ST. JOHN’S, N.L. — Cenovus Energy announced Tuesday (May 31) it will restart work on the West White Rose oil project in Newfoundland, ending nearly two years of uncertainty in the local energy sector.
The company said in a news release that work to complete the project will resume in 2023.
“The joint venture owners have worked together to significantly de-risk this project over the past 16 months,” Cenovus president and chief executive officer Alex Pourbaix said in the release.
“As a result, we’re confident restarting West White Rose provides superior value for our shareholders compared with the option of abandonment and decommissioning.”
The West White Rose project was among several oil developments put on hold in Newfoundland’s offshore after global oil prices collapsed in early 2020. Majority owner Husky Energy, now Cenovus Energy, said in September 2020 it was reviewing all of its operations in the province, prompting fears it would abandon the White Rose oilfield altogether.
White Rose sits about 350 kilometres east of St. John’s, and it’s one of four oil projects paying royalties to the province for operating in its offshore area.
The West White Rose development will extend the life of the field by about 14 years, the Cenovus news release said.
Construction on its infrastructure is about 65 per cent complete, and the first oil from the platform is expected in 2026, the company said. Peak production is expected to reach about 80,000 barrels a day by the end of 2029.
The announcement came as the province’s oil and gas industry association was set to begin its annual conference in St. John’s. In a news release issued before he spoke to the conference, Premier Andrew Furey said he supported the Cenovus decision.
The province says it has adjusted its agreement with the West White Rose operators “to facilitate a restart of the project,’’ but few details were provided. Newfoundland and Labrador’s royalty share is “improved” and the province will get $100 million to establish a “green transition fund,’’ the release says, noting details on the fund will be released in the coming weeks.
The province gave Cenovus — then Husky Energy — $41.5 million in December 2020 to maintain about 300 jobs connected to the West White Rose project as the company debated the project’s future.
The money came from a pot of $320 million provided by the federal government that year to help the province’s oil sector cope with pandemic-driven price crashes.
The government release says West White Rose will create more than 250 permanent jobs on the oil platform itself and create or maintain up to 1,500 more jobs, either directly related to the project or indirectly through other businesses catering to it.
© 2022 The Canadian Press