Showing posts with label FPSO. Show all posts
Showing posts with label FPSO. Show all posts

13 May 2020

Terra Nova field production halted for up to two years #nlpoli


No one should be surprised that the partners in the Terra Nova field are planning to lay up the production platform and will likely stop production from the field until 2022.

There are five perspectives we can bring to bear on this one event.

FPSO:  The pandemic knocked the planned refit of the Floating Production Storage and Offloading platform off schedule for 2020 anyway.  The operators needed to lay the ship alongside until a yard opened that could do the work.

Field:  There’s no sense in selling off a highly valuable asset very cheaply if you don’t need to do so.

The glut of oil and the downturn in policies make it sensible to shut down production from the field.
Terra Nova oil is light and sweet.  It is cheap to produce and easy to refine. With the FPSO paid off long ago, the Terra Nova operators can leave the very profitable field in storage until prices rebound and deliver the kind of higher profits that the field can generate.   

GNL:  The provincial government will take a serious financial hit with Terra Nova out of production for a couple of years.  But, as with the company perspective, it’s actually in the public’s long-term interest to leave the highly profitable oil in the ground rather than sell it off cheaply.

Provincial society and politics: Unfortunately, 15 years of using public money to buy political favour has produced a situation in Newfoundland and Labrador that is much like the one in Venezuela. So many groups across the whole of society are so addicted to public spending that they will treat this smart and understandable move as a catastrophe.

Expect calls for federal welfare for oil companies to become louder along with renewed demands for a federal bailout of the provincial government.

Federal Government:   The federal government will provide some financial assistance to governments, companies, and individuals across Canada to deal with the pandemic, but it has neither the political will nor the financial muscle to bailout oil companies and provincial governments.  There is no support for such moves at the bureaucratic level nor is there any support for bailouts at the political level either.


-srbp-