Husky Announces Review of West White Rose Project

Husky Energy (TSX:HSE) today announced a review of the West White Rose Project in the Atlantic region.

The review follows the suspension of major construction activities in March due to the COVID-19 pandemic and the Company’s capital re-prioritization following the global economic downturn.

“A full review of scope, schedule and cost of this project is critical, given the minimum one-year delay to first oil caused by COVID-19, and our priority of maintaining the strength of our balance sheet with ample liquidity,” said CEO Rob Peabody.

“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.”

With an expected peak capacity of 75,000 barrels of oil per day (approximately 52,500 bbls/day Husky working interest), West White Rose is designed to produce light crude oil at low incremental cost and with lower greenhouse gas emissions intensity than other North American crude oil projects.

Construction at Argentia and Marystown was suspended in March 2020 and construction workers demobilized due to COVID-19. The project is 60% complete, however all major construction remains on hold while Husky determines a path forward, given a start-up delay of at least one year due to a tight offshore weather window.

“This is a very difficult decision for us,” said Peabody. “We know thousands of Canadian families depend economically on these well-paid construction, contract and operational jobs, and that these are not easily replaced.”

“We fully appreciate that this project represents billions in government taxes and other anticipated public benefits. Without it, these will not materialize,” Peabody said.

Husky has discussed the project’s challenges and risks with the provincial and federal governments. The Company has proposed ideas designed to protect jobs and the economic benefits the project will deliver.

The project’s longer-term fundamentals remain attractive, given the lower incremental costs per barrel and expected lower emissions intensity of the oil produced.

“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.”

Husky is the operator of the White Rose field and satellite extensions, which are located in the Jeanne d’Arc Basin approximately 350 kilometres off the coast of Newfoundland and Labrador.

Stakeholder Quotes

Unifor supports the Canadian offshore oil industry and the thousands of good jobs it generates. The West White Rose project is important to Canada’s energy future. We support strategic public investments to protect good jobs and help the industry innovate.
– Jerry Dias, Unifor National President

Getting our members back to work safely in the COVID-19 ‘new normal’ is our top priority. We support government investment to move this project forward, putting thousands of unionized skilled trades people back to work immediately and ensuring decades of ongoing maintenance work on the project.
– Hassan Yussuff, President, Canadian Labour Congress

Government must turn its attention to repairing Canada’s deep economic wounds and preventing the destruction of major industries such as the Atlantic offshore due to COVID-19. 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 realize these benefits.
– Perrin Beatty, CEO, Canadian Chamber of Commerce

Our province, region and country depend on the oil and gas industry. Newfoundland and Labrador has proven we are a place rich in resource, expertise and ability to deliver. It only makes sense for our federal government to support our industry.
– AnnMarie Boudreau, CEO, St. John’s Board of Trade

The West White Rose project represents a significant investment for the local energy industry, and getting it moving again protects skilled jobs now, and creates jobs for the future. The offshore oil and gas industry has an important role to play in helping Newfoundland and Labrador and Canada achieve emissions reduction targets, while also supporting energy security for Canada.
– Charlene Johnson, CEO, Newfoundland and Labrador Oil and Gas Industries Association

As investors gather to review the future of the West White Rose extension project, we are encouraging Husky Energy to continue with their original plan to complete the construction of the concrete gravity structure (CGS) in Argentia, NL. We have thousands of highly skilled Newfoundlanders and Labradorians anxiously awaiting to return to work on that project. These workers are depending on this employment opportunity so that they can provide for their families and contribute to the local economy.
– Darin King, Executive Director, Trades NL

Husky is an essential component of our breakfast programming at the Jimmy Pratt Memorial Outreach Centre. Over the past seven years, Husky volunteers have been the main stay, working alongside our internal volunteers, in providing the required stability for the success and growth of our weekly hot breakfast program. Through Husky’s financial and volunteer support, we are able to serve up to 120 breakfasts to people in the downtown area. Husky’s presence in the community has been a great asset to our clients, our organization, and many others and I would like to see them have a long future here.
– George Parsons, Jimmy Pratt Memorial Outreach Centre