Suncor expects Terra Nova FPSO to return to production by yearend

Nov. 9, 2023
Suncor Energy is completing commissioning activities for the return of production from the Terra Nova FPSO offshore Newfoundland and Labrador.

Suncor Energy Inc., Calgary, is completing commissioning activities for the long-delayed return of production from the Terra Nova floating production, storage, and offloading (FPSO) vessel offshore Newfoundland and Labrador.

Work on the Terra Nova Asset Life Extension project—expected to add 10 years and 70 million bbl of oil to the FPSO’s production capacity—is complete, and the vessel is expected to restart production in this year’s fourth quarter, the operator said as part of its third-quarter update Nov. 8.

The FPSO, which lies about 350 km offshore Canada and can store 960,000 bbl of oil, had been out of service since 2019 following the order by the Canada-Newfoundland and Labrador Offshore Petroleum Board for Suncor to suspend production-related operations due to a crack in the vessel’s hull (OGJ Online, Dec. 23, 2019). The vessel had been challenged by a downturn in oil prices which delayed repairs.

In 2021, Suncor, Cenovus, and Murphy Oil took over full ownership in 2021 and finalized an agreement to move forward with the Asset Life Extension Project, which included Suncor’s commitment to repair the subsea production system (OGJ Online, Sept. 9, 2021). The work scope, carried out by Subsea 7, included replacement of flowlines, umbilicals, and control systems. The original target to return to production was end-2022. Later, the expected return of the vessel to the oil field was moved to second-quarter 2023.

In May 2023, Suncor told investors during a quarterly update that the vessel needed additional maintenance before it could safely return to oil production and removed the project from its yearly plan. The vessel, however, returned to open water in August 2023, according to Newfoundland and Labrador Premier Andrew Furey.

Terra Nova oil field is the first harsh environment development in North America to use an FPSO.

Suncor is operator of the Terra Nova project with 48% interest. Partners are Cenovus (34%) and Murphy Oil (18%).

Third-quarter 2023

In this year’s third quarter, Suncor delivered total upstream production of 690,500 boe/d, which included combined upgrader utilization of over 100% outside of planned maintenance activities and continued strong in situ performance, partially offset by asset divestments in exploration and production.

Refinery utilization was 99%.

The company completed the first full plant turnaround at Fort Hills and, subsequent to the quarter, completed significant planned turnaround activities at Upgrader 2. Subsequent to the quarter, Suncor agreed to acquire the remaining 31.23% working interest in Fort Hills (OGJ Online, Oct. 4, 2023).

Suncor's adjusted operating earnings were $1.980 billion (Can.) in the quarter, compared with $2.565 billion (Can.) in the prior year quarter, primarily due to decreased crude oil price realizations reflecting a weaker business environment in the current quarter, increased royalties and decreased sales volumes in E&P due to asset divestments, partially offset by increased refining and marketing gross margins on a first-in, first-out (FIFO) basis due to the impacts of improving benchmark pricing through the quarter, increased sales volumes in oil sands and lower income taxes.

Net earnings were $1.544 billion (Can.) in the quarter, compared with a net loss of $609 million (Can.) in the prior year quarter.

Cash flow provided by operating activities, which includes changes in non-cash working capital, was $4.184 billion (Can.) in the quarter, compared with $4.449 billion (Can.) in the prior year quarter.