Cenovus, Suncor outline Atlantic assets restructuring plan
Cenovus Energy Inc., Calgary, entered agreements with Atlantic region partners to restructure working interests in the Terra Nova and White Rose projects off Newfoundland and Labrador. The agreements will increase Cenovus’s working interest in Terra Nova and, if a decision is taken to restart West White Rose, reduce the company’s working interest in White Rose field.
Terra Nova
Cenovus’s working interest in Suncor Energy Inc.-operated Terra Nova will be 34%, up from 13%. The company will receive $78 million (Can.) from exiting partners as a contribution towards future Terra Nova asset retirement obligations. The Terra Nova asset life extension project will proceed, extending the life of the field to 2033. Production is expected to resume before end 2022, with gross production expected to reach 29,000 b/d in 2023.
Suncor, Cenovus, and Murphy Oil now control 100% of the Terra Nova project with the increased ownership positions: Suncor, 48% (previously about 38%); Cenovus, 34% (previously 13%); and Murphy Oil, 18% (previously about 10%).
Terra Nova oil field has proven reserves of about 506 million bbl of recoverable crude. It is the first harsh environment development in North America to use a floating production storage and offloading (FPSO) vessel. The FPSO will undergo maintenance work starting early September prior to sailing to dry dock in Ferrol, Spain, later this year with a return to operations expected before end 2022.
White Rose
Cenovus and Suncor Energy Inc., as part of the restructuring, have entered into an agreement whereby Cenovus will decrease its working interest in the White Rose field and satellite extensions while Suncor will take a larger stake, contingent upon approval of the West White Rose project restarting. Cenovus would reduce its stake in the original field to 60% from 72.5% and to 56.375% from 68.875% in the satellite extensions.
In September 2020, a review of the West White Rose Project was announced by then-operator Husky Energy Inc. prior to its acquisition by Cenovus Energy Inc. (OGJ Online, Oct. 26, 2020). This followed the suspension of major construction activities in March due to the COVID-19 pandemic and the decision to reprioritize capital investment following the global economic downturn.
Earlier this year, Suncor noted plans to record a $425 million (Can.) non-cash after-tax impairment charge in fourth-quarter 2020 on its share of White Rose and West White Rose (OGJ Online, Jan. 5, 2021). At the time, Suncor noted the events cast “significant doubt on the future of the project.”
The West White Rose project was intended to access 200 million bbl of light crude oil and extend the life of White Rose oil field by 14 years.
As part of the conditional agreement on White Rose, Cenovus will complete a restart evaluation for the West White Rose project by mid-2022. Should the project economics warrant a restart decision, Suncor has agreed to increase its interest in White Rose field to about 40% from 27.5% for an undisclosed cash payment by Cenovus to Suncor. Suncor would assume capital commitments on the 12.5% additional interest on a go-forward basis. Suncor also holds about 26% interest in the West White Rose project.
No significant capital spend is expected before 2023 and the companies will work together to increase the efficiency of the asset, Suncor said.
White Rose joint venture owners are Cenovus (operator) and Suncor. West White Rose project joint venture owners are Cenovus (operator), Suncor, and Nalcor.