Husky Energy to review West White Rose project off Canada
Canadian oil and gas company Husky Energy will be reviewing its West White Rose offshore oil project in Canada’s Atlantic region.
Husky Energy said on Wednesday that the review followed the suspension of major construction activities in March due to the COVID-19 pandemic and the company’s capital re-prioritization following the global economic downturn.
Rob Peabody, CEO of Husky Energy, said: “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.
“Unfortunately, the delay caused by COVID-19 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”.
With an expected peak capacity of 75,000 barrels of oil per day, West White Rose is designed to produce light crude oil at low incremental cost and with lower greenhouse gas emissions intensity than other North American crude oil projects.
Husky Energy added that construction at Argentia and Marystown was suspended in March 2020 and construction workers demobilized due to COVID-19. The project is 60 per cent complete, however, all major construction remains on hold while Husky determines a path forward, given a start-up delay of at least one year due to a tight offshore weather window.
“This is a very difficult decision for us. 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”, Peabody added.
Husky has discussed ideas designed to protect jobs and the economic benefits the project will deliver with the provincial and federal governments.
The project’s longer-term fundamentals remain attractive, given the lower incremental costs per barrel and expected 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 added. “We need to find a solution now”.
Husky is the operator of the White Rose field and satellite extensions, which are located in the Jeanne d’Arc Basin approximately 350 kilometres off the coast of Newfoundland and Labrador.