After suspending construction activities in March due to the COVID-19 pandemic and reprioritizing its capital following the economic downturn, Husky Energy is reviewing its $2.2-billion West White Rose extension project in the offshore Atlantic region of Canada.
Construction at Argentia and Marystown in Newfoundland was suspended in March, with construction workers demobilized. The project is 60% complete with a startup delay of at least 1 year due to a tight offshore weather window.
Husky CEO Rob Peabody said a full review of the scope, schedule, and cost of the project is critical, given the minimum 1-year delay to first oil and the company’s priority of maintaining the strength of its balance sheet with ample liquidity.
The company said it discussed the project’s challenges and risks with local and federal governments and proposed ideas to protect jobs and economic benefits of the project.
“However, sustaining project costs through a long delay in a negative economic environment is not an option,” Peabody added. “We need to find a solution now.”
A Canadian Broadcasting Corp. article quoted Husky's senior vice president for the Atlantic region Jonathan Brown who said canceling the extension is on the table due to pandemic financial pressures.
"It's completely realistic, that that is a possibility," he said.
"In order to proceed with what is even an attractive investment opportunity, you have to have the funds, and the company has to do so in a way which is prudent."
The White Rose field and satellite extensions are in the Jeanne d’Arc Basin, 350 km east of Newfoundland and Labrador in approximately 120 m of water. The project is to be developed through a fixed drilling platform comprising a concrete gravity structure (CGS), built by the SNC-Lavalin-Dragados-Pennecon General Partnership (SDP), and integrated topsides facilities. SDP will be constructing the CGS in the Argentia Graving Dock, located on the Argentia Peninsula approximately 130 km from St. John’s, Newfoundland.
The project has an expected peak capacity of 75,000 B/D and is designed to produce low-incremental-cost light crude oil with low emissions intensity.