Offshore staff
CALGARY, Canada – Husky Energy is reviewing its West White Rose field development in the Jeanne d’Arc basin offshore Newfoundland and Labrador.
The company suspended major construction activities in March due to the spread of COVID-19.
“A full review of scope, schedule and cost of this project is critical, given the minimum one-year delay to first oil caused by COVID-19, and our priority of maintaining the strength of our balance sheet with ample liquidity,” said CEO Rob Peabody.
“Unfortunately, the delay…and continued market uncertainty leaves us no choice but to undertake a full review of the project and, by extension, our future operations in Atlantic Canada.”
West White Rose would have an anticipated peak production capacity of 75,000 b/d. According to the company, it is being designed to produce light crude oil at low incremental cost and with lower greenhouse gas emissions than other North American crude oil projects.
Construction was halted in March at Argentia and Marystown. At present the project is 60% complete, but all major construction remains on hold while Husky determines future steps, with start-up set to be delayed by at least one year due to a tight offshore weather window.
Peabody said: “We know thousands of Canadian families depend economically on these well-paid construction, contract and operational jobs, and that these are not easily replaced.”
“We fully appreciate that this project represents billions in government taxes and other anticipated public benefits. Without it, these will not materialize.”
Husky has discussed the challenges and risks with provincial and federal governments and has ideas for protecting jobs.
The project’s longer-term fundamentals remain attractive, the company stresses, due to lower incremental costs per barrel and lower emissions intensity of the oil produced.
“However, sustaining project costs through a long delay in a negative economic environment is not an option,” Peabody said. “We need to find a solution now.”
09/10/2020
