company was expected to deliver a decision about whether the field would be shut down for good.
By Suncor's estimates, there are still 80 million barrels of oil left in the Terra Nova field. Suncor Energy is the minority owner of the field and its stake in the project will increase to 48% from 38% as part of the new agreement that’s been reached.
The agreement must still be approved and is contingent on the Newfoundland and Labrador government coming through with its promise of more than $500 million in cash and royalty adjustments, the news release said.
The Terra Nova oilfield is one of four offshore oil installations in the province and sits about 350 kilometres southeast of St. John's. It hasn't produced oil since December 2019. In the months before production was halted, the Terra Nova field directly employed more than 1,000 people in the province.
The field operates using a series of wells drilled into the seabed and connected to a massive floating production and storage vessel through a network of cables and pipes. All that infrastructure needs extensive maintenance and retrofitting work to keep the oil pumping.
Joining Suncor as co-owners of the Terra Nova project are ExxonMobil with a 19% stake, Equinor (NYSE:EQNR) (15%), Cenovus Energy (TSX:CVE) (13%), Murphy Oil Corp. (NYSE:MUR) (10.5%), Mosbacher Energy (3.9%) and Chevron Corp. (TSX:CVE) (1%).
