There was energy, excitement and Irish music at the official announcement of a new offshore oil project for Newfoundland and Labrador at the Star Hall in Placentia this afternoon.
The crowds rolled in and extra chairs were added before things got underway, with some still standing as area MHA Felix Collins started off the speeches. The head table each had a few minutes to tip their hats to work completed on the deal for the new project — the $2.5-billion West White Rose development.
The project will include construction of a concrete structure — a wellhead platform — at the former naval base at Argentia, within the borders if the Town of Placentia.
At the end of the day, the Husky Energy-led project is expected to bring 250 long-term jobs to the province along with $3 billion from new royalties, return on investment by Nalcor Energy and corporate taxes, from an estimated 115 million barrels of oil to be produced.
The White Rose offshore area as a whole is expected to result in $7 billion through projects announced to date, making West White Rose a significant piece.
The West White Rose project has passed environmental review and work is expected to start immediately on a graving dock for construction at Argentia. The full project development is still subject to a sanction decision by the project partners, likely next year.
The gathering in Placentia today was for the signing of an amendment to the original White Rose benefits agreement, allowing for the extension project to move ahead, placing it one step closer to expected first oil in 2017.
The project work at Argentia is proceeding at the same time as major project work on the Hebron oil project and the Lower Churchill development, but Premier Kathy Dunderdale says any challenges with overlapping developments are being considered and tackled by government.
"It's a good problem to have," she said of the work underway.
Significant advancement in White Rose Extension Project announced
Premier Kathy Dunderdale joined Husky Energy and its partners in Placentia today to announce an agreement to advance the development of the White Rose Extension Project.
A news release notes that amendments to the benefits terms of the 2007 White Rose Expansion Project Framework Agreement will allow for the development of West White Rose using a wellhead platform, instead of the subsea development originally planned.
The platform will have a stand-alone concrete gravity structure and topsides which will be tied-back to the existing SeaRose Floating Production and Storage Offloading (FPSO) vessel.
“This is an exciting day for us, and for an industry which has provided tremendous benefit to the people of our province,” Dunderdale said.
“Through development of the White Rose Extension Project, the province will gain an estimated $3 billion in royalties, return on investment through Nalcor Energy, and corporate income tax. By working together on agreements such as the one announced today, we are securing opportunities for a vibrant economy in this province that maximizes benefits for Newfoundlanders and Labradorians.”
The wellhead platform will deliver an estimated 115 million barrels of oil. Full development of the White Rose main field and all satellite tie-backs together including the White Rose Extension, is estimated to generate over $7 billion in total to the province.
Employment benefits for Newfoundlanders and Labradorians will be significantly enhanced compared to the original subsea concept. A total of 12,000 person years, which includes approximately 250 new platform positions, will be created over the life of the project. The development phase of the project alone is expected to generate 2,800 person years in the province.
To enable construction of the concrete gravity structure, a graving dock complete with gates will be built in Argentia by the proponents. The construction of these gates represents a new, significant piece of infrastructure in the province and is reusable for future industrial work.
The lease for the graving dock and gates will be between the operator and the Argentia Management Authority.
“The wellhead platform project and gated graving dock facility advances AMA’s vision for Argentia as this province’s premier heavy industrial seaport,” said Harvey Brenton, CEO, Argentia Management Authority. “It will generate economic activity for our region and our province for many years to come.”
The White Rose oilfield is located on the northeastern Grand Banks approximately 350 kilometres east of St. John’s. Husky Energy is the majority owner and operator of the White Rose oilfield and its satellite expansions.
“This agreement is an important step in our approval process, and allows us to advance plans for a wellhead platform,” said Malcolm Maclean, Husky’s Vice President, Atlantic Region.
The White Rose Extension Project is a joint venture between Husky Energy, Suncor Energy, and Nalcor Energy.
“Several development options were carefully evaluated,” said Sandy Martin, Vice President, East Coast for Suncor Energy. “In the end we collectively aligned on the wellhead platform as the preferred development option. This option maximizes the benefits for all parties including the province and the project proponents.”
The Government of Newfoundland and Labrador, through Nalcor Energy, has a five per cent equity stake in the White Rose Expansion Project.
“We are very pleased to see continued reserve growth in our first offshore investment,” said Ed Martin, Nalcor Energy’s President and CEO. “This wellhead platform will allow us to drill new areas of the White Rose field and extend field life thereby opening further possibilities for value creation. Nalcor's partnership in White Rose is a key revenue generator in our project portfolio.”
UPDATE: New infrastructure expected as part of Argentia deal
Questions brewing in lead-up to announcement on offshore oil project
The news of an announcement on the West White Rose development has individuals working within the province’s oil and gas supply and service sector a-buzz.
The development by Husky Energy has been in the works for some time now, with options openly discussed at oil and gas conferences.
The Telegram was reporting back in June 2012 the idea of building a drydock facility and concrete gravity structure at Argentia was under consideration by the company as the method of development.
In a news conference set for 2:30 p.m. today, Husky is expected to announce it will be building the structure, known as a wellhead platform, on the currently unused land at the former U.S. naval base, abandoned in 1994.
The company already has a deal with the Town of Placentia and a lease with the Argentia Management Authority that will allow use of the brownfield site. It has cleared environmental assessment.
The belief of sources in the local oil and gas industry who have been following the development is Husky will be permitted to build a re-usable graving dock at the site as part of the build.
Having gates that can open and close is quite different than requiring the construction of a rock barrier, berm, like at the Bull Arm Fabrication Site where the Hebron oil project is under construction. It would set the site up for repeated use with less lead-in work.
Rob Strong, a consultant in the oil and gas industry who is based in St. John’s, said he believes the multi-use graving dock — if confirmed — would be a legacy piece for the project.
“It has the potential for a variety of uses after Husky is finished with it,” he said.
Strong suggested it could create a new site to bring in supply vessels or semi-submersible drill rigs to drydock.
Meanwhile, others have raised questions on the capacity for the province to move ahead with another large construction project in the midst of the ongoing Hebron offshore oil development at Bull Arm and Marystown, as well as the hydroelectric development at Muskrat Falls.
The Telegram will have more to come from the head of Noia, the province’s oil and gas industries association, Bob Cadigan and others now en route to listen in person to the afternoon press conference with Premier Kathy Dunderdale.
Questions on the development can be emailed to firstname.lastname@example.org or sent on Twitter: @TeleFitz.
More to come.
UPDATE: Argentia celebrating new anchor tenant
Offshore oil project seen as spark for new industrial area
Husky Energy is readying to start on a new, multi-billion dollar offshore oil development at Argentia and the Argentia Management Authority sees the lease with the company as a continuation of the new lease on life it has promoted for the area.
“Of course you know the AMA signed an option to lease Husky Energy and we’re hoping today to have that lease executed,” said Harvey Brenton, CEO of the management authority, in a brief interview with The Telegram this morning.
Brenton will be on hand for the press conference at 2:30 p.m. at the Star Hall in Placentia, wherein further details on the project are expected to be released.
“I think it’s going to certainly mean a big thing or this particular area,” he said, referring to Argentia and the Town of Placentia, with a total population of roughly 3,700. Argentia is within the town’s boundaries.
The naval base at Argentia 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: scrap, PCBs and other environmental liabilities.
Yet since Vale developed its 1:100-scale test facility in Argentia — for the more than $4-billion processing plant under construction at nearby Long Harbour — the Argentia area has been looked at with fresh eyes.
Tenants now include not only the Canadian Coast Guard and Marine Atlantic, but also companies like MetalWorld, Capital Crane, Hunts Transport, Irving Equipment and H.J. O'Connell.
The Argentia Management Authority boasts an ice-free, deepwater port that is International Safety and Port Security code compliant, with two active stevedoring companies. Last year saw the most port traffic since 2001.
The addition of Husky Energy’s project site on the peninsula is expected to be another landmark in the redevelopment of the area, Brenton suggested.
“Right now, this is like an anchor tenant for us and we’re hoping to certainly build up around the brand new graving dock that’s going to be constructed here in Argentia,” Brenton said.
In addition to space around the peninsula, Brenton has previously said the management authority is hoping to see new entrants at what is known as the Southside Industrial Park, away from the peninsula but still within Placentia’s borders.
The Northside Industrial Park, including the area of the old airstrips on the peninsula, covers 900 acres and is open to heavy industry. A first phase of development there has 17 of 24 lots occupied and Husky Energy will add to that contingent.
More to come.
Bull Arm and Marystown are no longer the only locations for oil industry construction megaprojects.
In a news conference set for 2:30 p.m. today, Husky Energy is expected to announce it will be building a wellhead platform on the currently unused land at the former U.S. naval base at Argentia.
The location is now under the auspices of the Argentia Port Authority (a subsidiary of the Argentia Management Authority), which will have representatives at the press conference, according to a notice issued by the premier’s office at 9 a.m. this morning.
Premier Kathy Dunderdale is expected to make the announcement along with the new Natural Resources Minister Derrick Dalley, MHA for Placentia - St. Mary's Felix Collins and representatives for the Town of Placentia. Argentia is within Placentia’s borders.
Husky Energy has already said it hopes to begin construction on the project before the end of the year.
The wellhead platform will be used to get oil from the West White Rose oil field, about 350 kilometres from St. John’s. Husky already has the White Rose field as a whole in production and a $1.2-billion extension at South White Rose is currently in progress.
Husky had been considering two different ways it might produce oil from the larger West White Rose field. One involved, in large part, bringing in a collection of pre-fabricated pieces of subsea infrastructure and using dive teams to assemble and install the works.
The wellhead platform was the other option, involving the construction within Newfoundland and Labrador of a structure sized a step down from the Hebron or Hibernia gravity-based structures (GBS). The wellhead platform, unlike the GBS structures previously built in the province, will not contain the works to pump and store large amounts of oil. Instead, the SeaRose floating production, storage and offloading vessel (FPSO) will be paired with the wellhead platform to produce the West White Rose oil.
Husky brought both options through the detailed environmental review process and the project was released from further environmental assessment on Oct. 1.
The company has already negotiated a deal with the Town of Placentia to pay the town $2.25 million from 2014-17 as a construction permit and grant in lieu of taxes.
More to come.