Terra Nova production drops

Moira Baird
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Suncor Energy says some wells shut down because of sour gas

Terra Nova FPSO, a massive floating production, storage and offloading vessel used in the oil and gas industry, heads along the Newfoundland Coast near St. John's in this file photo.

Suncor Energy says production is down at the Terra Nova oilfield because the company encountered hydrogen sulphide in some oil wells late last year.

The wells were shut down, the Calgary-based company said in its fourth-quarter financial presentation Wednesday.

Also known as sour gas, hydrogen sulphide (H2S) results naturally from decaying organic material in oil and gas.

Suncor said the wells are safely shut in.

“What we’ve done is shut down the affected wells and the facilities in which we were testing H2S while we developed a mitigation plan,” said Rick George, Suncor president and CEO, during a conference call with analysts.

“That current outage is about 9,000 barrels a day net to Suncor, although I quickly have to say that that deferred production is well within our East Coast production guidance.”

Total production at the oilfield dropped to

1.7 million barrels in November, according to the most recent statistics available from the Canada-Newfoundland and Labrador Offshore Petroleum Board.

In December,  Terra Nova produced 1.3 million barrels of crude. For most of 2010, Terra Nova pumped more than 2 million barrels of oil per month.


Repair delay

George also said Suncor is considering postponing plans to remove the Terra Nova production ship from the oilfield this year to replace damaged bearings in its water-injector swivel.

That work would require a 15-week shutdown, moving the production ship to the Marystown shipyard this summer and installing a new swivel.

“However, we are currently working with our partners to consider the possibility of delaying this into 2012,” George said.

“If that swivel continues to operate safely, we will continue to take a look at delaying that maintenance.”

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Damaged in 2006, the swivel is part of the production ship’s turret, which uses water pressure to flow oil from the reservoir.


Hibernia South and Hebron

Suncor is also a partner in the Hibernia south extension project and the Hebron oilfield. On Wednesday, the company said:

‰    Oil production from Hibernia South is expected by the second quarter of this year.

‰    The Hebron partners expect to submit a development plan application sometime during the first three months of this year. That plan will set out how the partners expect to develop the multibillion-dollar project by 2017.


Terra Nova ownership

Suncor also reported it completed a “redetermination” of working interests in Terra Nova in December.

As the oilfield operator, Suncor now holds a 37.675 per cent ownership stake in Terra Nova — up from its previous 33.99 per cent.

That translated into an extra $295 million in revenue for Suncor retroactive to Feb. 1, 2005, when the Terra Nova oilfield reached payout and triggered the reconfiguration of the project’s ownership interests.

(Payout occurs when the oil companies recoup their initial investment in the oilfield and make a profit.)

Here are the changes in ownership stakes (previous interests are in brackets) for the other Terra Nova partners:

‰    ExxonMobil — 19 per cent (22 per cent)

‰    Statoil Canada — 15 per cent (unchanged)

‰    Husky Energy — 13 per cent (12.51 per cent)

‰    Murphy Oil — 10.47 per cent (12 per cent)

‰    Mosbacher Operating Ltd. — 3.85 per cent (3.5 per cent)

‰    Chevron Canada Resources — one per cent (unchanged).



Organizations: Suncor Energy, Canada-Newfoundland and Labrador Offshore Petroleum Board.In, Husky Energy Murphy Oil Mosbacher Operating Chevron Canada Resources

Geographic location: Terra Nova, East Coast, Hibernia South Marystown Hebron

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