Cenovus Energy and its partners are continuing the West White Rose oil project, expanding the $ 3.2 billion White Rose oil field offshore in Newfoundland, and the deal includes changes in how much royalty companies will have to pay to the government. of the province.
In separate news releases released Tuesday morning, both Cenovus and Suncor, another partner in the project, said the finalized agreement with the province includes a revised royalty structure that “protects the project economy during periods of low commodity prices”. .
In its own news release, the province said its “share of royalties is improving in an environment with higher commodity prices.”
The West White Rose project was halted in March 2020 as the COVID-19 pandemic came to a halt, causing oil markets to fall as travel and other economic sectors were halted.
In December of that year, the Newfoundland and Labrador governments donated $ 41.5 million from the Federal Fund for the Recovery of the Oil and Gas Industry to Husky Energy to keep 331 jobs on the defunct project in the meantime.
But the project continued to face an uncertain future until it was announced on Tuesday.
“The owners of the joint venture have been working together to significantly reduce the risk of this project over the last 16 months. As a result, we are confident that the restart of West White Rose provides superior value to our shareholders compared to the abandonment and decommissioning option, “said Alex Purbe, President and CEO of the company in a statement.
Cenovus acquired its ownership stake in the project after buying Husky Energy in late 2020, and said it is now reducing its working interest in both the White Rose field and expansion – up to 60% in the original field and 56% in the West White Rose.
Suncor said in exchange for a $ 50 million payment from Cenovus that it would increase its stake in the oil field to 40 percent and to 38 percent in the expansion.
This is a depiction of the West White Rose extension project. (Husky Energy)
The extension is a massive concrete gravity structure that will rise to a height of 145 meters from the base to the top once completed. Cenovus said it expects the first oil from the platform to come in the first half of 2026, with production reaching a peak of about 80,000 barrels per day by the end of 2029.
The project is expected to extend the life of the oil field by 14 years and give Cenovus access to an additional 200 million barrels of oil.
The province said that in addition to changes in the structure of royalties, it will receive a loan of $ 200 million to end royalties and $ 100 million to create a green transition fund.
The statement said the government expects the project to create about 250 permanent jobs on the platform and 1,500 other jobs.
“Employment will start to increase immediately at the site in Argentina and will increase until 2023,” the government said in a statement.
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