Petro-Canada predicts Terra Nova cost overruns, delays
Petro-Canada, Calgary, reports development of the Terra Nova oil field on the Grand Banks off Newfoundland will have cost overruns, with production start-up delayed until mid-2001.
CALGARY�Petro-Canada, Calgary, reports development of the Terra Nova oil field on the Grand Banks off Newfoundland will have cost overruns, with production start-up delayed until mid-2001.
The lead partner in the development says Terra Nova is now expected to begin production in May or June instead of early 2001, and the estimated cost of development has increased by $300 million (Can.) to $2.5 billion.
The company says overall costs of the project increased 13% because more work than anticipated was needed to complete a floating production, storage, and offloading vessel for the project. This included additional work on a turret and engineering and design changes when the FPSO reached the completion site at Bull Arm, Newf. The developers raised cost estimates for the project by $200 million in December when the South Korean-built unit was late on delivery to Newfoundland.
Petro-Canada said the cost increase will not affect the economic viability of Terra Nova, which will be the second Grand Banks field to go on stream after the Hibernia field, now in production.
Reserves are estimated at up to 400 million bbl of oil at Terra Nova field, which is 217 miles southeast of St. John�s, Newf. Initial production at Terra Nova will be 49,000 b/d in 2001, increasing to 129,000 b/d by the end of 2002.
Petro-Canada is lead partner in the project with a 34% interest. Other partners are: Exxon Mobil Corp., 22%, Husky Energy Inc., 12.5%, Norsk Hydro, 15%, Murphy Oil Corp., 12%, Mosbacher Operating Co., 3.5%, and Chevron Corp., 1%.