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Investigation shows Husky's decision not to move out of iceberg's path in close call 'economically driven'

Records obtained by CBC News under Newfoundland and Labrador's privacy act show that Husky Energy decided not to disconnect a floating production, storage and offloading vessel from an encroaching iceberg for financial reasons.

Husky Energy broke the rules when the SeaRose had a close call with an iceberg in March 2017

Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) suspended oil production on Husky Energy's SeaRose last month after a preliminary report of its investigation showed the company allowed an iceberg to get too close. (Husky Energy)

Husky Energy decided for financial reasons not to disconnect the SeaRose floating production, storage and offloading vessel (FPSO) when an iceberg drifted too close to it last March, according to records obtained by CBC News.

Eighty-four people on board were ordered to muster and to brace for impact on March 29, 2017, according to Scott Tessier, head of the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), the regulatory body for the offshore oil industry. The iceberg came within 180 metres of the structure. 

The iceberg measured 60 by 40 metres and was eight metres high.

An official in the provincial Department of Natural Resources wrote in an email on Jan. 17 that during a discussion about the SeaRose's close call with an iceberg, Tessier said that "the investigation showed that Husky's decision was economically driven."

The email was among 68 pages of records released under Newfoundland and Labrador's Access to Information and Protection of Privacy Act (ATIPPA).

The offshore regulator suspended Husky's operations for nine days last month — 10 months after the incident — because it did not close down production and sail away when the iceberg came close to the SeaRose, said Tessier on Jan. 17. 

The illustration gives an indication of the size and distance, not the direction, the iceberg was in relation to the SeaRose floating vessel. (CBC)

The iceberg came within 180 metres of the SeaRose, which had 340,000 barrels of oil in storage on board at the the time. The SeaRose is 258-metres long, meaning that the iceberg got nearly as close as half the length of the FPSO itself.

At the time of the suspension, Tessier said that it would have taken weeks to get back into production had the SeaRose shut down production and gotten out of the way.

"I suspect in the order of six to seven weeks," he said.

Husky's suspension lasted nine days because the C-NLOPB said it was satisfied that Husky took appropriate action to "address the deficiencies that were identified within the safety culture of their organization," according to a news release.

CBC News requested an interview with Tessier about the comment regarding Husky's financial motivation in defying ice management regulations, but a C-NLOPB spokesperson said it would be inappropriate because the investigation is still ongoing.

Prepared comments by C-NLOPB at the time of the suspension, which were among the documents released to CBC News, said that to take tougher action with Husky in the absence of a completed investigation would have been "capricious and arbitrary" and "subject to legal challenge."

Scott Tessier, head of C-NLOPB, the regulatory body for the offshore oil industry, said it would have taken six or seven weeks for Husky to bring the SeaRose back online if it shut down production and gotten out of the iceberg's way. (Gary Locke/CBC)

Husky dispatched top brass to deal with fallout

CBC News also asked Husky to address whether economic considerations factored into its decision to contravene the ice management plan. 

"We are absolutely committed to ensuring this can't happen again and the plans and procedures we are implementing will ensure that is the case," a Husky spokesperson said by email.

Husky dispatched top brass from its head office in Calgary to St. John's to deal with the fallout from the suspension of oil production last month, according to meeting minutes obtained by CBC News. 

The records show that Tessier communicated to Husky management that it needed to consider "what it is in Husky's culture that blocked the decision to disconnect, and then defended it as the right thing to do."

He also asked the company to "review decisions made in recent cost cutting that may have detrimentally affected ice management."

Senior Husky managers remained in Newfoundland until the issue was resolved. And in a management shakeup last month, Husky Energy replaced Malcolm Maclean, its senior vice-president for the Atlantic region.

This measure as well as a management and emergency response plan convinced the C-NLOPB that Husky could safely resume oil production on the SeaRose, 350 kilometres to the east southeast off the coast of Newfoundland.

Husky did issue a public notice at the time the SeaRose came in close contact with the iceberg last March. But few details were made public until the C-NLOPB issued its own notice nearly a year later.

The records obtained under ATIPPA said that C-NLOPB did not plan to discuss the issue publicly unless it was directly asked about it.

The SeaRose floating platform has returned to the White Rose oil field, 350 kilometres off Newfoundland. (CBC)

Investigation remains open

Tessier wrote that C-NLOPB did not plan any "proactive public communications" and would speak to the close call only if it re-entered "the public domain" because its investigation was open.

Newfoundland and Labrador's Natural Resources Minister Siobhan Coady did not agree to an interview request.

"We understand an investigation remains open regarding the incident in March 2017. We suggest talking to C-NLOPB directly regarding the status of that investigation and its outcomes," Coady said in a statement Friday.

The provincial government earns about $200,000 a day in royalties from oil production on the SeaRose. 

About the Author

Chris O'Neill-Yates

Network Reporter

Chris is the St. John's-based network reporter for CBC News. Her work has garnered multiple awards, including from the CAJ, RTDNA, and AJA. Chris holds an M.A. in South Asia and Global Security Studies from King's College London chris.oneillyates@cbc.ca