[Canada] West White Rose

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escveritas
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[Canada] West White Rose

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Husky Announces Review of West White Rose Project
Sep 9, 2020 7:00 ET

Review will prioritize Husky’s balance sheet strength and financial resilience

CALGARY, Alberta, Sept. 09, 2020 (GLOBE NEWSWIRE) -- Husky Energy (TSX:HSE) today announced a review of the West White Rose Project in the Atlantic region.

The review follows 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.

“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 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 (approximately 52,500 bbls/day Husky working interest), 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.

Construction at Argentia and Marystown was suspended in March 2020 and construction workers demobilized due to COVID-19. The project is 60% 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,” said Peabody. “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 said.

Husky has discussed the project’s challenges and risks with the provincial and federal governments. The Company has proposed ideas designed to protect jobs and the economic benefits the project will deliver.

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.

Stakeholder Quotes
Unifor supports the Canadian offshore oil industry and the thousands of good jobs it generates. The West White Rose project is important to Canada’s energy future. We support strategic public investments to protect good jobs and help the industry innovate.
- Jerry Dias, Unifor National President
Getting our members back to work safely in the COVID-19 ‘new normal’ is our top priority. We support government investment to move this project forward, putting thousands of unionized skilled trades people back to work immediately and ensuring decades of ongoing maintenance work on the project.
- Hassan Yussuff, President, Canadian Labour Congress
Government must turn its attention to repairing Canada’s deep economic wounds and preventing the destruction of major industries such as the Atlantic offshore due to COVID-19. The offshore provides thousands of well-paid private sector jobs and generates billions of dollars in government revenues. A business-focused recovery will ensure Canadians can continue to realize these benefits.
- Perrin Beatty, CEO, Canadian Chamber of Commerce
Our province, region and country depend on the oil and gas industry. Newfoundland and Labrador has proven we are a place rich in resource, expertise and ability to deliver. It only makes sense for our federal government to support our industry.
- AnnMarie Boudreau, CEO, St. John’s Board of Trade
The West White Rose project represents a significant investment for the local energy industry, and getting it moving again protects skilled jobs now, and creates jobs for the future. The offshore oil and gas industry has an important role to play in helping Newfoundland and Labrador and Canada achieve emissions reduction targets, while also supporting energy security for Canada.
- Charlene Johnson, CEO, Newfoundland and Labrador Oil and Gas Industries Association
As investors gather to review the future of the West White Rose extension project, we are encouraging Husky Energy to continue with their original plan to complete the construction of the concrete gravity structure (CGS) in Argentia, NL. We have thousands of highly skilled Newfoundlanders and Labradorians anxiously awaiting to return to work on that project. These workers are depending on this employment opportunity so that they can provide for their families and contribute to the local economy.
- Darin King, Executive Director, Trades NL
Husky is an essential component of our breakfast programming at the Jimmy Pratt Memorial Outreach Centre. Over the past seven years, Husky volunteers have been the main stay, working alongside our internal volunteers, in providing the required stability for the success and growth of our weekly hot breakfast program. Through Husky’s financial and volunteer support, we are able to serve up to 120 breakfasts to people in the downtown area. Husky’s presence in the community has been a great asset to our clients, our organization, and many others and I would like to see them have a long future here.
- George Parsons, Jimmy Pratt Memorial Outreach Centre
West White Rose Project Quick Facts

More than 500 current Husky operations jobs in Newfoundland and Labrador. West White Rose would create about 250 additional full-time platform jobs.
More than 1,000 unionized construction jobs at Argentia and Marystown.
$1.1 billion in work remains to be completed in Newfoundland and Labrador.
$11 billion in future capital and operating expenditures over the life of West White Rose to 2036.
More than $3 billion in incremental future royalties and taxes (federal and provincial).
$60 million in future research and development and social investments in the province.
$48 million to the Provincial Innovation Fund.
West White Rose greenhouse gas emissions intensity expected to be 50% lower than the average barrel produced in Canada.
escveritas
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Re: [Canada] West White Rose

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Overview
  • Together with its co-venture partners, Husky Energy is developing West White Rose with a concrete gravity (CGS) supported wellhead platform.
  • This is innovative technology for the region: a proven concept around the world, Husky is the first to bring it to Newfoundland and Labrador
  • The platform is a fixed drilling rig, which will produce back to the SeaRose FPSO. Benefits of this technology include:
• Improved drilling efficiency
• Reduced weather downtime
• Lower operating costs
• Greater resource recovery

Statistics

• Total platform height = 241 metres
• Topsides operating weight = 30,000 tonnes
• Concrete gravity structure with integrated topsides
• CGS overall height = 145 metres
• Concrete volume = 76,000 m3
• Total CGS weight = 210,100 tonnes
• Argentia Graving Dock
• Completed May 2015
• Approximately 25 metres deep
• Allows CGS to be constructed completely in the dry
escveritas
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Re: [Canada] West White Rose

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Cenovus announces restart of West White Rose Project
CALGARY, Alberta, May 31, 2022 (GLOBE NEWSWIRE) -- Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) and its partners have agreed to restart the West White Rose Project offshore Newfoundland and Labrador. First oil from the platform is anticipated in the first half of 2026, with peak production anticipated to reach approximately 80,000 barrels per day (bbls/d), 45,000 bbls/d net to Cenovus, by year-end 2029.

“The joint venture owners have worked together to significantly de-risk this project over the past 16 months. As a result, we’re confident restarting West White Rose provides superior value for our shareholders compared with the option of abandonment and decommissioning,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “With the project about 65% complete, combined with the work done over the past 16 months to firm up cost estimates and rework the project plan, we are confident in our decision to restart this project in 2023.”

The restart decision builds on Cenovus’s September 2021 restructuring of its working interests in the White Rose and Terra Nova fields, improving the strategic alignment across the two assets. Cenovus and Suncor, as part of the restructuring, have entered into an agreement whereby Cenovus will decrease its working interest in the White Rose field and satellite extensions while Suncor will take a larger stake, with the approval of the West White Rose project restarting. Cenovus has reduced its stake in the original field to 60% from 72.5% and to 56.375% from 68.875% in the satellite extensions. Nalcor has a 5% working interest in the satellite fields.

Contributing to the decision to restart the project is an amended royalty structure with the Government of Newfoundland and Labrador which provides safeguards to the project’s economics in periods of low commodity prices.

The remaining capital required to achieve first oil is expected to be approximately $2.0 billion to $2.3 billion net to Cenovus. This includes construction costs of approximately $1.6 billion to $1.8 billion net to Cenovus for the completion of the West White Rose full platform, and about $400 million to $500 million net to Cenovus for subsea drilling and completions work and the SeaRose floating production, storage and offloading (FPSO) vessel’s asset life extension. Capital to complete the project is largely offset by deferral of planned decommissioning costs of $1.6 billion to $1.8 billion over the next five years that had been assumed in the business plan presented at Cenovus’s Investor Day in December 2021.

Included in the West White Rose Project capital estimate is $120 million net to Cenovus to be spent in 2022 as the company works towards full restart of the West White Rose Project in 2023. This amount will be added to Cenovus’s 2022 Corporate Guidance at its next update later this year.

About the West White Rose Project

The West White Rose Project will add an expected 14 years of production to the White Rose field and is about 65% complete. The field’s production has tidewater access to global markets and receives Brent-like pricing. Construction includes the completion of the concrete gravity structure and topsides, which will serve as the drilling platform for the project. Once installed, the platform will be tied into existing infrastructure. A scheduled 70-day drydock program for the SeaRose FPSO will proceed in 2024.
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