Nfld. & Labrador

Husky still evaluating next expansion for White Rose field

A top executive with Husky Energy says the company is still weighing its options for another extension of the White Rose field.

Options include concrete gravity structure, to be built at Argentia, or subsea development

Malcolm MacLean is a senior vice-president for the Atlantic region with Husky Energy. (CBC)

Despite a gradual increase in oil prices and reduced construction costs, it seems Husky Energy is in no hurry to announce plans for another extension to the White Rose oil field.

In December, the company said it was deferring plans for the West White Rose Extension for at least a year because of a crash in oil prices.

But crude is up by about 20 per cent since that time, while labour, steel, drill rigs and other equipment costs have fallen sharply.

Husky vice-president Malcolm MacLean is confident the project will proceed, but says the company will likely take the full year to make a final decision.

"We want to complete the work that's currently underway on looking at cost reductions for both concepts and also we'll be monitoring the oil price throughout the remainder of this year, really, just to see when the economics look more favourable," MacLean told CBC News during an interview at the NOIA oil and gas conference in St. John's.

Husky and its partners, Suncor Energy and Crown-owned Nalcor, are considering two options for the extension.

One is a gravity concrete structure that will be built at Argentia, reinvigorating the Placentia area and creating about 250 long-term jobs once complete.

The second is a subsea development similar to the North Amethyst satellite field, which began producing in 2010.

The issue we had was the oil price was falling. There were a lot of people predicting it falling to extremely low levels, so it was not a time to be launching a major investment project.- Malcolm MacLean, Husky Energy

MacLean said both options have their advantages and disadvantages, and each will continue to be evaluated against the backdrop of lower oil prices.

"Yes, things are looking better than the dark days of December," he said. 

"The issue we had was the oil price was falling. There were a lot of people predicting it falling to extremely low levels, so it was not a time to be launching a major investment project," he said.

But MacLean remains confident that the West White Rose extension will eventually get a green light, and that Husky's presence in Eastern Canada will continue to grow and prosper for many years to come.

A proven option

He said the gravity structure, also known as a wellhead platform, is a proven option. But he said the area's unique location — 350 km east of St. John's in the Jeanne d'Arc Basin — and harsh conditions mean greater risks.

He said the development team is working to reduce these risks by completing the platform's design prior to the start of construction, which will help avoid costly design changes afterwards, and by completing the graving dock in Argentia where the platform would be built.

"We will be able to estimate its cost and construction schedule more accurately," he explained.

MacLean said there is a lot of effort being put into ensuring any cost overruns are avoided.

"Overruns are often tolerated when oil prices are high and rising, but they are unacceptable in a low-price environment."

ABOUT THE AUTHOR

Terry Roberts is a journalist with CBC's bureau in St. John's.

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