As Suncor ponders Terra Nova's future, N.L. offshore workers worry about their own
Supply and service sector also on edge as business slows, while government pushes for federal help
The union representing some 400 workers on the Terra Nova FPSO oil platform is sounding the alarm about a scenario that could see the vessel not produce any oil for the next two years.
"The members are very worried about their future, and the future of Newfoundland (and Labrador)," said Unifor Local 2121 president Dave Mercer.
Companies that supply the offshore are also feeling the pinch from an oil industry that has been thrown into crisis by a global pandemic.
"The impact directly is the loss of some supply ships that we supply. They're tied up or moved on somewhere else. We don't have that business or as much," said Gary Squires, manager at St. John's-based Campbell's Ship Supplies, which provides supplies to supply ships and drill rigs in the offshore.
Campbell's has a workforce of 25, and so far has been able to avoid any layoffs, said Squires.
His comments reflect a mood now permeating an industry that represents some 30 per cent of the value of the province's gross domestic product, and uncertainty about the future of the Terra Nova FPSO is the latest dark cloud to cast a shadow over the offshore sector.
"Now it's time for the government to step up," said Mercer, whose union represents nearly 800 workers on the Terra Nova and Hibernia oil platform.
Workers on the Hebron and SeaRose FPSO platforms are not unionized.
Suncor, the majority owner and operator of Terra Nova, confirmed this week that it was unable to formalize a Plan B for a life extension overhaul of the aging floating, production, storage and offloading vessel, which has been producing oil on the Grand Banks since 2002.
As a result, the partnership that owns the vessel has decided to remove the Terra Nova from the offshore by this summer, and sail it to port at a location yet to be named, for an unknown duration.
"Obviously we're very concerned about the impacts to industry, the impacts to employment, the impacts to Newfoundlanders and Labradorians of the challenges that the industry is facing," said provincial Natural Resources Minister Siobhan Coady.
Coady has been in discussions with the operator, but said there's no indication yet how many jobs will be lost, or when the Terra Nova might return to the offshore and resume production, but she acknowledged it could very well be 2022.
Mercer said the union is also scrambling for information.
"It's all so fluid," he said.
Suncor released a statement Tuesday that said, "No decisions have been made to shut down production operations on Terra Nova until 2022."
But with so much uncertainty caused by the global pandemic, oil markets that are extremely volatile, and the immense planning that goes into a refit like the one proposed for the Terra Nova, insiders predict a lengthy shutdown for the vessel.
The Terra Nova was supposed to be at a dockyard in Spain by now, undergoing a half-billion-dollar life extension refit that would extend the oil field for 10 years, and allow the vessel to produce an additional 80 million barrels of oil.
But with Spain hit hard by the COVID-19 virus, those plans have been scuttled, and when Suncor was unable to come up an with an alternative plan, the decision was made to mothball the vessel.
That means the number of producing fields in the offshore will fall from four to three, and the hundreds of workers whose livelihoods are connected to the Terra Nova are now in doubt.
"There's only so much we can say. It's becoming very difficult to take care of our members," said Mercer.
The Terra Nova hasn't produced oil since it was ordered late last year to suspend operations by the board that regulates the offshore for a safety infraction.
There were hopes that Suncor could resume production and carry out the refit at a later date, but sources say some partners were unwilling to spend the money required to recertify the Terra Nova, at a time when companies are slashing spending in order to manage through a collapse in the market.
Suncor was engaged in ongoing talks with the Canada-Newfoundland and Labrador Offshore Petroleum Board about a plan to restart production, but a resolution was never reached.
"As of yesterday we were still in very active discussions with Suncor on their recent proposal to resume production and thought those discussions were continuing," the C-NLOPB wrote in a statement to CBC.
"While we sympathize with the workforce affected by yesterday's announcement, we are not privy to the commercial considerations faced by Suncor and its partners."
Meanwhile, calls for the federal government to offer a lifeline to the oil sector continue.
"We really need is an investment in accelerating exploration in offshore Newfoundland and Labrador," said Coady.
The province and industry groups want Ottawa to offer tax breaks and other incentives to encourage oil companies to keep looking for new discoveries, similar to those offered in Norway and the United Kingdom.
Federal Natural Resources Minister Seamus O'Regan said Wednesday he is in talks with the province and those in the industry.
"We are looking for options," said O'Regan, who specifically referenced "incentive-based exploration."
But O'Regan would not put a timeline on when those measures might be announced.
"We want to make sure we get it right," he said
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