Nfld. & Labrador

Husky and Suncor sue N.L., claiming overpaid royalties for White Rose oilfield

Husky Oil Operations and Suncor Energy are taking the Newfoundland and Labrador government to court, saying they have overpaid tens of millions in royalties.

Affidavits allege $32M in excess payments from 2014 to 2017

The SeaRose is a floating production, storage and offloading (FPSO) facility that operates in the White Rose oilfield about 350 kilometres east of St. John's. (Husky Energy)

The companies behind the White Rose offshore oil project are taking the Newfoundland and Labrador government to court, saying they have overpaid royalties.

Husky Oil Operations and Suncor Energy are seeking a ruling from a judge that their interpretation of the regulations is correct, and would apply to "all past, current and future royalties payable" for White Rose.

The application does not specify an exact amount being sought by the oil companies.

However, affidavits from Husky and Suncor officials contend that they overpaid more than $32 million, in total, from 2014 through 2017.

Those amounts apply to both the original White Rose field, and the White Rose expansion.

In a nutshell, the oil companies say the intent of the royalty regulations is for them to pay the greater of two royalty levels in a certain period, but not both.

They say that is sometimes happening, even though it's not the way the system is supposed to work.

Suncor and Husky filed the application at Newfoundland and Labrador Supreme Court in St. John's. (Eddy Kennedy/CBC)

Husky spokeswoman Colleen McConnell said that is the unintended result of "an anomaly" in the royalty regulations.

"We have been working to address this with the province over the past three years; however, it remains unresolved," McConnell said in an email to CBC News. 

"As a result, we have referred it to court for a decision, which is a mechanism that is available to the parties to resolve matters in dispute."

The province had not yet filed any documents in reply as of midweek, and the Energy Department declined comment, saying it would be inappropriate to do so while the case is before the courts.

Similar issues with Terra Nova settled in the past

In court documents, Husky and Suncor pointed to past disputes involving similar issues with the Terra Nova oilfield.

The owners of Terra Nova filed court actions in 2010 and again in 2015 over comparable concerns about royalty calculations.

Both cases were settled before a judge could issue a final ruling.

The Terra Nova floating production, storage and offloading vessel is seen in a file photo. (C-NLOPB)

The second dispute was resolved by both sides essentially deciding to split the difference.

The White Rose case is due to be called at Newfoundland and Labrador Supreme Court in early February.

Husky is the operator of White Rose, owning a 72.5-per-cent share, with Suncor holding the remaining 27.5 per cent.

Husky owns 68.875 per cent of the White Rose expansion. Suncor has 26.125 per cent, with Newfoundland and Labrador taxpayers holding the remaining five per cent through a Crown-owned corporation.

Read more from CBC Newfoundland and Labrador

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