Report of the Terra Nova Development Project Environmental Assessment Panel

1.1 Project Description

The Terra Nova Development (the Project) is a proposal to develop the petroleum resources of the Terra Nova oil field on the northeast Grand Banks of Newfoundland, and is likely to be the second oil production project on the Grand Banks. The Terra Nova Development proponents (hereafter called the Proponents) are Petro-Canada, Mobil Oil Canada Properties, Husky Oil Operations Limited, Murphy Oil Company Limited, Norsk Hydro AS and Mosbacher Operating Limited. Petro-Canada will operate the development on behalf of the Proponents.

The Terra Nova oil field lies 350 km east-southeast of St. John's on the continental shelf in the northeast section of the Grand Banks on the southeastern margin of the Jeanne D'Arc Basin (Figure 1). It is approximately 35 km southeast of the Hibernia project and covers an area of 67 km ². The field is located in water approximately 95 m deep.

The Terra Nova oil field is estimated to contain over one billion barrels of oil in place, and is composed of three major geological structural fault blocks: the Graben, the East Flank and the Far East (Figure 2). The Graben and East Flank blocks are estimated to contain 200 to 400 million barrels of recoverable reserves, given current prices and technology. The Far East block may, in addition, contain up to 100 million barrels of recoverable reserves, though this estimate has yet to be proven by drilling. The development plan forecasts a producing life for the Graben and East Flank of 13 to 15 years, with development beginning in the East Flank and continuing to the Graben. The first well in the Far East Block will be drilled early in the Project life. If the results are positive, the Far East block will be incorporated into the later stages of the Project.

The Proponents' preferred mode of development, a floating production facility, includes a steel monohull vessel, known as a floating production storage and offloading (FPSO) vessel, sub-sea equipment, and an oil transfer system. Shuttle tankers, one or more semi-submersible drilling rigs, and marine and air support vessels will also be associated with the Project. Oil will be processed on the FPSO and transferred to shuttle tankers for transport to shore.

Detailed engineering work, drilling, fabrication, construction, and assembly are scheduled to begin in 1998, with production expected to commence in 2001. During the course of the hearings, however, Petro-Canada informed the Environmental Assessment Panel (the Panel) that the Proponents are working to advance this schedule so that production can begin earlier.

The Proponents considered several options for the Project. A gravity base structure (GBS), like the one used at Hibernia, was evaluated but was found to be uneconomical owing to the greater water depth and smaller reserves of recoverable oil at the Terra Nova oil field. A semi-submersible floating production facility was also evaluated, but the steel monohull vessel was found to offer the same benefits while having lower capital and operating costs.

The use of a vessel with a concrete hull was also considered. Studies carried out on behalf of the Proponents suggested the cost would be significantly higher than for a steel vessel and that, in any case, the technology was unproven. In December, 1996, the Proponents announced that the steel monohull option had been selected. The proposed FPSO for the Project will be a newly built steel vessel 265 m in length.

The vessel will be ice-strengthened and double-hulled with a storage capacity of 850,000 barrels of crude oil. The topsides will include a processing facility that is capable of producing 125,000 barrels of oil per day. Accommodation for 75 people will be located at the forward of the ship.

The FPSO will be positioned at the centre of the field (Figure 2) and will be moored to the seabed during operations through a series of strategically placed anchors, the chains from which are gathered in the turret and allow the vessel to swing freely. The crude oil will be offloaded by pumping it from the stern of the vessel to a shuttle tanker located about 80 m away.

The wells will be drilled in clusters of about six. The Proponents plan approximately 32 production, water injection and gas injection wells to be drilled in the Graben and East Flank blocks with a potential for an additional 12 in the Far East block. At each drill centre, manifolds will collect the flow of the wells, and will be connected by flowlines, trenched in the ocean floor, to flexible risers leading to the FPSO. The drill centres will be located in open pits, called glory holes, 10 m deep by 15 m in diameter to protect the equipment from scouring icebergs. The flowlines from the drill centres will be gathered in the turret of the FPSO, and can be disconnected along with the mooring lines.

The number and size of tankers that will be used for the Terra Nova Development have yet to be determined. The Proponents estimate that between one and three tankers of 80,000 to 120,000 tonnes deadweight will be required. Shuttle tankers will be ice-strengthened and doubled-hulled and designed for segregated ballasting. The oil-loading equipment will be located at the bow.

The crude oil will be shipped directly to market or transshipped through an onshore storage and offloading terminal. Potential markets for Terra Nova oil are Eastern Canada, the U.S. East Coast and the U.S. Gulf Coast.

One or more semi-submersible offshore drilling rigs will be used to drill and complete about 10 wells before the FPSO moves on site. The remainder of the wells will be drilled after First Oil.

Support vessels will be required for iceberg towing and deflection, for assistance with anchors and drilling rigs, for transportation of supplies, and for safety duties. Helicopters will be used primarily for the transport of personnel and smaller supplies.

A base will be established in St. John's to manage the logistics of drilling and production operations. 

1.2 The Process

On June 17, 1996, the Government of Newfoundland and Labrador, the Government of Canada and the Canada-Newfoundland Offshore Petroleum Board (the Board) signed a Memorandum of Understanding (MOU) concerning the environmental assessment of the Terra Nova Development. The purpose of the MOU was to establish a single process for assessing the environmental effects of the Project and for ensuring that the process satisfied the environmental assessment requirements of the parties under the Canada-Newfoundland Atlantic Accord Implementation Acts (the Accord Acts) and the Canadian Environmental Assessment Act (CEAA). The MOU stipulated that the Panel must complete its work within 270 days of receiving the development application from the Board.

The federal and provincial governments jointly announced the appointment of the Panel on November 22, 1996. The

members of the Panel are: Dr. Leslie Harris (chair), Ms. Irene M. Baird and Dr. Jon Lien. Biographies of the Panel members are provided in Appendix A.

The Panel was asked to conduct a review of the environmental effects of the Project; considerations of human safety incorporated into the proposed design and operation of the Project; the general approach to the development and exploitation of the petroleum reserves of the Terra Nova field; and, the employment and industrial benefits that are expected to accrue to Canada and in particular to the Province of Newfoundland. The Panel's complete terms of reference and the matters to be considered in the public review are part of the MOU and are provided in Appendix B.

The Board is responsible for the management of hydrocarbon resources in the Newfoundland offshore area on behalf of the Government of Canada and the Government of Newfoundland and Labrador. The Board's authority is derived from the Accord Acts of 1986 and 1987.

The Proponents prepared their development application in cognizance of the provisions of the MOU and submitted it to the Board on August 5, 1996. In October, the Board requested additional information from the Proponents which was supplied in November. On December 2, 1996, the Board, satisfied that the development application was suitable for public review, referred it to the Panel.

On December 16, 1996, the Panel invited the public to comment on the development application and specifically on whether any further information on the Project was required prior to the public hearings. On February 5, 1997, the Panel met with representatives of the provincial Department of Mines and Energy, and on February 6, 1997 with Petro-Canada forpublic information sessions. Having considered all the information before it, the Panel requested additional information from the Proponents on February 13, 1997. The Proponents submitted their response to the Panel's request on March 14, 1997.

The Government of Canada made available $75,000 to assist the public to participate in the review process. Funds were allocated by an independent committee prior to the appointment of the Panel. Two funding applications were received, and a total of $26,410 was awarded. According to some participants in the review process, more applications for funding would have been made had the program been more widely advertised. A summary of the participant funding allocations is found in Appendix C.

The Panel held public hearings in four Newfoundland communities: in St. John's on April 22, 23, 24 and May 6; in Grand Falls-Windsor on April 30; in Clarenville on May 1; and, in Marystown on May 2. The public hearings gave participants an opportunity to present their views, opinions and technical information on the acceptability of the proposed Project. The Panel heard over 20 presentations and received in excess of 70 written submissions during the public review phase. A list of presenters at the public hearings can be found in Appendix D and the key review documents are listed in Appendix E.

This report is the final step in the review process. It provides the Panel's findings, conclusions and recommendations to the federal Ministers of Natural Resources and of the Environment, to the provincial Ministers of Mines and Energy and of Environment and Labour, and to the Board.

Concurrent with the Panel's work, the Board has conducted its own internal review of the development application. The Board's decision with respect to the Project will explicitly take into account this report and the Panel's recommendations, as well as the positions of the Government of Canada and the Government of Newfoundland and Labrador regarding the report of the Panel.