GENERAL INTEREST / Owners approve Terra Nova Development
ST. JOHN'S, Nfld, Feb. 17 /CNW/ - The Terra Nova development proponents
today announced their decision to proceed with the development of the Terra
Nova oil field offshore Newfoundland. The decision to proceed with the
development follows last month's Canada-Newfoundland Offshore Petroleum Board
approval of the development application, subject to a number of conditions.
''We are pleased that final agreements and approvals are now complete and
the development can move forward,'' said Norm McIntyre, executive
vice-president, Petro-Canada. He added, ''The economics of Terra Nova are
attractive; it is a good investment for the development owners and will
generate substantial revenues for Newfoundland and Canada as a whole.''
Construction of glory holes - holes in the sea floor to protect wellheads
and subsea templates - will begin this summer to prepare for drilling, which
will commence in June, 1999. The contract for the Floating Production Storage
and Offloading (FPSO) vessel hull has been awarded to Daewoo Heavy Industries
and the contract for the drilling rig to Transocean Inc. Topsides fabrication
work will be announced shortly.
The Terra Nova development consists of an FPSO capable of producing
125,000 barrels of oil per day. A total of 24 wells will be drilled, six
before start up, to recover an estimated 370 million barrels of oil. Average
annual peak production is estimated at 115,000 barrels of oil per day.
In announcing the decision to proceed, the development proponents noted
they expect to obtain first oil by year-end 2000 at a cost of just under $2
billion (as spent dollars). Post first oil capital costs are estimated at $600
million for a total capital cost of approximately $2.6 billion. Operating
costs are expected to be $1.9 billion over the 15-year life of the field.
Total project costs will be $4.5 billion.
While all work will be internationally bid, the Terra Nova proponents are
committed to ensuring that Newfoundland will have full and fair opportunity
and first consideration in gaining business and employment opportunities.
''The development of Terra Nova will be a major contributor to future offshore
oil exploration and development and the establishment of a sustainable oil
industry in Newfoundland'' commented Mr. McIntyre. ''We are committed to
furthering the industrial capabilities available in Newfoundland to service a
growing industry.''
The proponents currently estimate that between 900-1100 persons will be
employed in Newfoundland during peak pre-production activity. Employment will
occur in the areas of engineering, fabrication, drilling, and project
administration. The operations phase will generate in the range of 400 - 450
direct longer-term jobs. Approximately 80 per cent of the estimated total
employment activity - 20.9 million person hours - will occur in Newfoundland.
Of the anticipated total capital and operating expenditures of $4.5 billion,
approximately 60 per cent will be spent in Newfoundland.
The Terra Nova proponents have completed the initial unitization of the
field resulting in the following working interests: Petro-Canada, operator,
(29%), Mobil Oil Canada Properties (23%), Husky Oil Operations Ltd. (17.5%),
Norsk Hydro Canada Oil & Gas (15%), Murphy Oil Company Ltd. (12%) and
Mosbacher Operating Ltd. (3.5%). A seventh company, Talisman Energy Inc.,
holds an interest in an undrilled section of the field - the Far East block.
If oil is discovered in this block, Talisman will become a working interest
owner at the time of redetermination of interests.
The Terra Nova Alliance, a consortium of companies led by Petro-Canada,
will design, construct and install the FPSO, subsea components and
pre-production wells necessary for the development of the Terra Nova oil
field. The Alliance consists of: Petro-Canada, Shawmont Brown and Root,
Halliburton Energy Services, FMC Offshore Canada Ltd., PCL Industrial
Constructors Inc., Coflexip Stena Offshore Newfoundland Ltd. and Doris ConPro
Offshore Ltd.
The Terra Nova oil field is located on the Grand Banks 350 kilometres
east-southeast of St. John's, Newfoundland. Discovered in 1984, Terra Nova is
the second largest oil field off Canada's East Coast. |
