Life support of $41.5M given to West White Rose, but no guarantee oil project will restart

Construction on the concrete gravity structure for the West White Rose extension project is currently on hold. (Husky Energy)

Husky Energy is getting $41.5 million from the Newfoundland and Labrador government to keep the idled West White Rose offshore oil project going, particularly to “protect the option of re-starting” in 2020 — although there is no guarantee that will happen.

The announcement was made Thursday morning that involves Premier Andrew Furey, Energy Minister Andrew Parsons, MP Seamus O’Regan and Husky senior vice-president Jonathan Brown. 

The money is coming from the government’s Oil and Gas Industry Recovery Fund, and is the first project to get financial help from that source.

The $41.5 million is half the total project cost, and Husky Energy will be kicking in the other half. 

Furey said the work related to the project will happen in 2021, and it will mean 331 jobs. Specifically, there will be 169 positions in project management and engineering, and 162 tradespersons in Argentia and Marystown.

Minister of Natural Resources Seamus O’Regan, speaking after Furey at the media conference, called the announcement “one heck of a Christmas surprise for Newfoundlanders and Labradorians and their families.”

“We believe in our workers, we believe in this industry and we believe in its future,” O’Regan added. 

He said it wasn’t merely a “government handout” but instead called it a “strategic investment.”

That fund was announced on Sept. 25, with the federal government allocating $320 million for the N.L. government to distribute to support direct and indirect employment in the sector.  

This is a breaking news update of an existing CBC story. Below is the original text: 

A clearer picture may emerge later today for one of Newfoundland and Labrador’s biggest offshore operations, with federal and provincial politicians set to make an announcement about the West White Rose project.

Premier Andrew Furey, Industry Minister Andrew Parsons, and federal Natrual Resources Minister Seamus O’Regan are scheduled to attend the event Thursday morning, along with a senior Husky Energy executive, and Karen Winsor, the co-chair of the province’s Oil and Gas Recovery Task Force. 

The announcement will likely be the latest development in a saga that started in April, when Husky announced it was stopping construction on the project, as the global pandemic battered oil markets.

Hundreds of workers were laid off.

At the time, the project was nearly 60 per cent complete, with major construction taking place at the Port of Argentia and a fabrication facility in Marystown.

In October, Husky said construction was cancelled for 2021 as well.

That news came just days after Cenovus Energy announced it would buy Husky Energy in a deal worth nearly $4 billion. 

In a statement, Cenovus said regarding Husky’s operations in the province “the WWR [West White Rose] project is key to extending the life of the White Rose field. As we have said before, all options are on the table and accelerating abandonment remains a possibility.”

Husky has been asking both the federal and provincial governments for money to save West White Rose, but both governments have rejected the company’s pitch to buy a stake in the project.

Newfoundland and Labrador, through its Crown corporation Nalcor Energy, already owns a five per cent stake in the project.

Meanwhile, Ottawa has committed hundreds of millions of dollars to support offshore workers, and Husky has said it’s looking to have some of that go to White Rose. 

“We continue to work with the government to discuss how the federal dollars allocated to the offshore can support the long-term success of White Rose and the offshore, including determining whether some scopes of work can proceed.”

Read more stories from CBC Newfoundland and Labrador

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