- The fate of Husky Energy’s (HSE) West White Rose Project is under review with an anticipated one-year delay in the production of oil
- The resumption of work is expected to be delayed by at least one year due to a tight offshore weather window
- While the project represents billions in government taxes and other public benefits, Husky says that sustaining project costs through a long delay is not an option
- The project is currently 60 per cent completed and will require a further C$1.1 billion to fund the rest of the work
- Husky Energy (HSE) is currently down 0.51 per cent and is trading at $3.89 per share
The fate of Husky Energy’s (HSE) West White Rose Project is under review with an anticipated one-year delay in the production of oil.
Located in the Jeanne d’Arc Basin, approximately 350 kilometres off the coast of Newfoundland and Labrador, the project review follows the suspension of major construction activities in March due to the COVID-19 pandemic, as well as Husky’s capital re-prioritisation on the back of severe economic downturn.
While the West White Rose Project is currently at 60 per cent completion, the resumption of work is expected to be delayed by at least one year as a result of a tight offshore weather window.
Approximately C$1.1 billion will be required to complete the work, with an additional $11 billion in capital and operating expenses required over the 16-year life of the project.
Rob Peabody, CEO of Husky Energy, said a full review of the scope, schedule and cost of the West White Rose Project is critical.
“Unfortunately, the delay caused by COVID-19 and continued market uncertainty leaves us no choice but to undertake a full review of the project and, by extension, our future operations in Atlantic Canada.
“This is a very difficult decision for us. We know thousands of Canadian families depend economically on these well-paid construction, contract and operational jobs, and that these are not easily replaced,” he added.
While the project potentially represents billions of dollars in government taxes and other public benefits, Rob also noted that sustaining project costs through a lengthy delay in an already negative economic environment “is not an option.”
In an attempt to find a rapid solution, Husky has been engaged in discussions with both provincial and federal governments, and has proposed a range of ideas designed to protect jobs and the would-be economic advantages.
Perrin Beatty, CEO of the Canadian Chamber of Commerce, called on the government to focus on repairing Canada’s “deep economic wounds” and the prevention of COVID-19’s impact on major industries.
“The offshore provides thousands of well-paid private sector jobs and generates billions of dollars in government revenues. A business-focused recovery will ensure Canadians can continue to realise these benefits,” he said.
Husky Energy (HSE) is currently down 0.51 per cent and is trading at $3.89 per share at 1:30pm EDT.