Nfld. & Labrador

A double win for Husky: Company sanctions West White Rose and announces new discovery

The offshore oil industry in Newfoundland and Labrador received a boost Monday, with Husky Energy announcing it will build a new fixed wellhead platform and confirming it has discovered more oil in the White Rose field.

Construction activity at Port of Argentia will begin almost immediately on new concrete gravity structure

From left, Natural Resources Minister Siobhan Coady, Husky Energy vice-president Malcolm Maclean and Newfoundland and Labrador Premier Dwight Ball announcing the West White Rose project's approval. (Terry Roberts/CBC)

The offshore oil industry in Newfoundland and Labrador has received a big boost, with Husky Energy announcing it will build a new fixed wellhead platform and confirming it has discovered more oil in the White Rose field.

After months of anticipation, news outlets received a last-minute invite Monday morning to an announcement at The Rooms in St. John's, and the news was even more promising than anticipated.

$3 to $4 billion in economic benefits

Husky confirmed plans to build the first-ever wellhead platform for the province's offshore, with the West White Rose expansion being described as the largest oil and gas production project to move forward in Canada this year, with a project cost of $2.2 billion before first oil in 2022.

The current field schematic for the wellhead platform option. (Husky Energy)

The project will have at least a 25-year lifespan, and deliver between $3 and $4 billion in economic benefits for the province in the form of royalties, taxes and equity payments.

It will also create 250 permanent platform jobs, and up to 1,500 more direct and indirect jobs.

And it's bigger than what was originally envisioned when the project was proposed in 2013, which means more construction work in the province.

Provincial benefits bigger than expected

The concrete gravity structure is larger, and will be constructed at a new graving dock in Argentia, with a peak construction workforce of 800.

The White Rose oil field is located about 350 kilometres east of St. John's. Commercial oil production from the White Rose field began in November 2005. (The Canadian Press)

Components such as the accommodations module, helideck, lifeboat stations and flare boom will also be built in the province.

Husky confirmed that the main topside will be built in the Gulf of Mexico, though a contract has not yet been signed.

Sources say Kiewit is the preferred bidder.

'Every single community is impacted'

"This is a significant day for the province," said Premier Dwight Ball.

"It's certainly a boost of confidence for the oil and gas industry. But I would add a boost of confidence to the whole province. Every single community is impacted by this."

Above is the Argentia drydock where the concrete gravity structure will be built. (Husky Energy)

The province says about 56 per cent of the work will be completed in Newfoundland and Labrador, which is an improvement over the 52 per cent related to the recently completed Hebron platform.

This is a much larger project today than was discussed in 2013.- Premier Dwight Ball

"The changes are all for positive for Newfoundland and Labrador," said Ball, referring to the fact that a revised West White Rose expansion will mean 72 per cent more engineering and construction work in the province.

"I don't look at what is being built elsewhere. What I'm looking at is the increase and the significant impact and the growth for Newfoundland and Labrador. This is a much larger project today than was discussed in 2013," said Ball.

More recoverable oil, simplified platform

Husky hit pause on the project in 2014 after oil prices plummeted, and has now completed an exhaustive review of the economics that will mean more recoverable oil — 180 million barrels — and a simplified platform, said Husky's Malcolm Maclean.

Production is expected to peak at 75,000 barrels per day several years after production commences, which is 40 per cent more that earlier projections.

That's in addition to existing production from several subsea tiebacks to the SeaRose FPSO (floating, production, storage and offloading), and Husky is confident that can grow even more.

"We're confident we can recover twice the oil that originally expected to be recovered from the field in 2005," said Maclean. "That was around 230 million barrels. So again a very good news story for the province."

New oil discovery

One of the big surprises of the news conference was a revelation by Husky that it has made a new oil discovery about 11 kilometres away from the FPSO, though Maclean said the data is still being reviewed and it's too early to say how significant the find is.

"It is of significant interest to us," he said.

So is it possible this could be the first of several wellhead platforms in the offshore? Maclean would not rule it out.

"We think there could be uses elsewhere in the region for wellhead platforms, particularly as I said for smaller fields or outlying areas of other fields."

The premier also announced that Husky will pay an additional $60 million to the province over a 10-year period, though it was not explained if this was compensation for allowing the topsides to be constructed outside of the province.

The money will be used to create an innovation and business development fund, the premier explained.

Husky's interest in the project is 70 per cent. It's partnered with Suncor Energy and Nalcor Energy — with Nalcor, the province's Crown energy corporation, having a five per cent stake in West White Rose.

This is a schematic diagram of the wellhead platform gravity base structure layout option. It is shown connected to to existing infrastructure in the White Rose field, includin the SeaRose FPSO. (Husky Energy)

About the Author

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