The Terra Nova Field
The Terra Nova Project
The Canada-Newfoundland Offshore Petroleum Board
The Terra Nova Public Review Process
The Canada-Newfoundland Benefits Plan Decision
The Development Plan Decision

The Terra Nova Field

The Terra Nova field is located on the Grand Banks, approximately 350 km east-southeast of St. John’s, Newfoundland and about 35 km southeast of the Hibernia field. Water depths in the area range from 90 to 100 m.

The field was discovered in May 1984 by the drilling and testing of the Petro-Canada et al Terra Nova K-08 exploration well. Eight additional wells subsequently were drilled to define the structure; three 3D seismic surveys also were conducted.

The Terra Nova field is divided into three major fault blocks: the East Flank, the Graben, and the Far East. The discovery well and five of the subsequent wells were drilled into the Graben and East Flank and identified five major and two minor oil bearing sandstones. The Far East has not been tested by drilling but, based upon the interpretation of seismic data, is believed to contain as much as 16 10 6 m 3 (100 million barrels) of recoverable oil. The Canada-Newfoundland Offshore Petroleum Board estimates that the full Terra Nova field contains some 64 10 6 m 3 (400 million barrels) of recoverable oil.

At present, the Terra Nova Significant Discovery Area comprises five Significant Discovery Licences with ownership varying in each licence. The overall equity interests in the field will be established following conclusion by the interest owners of a unitization agreement covering the entire field.

The Terra Nova Project

At present, the pre-development costs of the Terra Nova project are being shared by the project proponents as follows:

Petro-Canada will operate the project on behalf of the interest owners, and is referred to in the remainder of this document as “the Proponent”.

The Proponent concluded that, because of field size and water depth, the only viable option for Terra Nova is a floating production system capable of year-round operations, and chose to develop the field using a new-build, steel monohull, floating production, storage and offloading vessel (FPSO) moored by means of a disconnectable turret. The FPSO vessel will have independent self-propulsion capability and a dynamic positioning system to provide a high level of station keeping. Wells will be drilled using separate, conventional offshore drilling units.

A total of 26 wells is planned for the Graben and East Flank: 15 production wells, 8 water injection wells and 3 gas injection wells. The open glory hole method will be used to protect the wells, which will be drilled in clusters around six manifolds. Many wells will be directionally drilled with hole inclinations up to 30° to achieve full drainage of the reservoir. A total of 10 wells is foreseen for the Far East portion of the field: 5 production wells and 5 water injection wells clustered around 2 manifolds.

The proposed schedule foresees the first shuttle tanker load of oil being produced in 2001. However, work is proceeding in accordance with a fast-track approach which may result in first oil being produced by late 2000. According to this schedule, construction activities will commence immediately following sanction of the development; the construction of glory holes would start in 1998. It is anticipated that six wells will be drilled and completed prior to the commencement of production.

The Canada-Newfoundland Offshore Petroleum Board

The Canada-Newfoundland Offshore Petroleum Board (the Board) is responsible, on behalf of the Government of Canada and the Government of Newfoundland and Labrador, for petroleum resource management in the Newfoundland Offshore Area. The Board’s authority is derived from the legislation implementing the February 11, 1985 Atlantic Accord between the two governments. The Canada-Newfoundland Atlantic Accord Implementation Act and the Canada-Newfoundland Atlantic Accord Implementation Newfoundland Act (the Accord Acts) provide for joint management of the offshore area.

The Board consists of seven members who are appointed for fixed terms of office. The Government of Newfoundland and Labrador and the Government of Canada each appoint three members. The seventh member, the Chairman, must be jointly appointed. The Board, which assumed its jurisdiction in 1987, has a multi-disciplinary staff of professional and support personnel located at its offices in St. John’s, Newfoundland.

The Board’s responsibilities include the issuance and administration of petroleum exploration and development rights, and administration of statutory requirements regulating offshore exploration, development and production.

Under the Accord Acts, before any development activity can proceed in the offshore area, the proponent is required to submit for Board approval a development plan and a Canada-Newfoundland benefits plan. As part of the Board’s review and approval process, the Accord Acts require the Board to conduct a public review of a proposed development unless the Board is of the opinion that it is not in the public interest to do so.

In addition to the Board’s authority under the Accord Acts, the Board also has a responsibility under the Canadian Environmental Assessment Act to ensure that an environmental assessment of any proposed development is conducted.

The Terra Nova Public Review Process

The Board informed Petro-Canada early in the planning stages of the project that a public review of the proposed Terra Nova project would be required to complement its own internal review.

To eliminate any potential conflict or duplication between the public review contemplated pursuant to the Accord Acts and similar processes which arise by virtue of the Canadian Environmental Assessment Act (CEAA) and other federal and provincial legislation, the Board, together with environment and natural resource ministers of the federal and provincial governments, concluded the Memorandum of Understanding Concerning Environmental Assessment of the Terra Nova Development (the MOU) in July 1996. The MOU provided for the establishment of the Terra Nova Project Environmental Assessment Panel (the Panel) and described a single joint public review process which satisfies the legislative requirements of all parties.

In January 1996, the Proponent held public “open house” meetings in eleven Newfoundland communities, at which it described the development concepts being considered for Terra Nova and solicited advice from participants on issues which they believed should be incorporated into the Terra Nova Development Application.

On August 5, 1996 the Proponent submitted its Terra Nova Development Application to the Board, distributed copies of its Application and of the Application Summary throughout the province, opened a project information office in St. John’s, and placed its application documents on a home page on the World Wide Web.

In September 1996 the Proponent hosted public information sessions in the same communities it visited in January 1996, to describe the contents of its Application and to answer questions from those attending.

The Panel was appointed on November 27, 1996, and the Board referred the Application to it on December 2, 1996. Following consideration of the Application documents and of public comments, the Panel issued a request to the Proponent for additional information on February 13, 1997, to which the Proponent responded on March 14, 1997.

The Panel held public hearings seven Newfoundland communities between April 22 and May 6, 1997, at which approximately 20 groups and individuals made presentations.

The Panel submitted its report to the Board and to the other parties to the MOU on August 25, 1997. The Panel recommended that the Project be permitted to proceed subject to the recommendations in its report. The Board subsequently prepared its proposed response to the Panel’s report and submitted it to the Minister of Natural Resources Canada. The Governor in Council approved the proposed response on December 4, 1997. The response to the Panel report and the results of the Board’s internal review are reflected in the Board’s Decision 97-02 .

The Canada-Newfoundland Benefits Plan Decision

The Board has approved the Terra Nova Canada-Newfoundland Benefits Plan subject to eight conditions.

The Accord Acts contain provisions designed to ensure that petroleum resources offshore Newfoundland are developed in such a way that maximum benefits accrue to Canada and in particular to Newfoundland and Labrador. Two fundamental principles are embodied in the legislation for this purpose. The first requires that Canadian suppliers be provided a full and fair opportunity to participate on a competitive basis in the supply of goods and services with first consideration being given to those located within the Province provided they are competitive in terms of fair market price, quality and delivery; and the second requires that first consideration for training and employment be given to residents of the Province.

The Terra Nova Canada-Newfoundland Benefits Plan describes the Proponent’s plans and strategies to meet the legislative requirements. The Plan details the procurement and human resource policies and strategies applying to the development and outlines the Proponent’s plans to establish an office in the province with relevant levels of decision making and to provide for expenditures on research and development and education and training in the province.

The Board considers that the Benefits Plan commitments meet the requirements of the Accord Acts. In approving the Benefits Plan, the Board has developed conditions to help ensure that these commitments are met, and to ensure it will have access to the documentation necessary to corroborate this. The Board will develop reporting mechanisms for the timely review of major contracting decisions, and appropriate reporting formats for tracking employment and expenditures, and will conduct periodic audits to confirm the accuracy of the reports.

The Development Plan Decision

The Board has approved the Terra Nova Development Plan subject to fifteen conditions.

In approving a Development Plan, the Board must satisfy itself that the plan provides for hydrocarbons to be produced in accordance with good oil field practice with due regard for the efficient recovery of the resource and the prevention of waste; for the facilities to be designed so that they can be operated safely throughout the expected life of the field; for a responsible approach to be taken regarding environmental protection; and for the safety of personnel to be a primary consideration at all times.

The Development Plan sets out the Proponent’s interpretation of the geology and reservoir characteristics of the Terra Nova field, provides estimates of hydrocarbon reserves, describes the approach and facilities the Proponent plans to use to recover those reserves, and includes a description of the environmental parameters governing the design of facilities.

The Board’s overall response to the Development Plan is positive. The work submitted by the Proponent has been judged to be thorough and comprehensive, and the concepts, approaches, and preliminary designs have been accepted. The Board believes that the Proponent’s plans for the recovery of resources from the field are appropriate given the present state of knowledge, but has established several conditions to its approval of the portion of the Development Plan that deals with conservation of the resource.

The Board also has accepted the process outlined in the Development Plan for the design of the production and extraction facilities, and has established several conditions to its approval which prescribe the timing of certain submissions which are identified in the Plan or which are required by the regulations promulgated under the Accord Acts.

Approval of the Development Plan does not, of itself, authorize the conduct of any work or activity in the offshore area. As plans evolve and more detailed analyses are completed, the Proponent must obtain other specific approvals from the Board for the execution of various components of the actual work. Lloyd’s Register of Shipping has been selected to be the Certifying Authority for the Project and will conduct the reviews of the design and surveys of the construction of the facilities that are necessary to enable it to issue a Certificate of Fitness attesting that the facilities have been designed in compliance with the applicable legislation and are suitable for their intended purpose. Prior to issuing authorizations for the execution of project activities, the Board will satisfy itself that appropriate Safety Management Systems are established by the Proponent and its contractors. The regulations require that the Board’s approval be obtained for the Proponent’s Safety Plan and Training Proposal before the commencement of production can be authorized.

The regulations also require that the Proponent submit an Environmental Protection Plan, including an Environmental Effects Monitoring Plan, for the Board’s approval prior to commencing production. All routine discharges from the platform will be required to meet regulatory standards. The Board has attached several conditions to its approval to ensure adherence to existing environmental standards and to require the investigation of the implications of designing the facilities in a manner that enables them to accommodate future changes in regulatory requirements.