Canadian Energy Centre
Terra Nova back producing oil, benefits to flow for Atlantic Canada communities and world energy security
The Terra Nova floating production, storage and offloading (FPSO) vessel. Photo courtesy Suncor Energy
From the Canadian Energy Centre
By Will Gibson
‘You should see it start to make a real impact on the market by 2025’
The Terra Nova offshore oil project sits about 350 kilometres southeast of St. John’s in the deep blue waters of the Atlantic.
And even though St. John’s Mayor Danny Breen can’t see the field and its massive floating, production, storage and offloading (FPSO) vessel from his office at city hall, he’s pleased it’s back to producing oil.
“There’s lots of numbers you could use to demonstrate Terra Nova’s contribution to our province and community, from the royalties and taxes it generates for governments or the jobs and contracts it provides to people and businesses,” says Breen.
“But it’s important for our psyche to see the FPSO back in production. To see it come back after some delays is great news for the province and the offshore industry.”
St. John’s Mayor Danny Breen. Photo supplied to Canadian Energy Centre
Suncor Energy CEO Rich Kruger announced in late November that Terra Nova’s FPSO vessel had restarted production after undergoing an extensive makeover in Spain to improve reliability and extend its life.
The massive vessel — standing 18 stories high and three football fields long — first started operating in 2002 and has produced more than 425 million barrels of oil, or enough to meet world oil demand at current levels for just over four years.
While the FPSO was in Spain, additional subsea work took place in the middle of the Atlantic to extend the Terra Nova field’s life, including replacing two million kilograms of mooring chain that anchors the ship to the underwater drilling system.
The project is forecast to extend the life of the Terra Nova project by 10 years and produce an additional 70 million barrels.
Phil Skolnick, Eight Capital’s managing director of research, sees Europe and Asia as potential destinations for those barrels when the project ramps up to full production.
Asian oil demand is rising, and Europe is now taking higher volumes of oil imports from countries other than Russia, its primary supplier before the start of the war in Ukraine.
“You should see it start to make a real impact on the market by 2025, when Terra Nova is expected to get back to producing 180,000 barrels per day,” he says.
“It will have a big impact for the Newfoundland economy.”
Even when the FPSO was in drydock in Spain, Terra Nova continued to provide benefits to the community at home.
In the third quarter of 2023, the latest period available, the project reported it spent $173.8 million in operational and capital expenditures.
This included $52.2 million in procuring goods and services, with 62 per cent spent with suppliers in the province and 94 per cent with Canadian vendors.
Terra Nova provides 710 direct jobs with 90 per cent of its workforce residing in Newfoundland and Labrador. The project is a partnership operated by Suncor, which holds a 48 per cent stake. The other partners are Cenovus Energy (34 per cent) and Murphy Oil (18 per cent).
While wind, hydrogen and other energy projects have been proposed in Newfoundland and Labrador, Breen sees the offshore oil industry as a crucial part of the province’s economy now and in the future.
He believes Terra Nova and the other three producing oil fields in the province — Hibernia, Hebron and White Rose — will assume added importance for the local economy and global energy security.
“Oil is going to be around for a long time, even if demand decreases, because it is an essential part of so many products we use today. And that’s important for us because the offshore industry supports many families across Newfoundland and Labrador today,” Breen says.
“The industry has been under a lot of scrutiny and has faced a lot of challenges, particularly in the approval for new projects. Keeping the production from approved supplies is going to be vital. That’s why it’s good to see the investment in Terra Nova and the return to production. That bodes well for the future.”
Canadian Energy Centre
Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project
From the Canadian Energy Centre
Billions in government revenue and thousands of jobs across provinces
Announced in 2006, the Northern Gateway project would have built twin pipelines between Bruderheim, Alta. and a marine terminal at Kitimat, B.C.
One pipeline would export 525,000 barrels per day of heavy oil from Alberta to tidewater markets. The other would import 193,000 barrels per day of condensate to Alberta to dilute heavy oil for pipeline transportation.
The project would have generated significant economic benefits across Canada.
The following projections are drawn from the report Public Interest Benefits of the Northern Gateway Project (Wright Mansell Research Ltd., July 2012), which was submitted as reply evidence during the regulatory process.
Financial figures have been adjusted to 2025 dollars using the Bank of Canada’s Inflation Calculator, with $1.00 in 2012 equivalent to $1.34 in 2025.
Total Government Revenue by Region
Between 2019 and 2048, a period encompassing both construction and operations, the Northern Gateway project was projected to generate the following total government revenues by region (direct, indirect and induced):
British Columbia
- Provincial government revenue: $11.5 billion
- Federal government revenue: $8.9 billion
- Total: $20.4 billion
Alberta
- Provincial government revenue: $49.4 billion
- Federal government revenue: $41.5 billion
- Total: $90.9 billion
Ontario
- Provincial government revenue: $1.7 billion
- Federal government revenue: $2.7 billion
- Total: $4.4 billion
Quebec
- Provincial government revenue: $746 million
- Federal government revenue: $541 million
- Total: $1.29 billion
Saskatchewan
- Provincial government revenue: $6.9 billion
- Federal government revenue: $4.4 billion
- Total: $11.3 billion
Other
- Provincial government revenue: $1.9 billion
- Federal government revenue: $1.4 billion
- Total: $3.3 billion
Canada
- Provincial government revenue: $72.1 billion
- Federal government revenue: $59.4 billion
- Total: $131.7 billion
Annual Government Revenue by Region
Over the period 2019 and 2048, the Northern Gateway project was projected to generate the following annual government revenues by region (direct, indirect and induced):
British Columbia
- Provincial government revenue: $340 million
- Federal government revenue: $261 million
- Total: $601 million per year
Alberta
- Provincial government revenue: $1.5 billion
- Federal government revenue: $1.2 billion
- Total: $2.7 billion per year
Ontario
- Provincial government revenue: $51 million
- Federal government revenue: $79 million
- Total: $130 million per year
Quebec
- Provincial government revenue: $21 million
- Federal government revenue: $16 million
- Total: $37 million per year
Saskatchewan
- Provincial government revenue: $204 million
- Federal government revenue: $129 million
- Total: $333 million per year
Other
- Provincial government revenue: $58 million
- Federal government revenue: $40 million
- Total: $98 million per year
Canada
- Provincial government revenue: $2.1 billion
- Federal government revenue: $1.7 billion
- Total: $3.8 billion per year
Employment by Region
Over the period 2019 to 2048, the Northern Gateway Pipeline was projected to generate the following direct, indirect and induced full-time equivalent (FTE) jobs by region:
British Columbia
- Annual average: 7,736
- Total over the period: 224,344
Alberta
- Annual average: 11,798
- Total over the period: 342,142
Ontario
- Annual average: 3,061
- Total over the period: 88,769
Quebec
- Annual average: 1,003
- Total over the period: 29,087
Saskatchewan
- Annual average: 2,127
- Total over the period: 61,683
Other
- Annual average: 953
- Total over the period: 27,637
Canada
- Annual average: 26,678
- Total over the period: 773,662
Chief David Jimmie is president of Stonlasec8 and Chief of Squiala First Nation in B.C. He also chairs the Western Indigenous Pipeline Group. Photo courtesy Western Indigenous Pipeline Group
From the Canadian Energy Centre
Stonlasec8 agreement is Canada’s first federal Indigenous loan guarantee
The first federally backed Indigenous loan guarantee paves the way for increased prosperity for 36 First Nations communities in British Columbia.
In May, Canada Development Investment Corporation (CDEV) announced a $400 million backstop for the consortium to jointly purchase 12.5 per cent ownership of Enbridge’s Westcoast natural gas pipeline system for $712 million.
In the works for two years, the deal redefines long-standing relationships around a pipeline that has been in operation for generations.
“For 65 years, there’s never been an opportunity or a conversation about participating in an asset that’s come through the territory,” said Chief David Jimmie of the Squiala First Nation near Vancouver, B.C.
“We now have an opportunity to have our Nation’s voices heard directly when we have concerns and our partners are willing to listen.”
Jimmie chairs the Stonlasec8 Indigenous Alliance, which represents the communities buying into the Enbridge system.
The name Stonlasec8 reflects the different regions represented in the agreement, he said.
The Westcoast pipeline stretches more than 2,900 kilometres from northeast B.C. near the Alberta border to the Canada-U.S. border near Bellingham, Wash., running through the middle of the province.
It delivers up to 3.6 billion cubic feet per day of natural gas throughout B.C. and the Lower Mainland, Alberta and the U.S. Pacific Northwest.
“While we see the benefits back to communities, we are still reminded of our responsibility to the land, air and water so it is important to think of reinvestment opportunities in alternative energy sources and how we can offset the carbon footprint,” Jimmie said.
He also chairs the Western Indigenous Pipeline Group (WIPG), a coalition of First Nations communities working in partnership with Pembina Pipeline to secure an ownership stake in the newly expanded Trans Mountain pipeline system.
There is overlap between the communities in the two groups, he said.
CDEV vice-president Sébastien Labelle said provincial models such as the Alberta Indigenous Opportunities Corporation (AIOC) and Ontario’s Indigenous Opportunities Financing Program helped bring the federal government’s version of the loan guarantee to life.
“It’s not a new idea. Alberta started it before us, and Ontario,” Labelle said.
“We hired some of the same advisors AIOC hired because we want to make sure we are aligned with the market. We didn’t want to start something completely new.”
Broadly, Jimmie said the Stonlasec8 agreement will provide sustained funding for investments like housing, infrastructure, environmental stewardship and cultural preservation. But it’s up to the individual communities how to spend the ongoing proceeds.
The long-term cash injections from owning equity stakes of major projects can provide benefits that traditional funding agreements with the federal government do not, he said.
Labelle said the goal is to ensure Indigenous communities benefit from projects on their traditional territories.
“There’s a lot of intangible, indirect things that I think are hugely important from an economic perspective,” he said.
“You are improving the relationship with pipeline companies, you are improving social license to do projects like this.”
Jimmie stressed the impact the collaborative atmosphere of the negotiations had on the success of the Stonlasec8 agreement.
“It takes true collaboration to reach a successful partnership, which doesn’t always happen. And from the Nation representation, the sophistication of the group was one of the best I’ve ever worked with.”
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