• Husky asks Ottawa, Newfoundland and Labrador to invest in stalled offshore West White Rose project

    Source: Financial Post - Top Stories / 09 Sep 2020 14:33:07   America/New_York

    CALGARY — Husky Energy Inc. is asking for government investment in its $2.2-billion offshore West White Rose project that’s under construction off the coast of Newfoundland and Labrador as it launches a review of its operations in Atlantic Canada. Calgary-based Husky said Wednesday it’s reviewing and might cancel the 75,000-barrel-per-day project following the COVID-19 pandemic and resulting collapse in global oil prices in a bid to reduce its costs and improve its debt situation. In March, the company had suspended construction activities at the site due to the pandemic and to conserve capital amid the global economic downturn. “We fully appreciate that this project represents billions in government taxes and other anticipated public benefits. Without it, these will not materialize,” Husky CEO Rob Peabody said in a statement. “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,” Peabody said. Oil prices dive to lowest since June in wake of souring demand outlook Endangered species: Canadian small oil and gas companies under pressure to merge or die Why the world’s resource king is so interested in Saskatchewan — podcast The company is now asking for a direct investment in the project from the provincial and federal governments, “similar to the government’s investment in Hibernia,” which is another offshore Newfoundland and Labrador oil project, Husky spokesperson Dawn Delaney said in an email. “Our review is already underway and it entails a detailed review of the project’s returns to the various stakeholders as well as funding sources, such as a potential government investment in the project. It will examine the impact of deferral and cancellation options,” Delaney wrote. West White Rose is located in the Jeanne d’Arc Basin, 350 kilometres east of Newfoundland and Labrador in approximately 120 metres of water, is 60 per cent complete, the company said. Husky is managing the project on behalf of its partners Suncor Energy Inc. and Nalcor Energy. The project, which supports more than 500 Husky jobs and another 1,000 unionized construction jobs in the cities of Argentia and Marystown, requires another $1.1 billion to be completed. In its press release release, Husky also included comments from Unifor National President Jerry Dias supporting “strategic public investment” in the project, as well as comments from the Canadian Chamber of Commerce and the Newfoundland and Labrador Oil and Gas Industries Association calling for government support. The government of Newfoundland and Labrador has previously taken interests in offshore oil projects through Nalcor, a Crown corporation. But the province is not in a position to directly invest in the project after the coronavirus pandemic “battered” oil prices and its finances, Industry, Energy and Technology Minister Andrew Parsons said in an interview Wednesday. “What they are looking for is a pretty significant equity interest in this project. Given our diminished fiscal capacity, that’s not a likelihood for us,” Newfoundland and Labrador Industry, Energy and Technology Minister Andrew Parsons said, but added the province might be otherwise willing to support it. “We’re talking well over 1,500 jobs in a province of half a million. It has a significant impact,” Parsons said. Asked whether he’s concerned other companies would ask for similar investments if Husky’s request was granted, Parsons said oil companies operating in the province are facing different issues. Parsons said talks have been ongoing in the background with the federal government. “It only makes sense for our federal government to support our industry,” St. John’s Board of Trade CEO AnnMarie Boudreau said in the release from Husky. Natural Resources Minister Seamus O’Regan, who is also the member of parliament for St. John’s South-Mount Pearl electoral district, said Ottawa is in discussion with Newfoundland. “We are at the table with the Province right now, hammering out the concrete steps needed to support the Offshore. Workers and their families are at the center of all our discussions,” the Minister said in a statement. Ottawa recently pledged to invest in green projects to drive recovery from the COVID-19 pandemic and in recent days announced grants and investments in renewable energy projects, including a $4 million grant announced Wednesday to build a tidal energy turbine in the Bay of Fundy. • Email: gmorgan@nationalpost.com | Twitter: geoffreymorgan http://feedproxy.google.com/~r/FP_TopStories/~3/FDgC2Mf5u8I/husky-asks-ottawa-newfoundland-and-labrador-to-invest-in-stalled-offshore-west-white-rose-project
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