Big benefits from smaller development

Ashley
Ashley Fitzpatrick
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West White Rose project includes long-term asset for Argentia

Having lived in Placentia for 62 years, Laura Tucker had five of six children leave the community for work elsewhere.

Hearing Thursday about a new offshore oil platform to be built in her area, her interest was in the 250 long-term jobs expected, on top of the hundreds of temporary construction jobs between now and 2017.

A new offshore oil project was announced during a ceremony in Placentia Thursday afternoon. Signing the agreement for the project are (from left) Malcolm MacLean of Husky Energy, Premier Kathy Dunderdale, Sandy Martin of Suncor and Ed Martin of Nalcor Energy. — Photo by Keith Gosse/The Telegram

“I think it’s great news. It’ll be work for all the young people,” she said, seated for the official announcement at the Star of the Sea Hall in Placentia.

She was surrounded by more than 100 others — a mix of mostly curious local residents and suited, contract-hungry industry players.

West White Rose is about 350 kilometres from St. John’s and will be an extension of Husky Energy’s White Rose project, one of the province’s current oil producers.

The $2.5-billion development of West White Rose will begin with the creation of a new drydock site at the former naval base in Argentia, with a gating system allowing for the site to be re-used in future.

A concrete platform will then be built there, sized a step down from the Hebron or Hibernia gravity base structures. The platform will be mated with a topsides, floated offshore and ultimately connected to the SeaRose production vessel.

 

Billions to the province

The wellhead platform project is expected to produce about 115 million barrels of oil, ultimately providing $3 billion to Newfoundland and Labrador in the form of royalties, return on equity and corporate taxes.

White Rose as a whole is expected to provide $7 billion in benefits to the province, making West White Rose a significant piece.

The gathering at the hall allowed for the official signing of required amendments to the terms of the 2007 White Rose Expansion Project Framework Agreement, allowing for Husky and its partners to move West White Rose ahead as planned.

The project was released from environmental assessment on Oct. 1 and Husky Energy has already negotiated a deal with the Town of Placentia to pay the town $2.25 million between 2014-17 for construction permits and as a grant in lieu of taxes.

Some final approvals are still required before a final sanction decision by the oil companies — expected to come next year. That said, construction of the gated graving dock facility at Argentia will be starting almost immediately.

“At the end of the day ... we’re always interested in proceeding with attractive developments,” said Sandy Martin, a vice-president for Suncor, who was also on hand for the signing.

The other project partner is Crown corporation Nalcor Energy, with a five per cent equity stake. That stake will cost about $95 million in contributions towards the construction cost, estimated Nalcor Oil and Gas lead Jim Keating, but will provide for the much larger returns in the long run.

“It means billions of dollars in revenues from royalties and our equity stake. It also means that we’re extracting every bit of value we can get from White Rose,” said premier Kathy Dunderdale, who was all smiles at the signing.

 

Good challenges

West White Rose is one more multibillion-dollar development in the province, adding to the Hebron oil project and the Muskrat Falls hydroelectric development. The premier was asked if the pile-up might cause problems with labour supply and sub-contractor availability.

“There is so much going on in the province at the moment. It’s always top of mind with us,” she said.

“We’re working within (a) realistic envelope of what we can manage and no doubt there are challenges and we deal with that every day. But they’re good challenges. It’s a good problem to have.”

She said about 70 per cent of the construction of West White Rose will be completed in this province.

“I think it’s going to certainly mean a big thing for this particular area,” said Harvey Brenton, CEO of the Argentia Management Authority.

The naval base at Argentia, now within the Town of Placentia’s boundaries, was abandoned in 1994 and the Canadian government has since put more than $100 million into cleaning up what was left behind at the base. The Argentia Management Authority was tasked with trying to entice new entrants to the industrial area on behalf of the surrounding communities — something, as MHA Felix Collins told the celebratory gathering, that was not an easy task.

The potential benefit to the local economy was the key takeaway for many in the room.

“It’s like everywhere in Newfoundland. The tide comes in, the tide goes out and the tide is coming in now,” said Tom O’Keefe, former town clerk and head of the local historical society, attending the signing out of curiosity.

 

Expectation of more to come

President of Noia Bob Cadigan said the gated infrastructure being installed at Argentia will be large enough for an offshore semi-submersible drilling rig to be brought in for emergency work or refit work as needed in future.

“It would save a lot of time and money compared to bringing the rig elsewhere. And I think it creates a lot of additional potential,” he said.

“We feel it is a wonderful piece of infrastructure and there are other uses for it besides building concrete structures,” said Malcolm Maclean, Husky Energy’s vice-president for its Atlantic Region. “So we’ll certainly work with the Argentia Management Authority to try and maximize its (future) use.”

Nalcor Energy CEO Ed Martin was asked if the province’s has just agreed to create a competitor to its own Bull Arm Fabrication Site.

“Absolutely not,” he said, pointing to the different sizes and features of the province’s existing construction facilities and the current hunt for capacity.

“For my money, we’re going to need these facilities as we go forward,” he said, “and I think it’s our job to make sure we keep them full.”

 

afitzpatrick@thetelegram.com

Organizations: Argentia, Husky Energy

Geographic location: White Rose, Placentia, Hebron Newfoundland and Labrador

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  • Fred
    October 11, 2013 - 07:09

    This sort of infrastructure is long overdue in NL and is required to create a sustainable and solidly based industrial economy.