Cenovus Energy and its partners are moving forward with the West White Rose oil project, a $ 3.2 billion expansion of the White Rose oil field off the coast of Newfoundland, and the agreement includes changes in how much money companies will have to pay. to the provincial government. .
In separate press releases issued Tuesday morning, both Cenovus and Suncor, another project partner, said the agreement with the province includes a modified gift structure that “guarantees the economy of the project in periods of low prices. of raw materials “.
Speaking at the Energy NL conference on Tuesday morning, Prime Minister Andrew Furey said the changes mean the province will get more money for royalties when oil prices are high.
“In a high-priced environment, we could have up to 42.5% additional copyright on this project,” he said.
Furey said the government expects the project to result in about 250 permanent platform jobs and 1,500 more jobs related to the increase in employment in construction in Argentina immediately.
The West White Rose project was suspended in March 2020, as the COVID-19 pandemic consolidated, causing the oil markets to fall as travel and other economic sectors stalled.
Work on the wellhead fixed platform, which will be linked to the SeaRose production, storage and unloading floating vessel, known as the FPSO, was shut down at Marystown and Placentia sites and left hundreds unemployed.
Both the federal and provincial governments rejected the idea of buying a stake in the project.
In December 2020, the Newfoundland and Labrador government donated $ 41.5 million from the Federal Oil and Gas Recovery Fund to Husky Energy to keep 331 jobs in the project idle over time.
But the project still had an uncertain future until Tuesday’s announcement.
“The owners of the joint venture have worked together to significantly reduce the risk of this project over the past 16 months. As a result, we are confident that the restart of West White Rose offers a higher value to our shareholders than ‘option of abandonment and dismantling,’ he said. the president and CEO of the company, Alex Pourbaix, in the statement.
Cenovus, which acquired its stake in the project after buying Husky Energy in late 2020, said it is now reducing its job interest in both the White Rose field and the extension, to 60% in the field. original and 56% in the original field. Western White Rose.
Suncor said it will increase its stake in the oil field to 40 percent and in the extension to 38 percent of the extension in exchange for a $ 50 million payment from Cenovus.
Newfoundland and Labrador Crown Energy Corporation Nalcor Energy owns five percent of the project, after investing $ 110 million.
This is a representation of the West White Rose extension project. (Energy Husky)
The provincial government approved the environmental project in 2013 and the company officially sanctioned it in 2017.
At the time, Husky said the expansion project would bring in between $ 3,000 and $ 4 billion in economic benefits for the province in the form of royalties, taxes and capital payments.
The expansion is a massive gravity concrete structure that will rise to a height of 145 meters from the base to the top once completed. Cenovus said it expects the platform’s first oil to arrive in the first half of 2026, with a maximum production of about 80,000 barrels a 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.
Placentia Mayor Keith Pearson says he wants local people hired to work on the West White Rose project. (Curtis Hicks / CBC)
Money derived
In Placentia, construction work in nearby Argentia is expected to bring jobs and money to the community.
Mayor Keith Pearson said it was “a good day to wake up.”
“It’s been difficult. We’ve had some difficult times,” he said on Tuesday.
Pearson said there are derivatives of a project of this size, including money coming to local businesses. There is no first-place hiring clause in the project benefits agreement, but he has met with Cenovus to discuss the issue.
“We are looking here for our own people from our own local region to benefit directly,” he said.
In a statement, Trades NL CEO Darin King, executive director of the Trades NL construction association, said his group hopes the project will “create jobs for thousands of workers and help them donate support for their families and communities. “
“The West White Rose project is critical to the future of our province’s construction and construction industry,” the statement said.
Charlene Johnson, CEO of the provincial oil industry association Energy NL, is also optimistic about the economic diversion.
“Particularly for the supply chain and service companies represented by Energy NL, this comes at a good time for them when we have gone through a couple of difficult years,” he said.
Prime Minister Andrew Furey speaks to reporters at the Energy NL conference in St. Louis. John’s May 31, 2022. (Curtis Hicks / CBC)
Furey promoting NL oil
In a statement Tuesday, the province said that in addition to the changes in the structure of the royalty, it will receive a dismantling credit of $ 200 million and $ 100 million to establish a green transition fund.
The costs of dismantling offshore oil projects, and how much of them come from taxpayers, are not made public.
When asked about the oil transition, Furey reiterated the government’s position that oil on the Newfoundland coast needs less carbon to extract than in other parts of the country.
“So when companies and individuals are faced with choosing petroleum products, which will be needed for the next 20 or 30 years, I think it’s responsible, it’s responsible, it’s ethical that we choose products that emit less carbon. “. He said.
References to low carbon oil refer only to emissions created during extraction. As with all oil, most emissions occur during refining and combustion.
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