West White Rose to Bloom Again After East Coast Oil Project Revived

More than two years after halting work on the West White Rose expansion project offshore Newfoundland and Labrador, Cenovus Energy has green-lighted the project. 

The project, originally sanctioned by operator Husky Energy in May 2017, was expected to reach first oil in 2022. It was expected to reach gross peak production of 75,000 bbl/d in 2025 and extend the life of the original White Rose project by 14 years. But the emergence of the COVID-19 pandemic in March 2020 upended the timeline, and Husky suspended major construction activities for the West White Rose project in 120 m water depth amid efforts to prevent the spread of COVID-19.

Cenovus expects first oil in first-half 2026, and to reach peak production around 80,000 bbl/d by the end of 2029. White Rose, discovered in 1984, achieved first oil in 2005.

Cenovus President and CEO Alex Pourbaix said in a press release announcing the decision to restart the project that the joint venture owners had worked to significantly de-risk the project over the past 16 months.

Shelley Powell, Suncor’s senior vice president of exploration and production and in situ, said in a release that restarting the project and increasing the company’s interest in the project “underscores Suncor’s confidence in East Coast Canada’s energy future, the importance of our offshore business within our integrated model and the positive role of Canadian oil and gas from a global energy security and ESG perspective.” 

An amended royalty agreement with the government of Newfoundland and Labrador provides safeguards to the project’s economics in periods of low commodity prices, and that factored into the decision to restart the White Rose project rather than proceed with abandonment and decommissioning, Cenovus said.

The Provincial Government of Newfoundland and Labrador said in a release that the province will receive a CA$200 million Royalty Abandonment credit as well as CA$100 million to establish a Green Transition Fund under the restructuring of the West White Rose royalty restructuring agreement. 

According to government estimates, the project will generate almost CA$20 billion in gross domestic product and over CA$7 billion in labor income for the province over the course of the project’s 14-year life. The project is expected to create 250 permanent platform jobs, and create or maintain up to 1,500 more direct and indirect jobs. Employment will begin to ramp up at the Argentia site immediately and increase through 2023, according to the provincial government. 

Tudor, Pickering, Holt, & Co. (TPH) analyst Matt Murphy said West White Rose partners had previously framed the decision about the project as either decommissioning or completion based on work done to date and the current commodity price environment.

“We suspect investors will be little surprised with the sanction decision,” he wrote in the TPH Energy Market Weekly Round the day the announcement was made.

This time-lapse video from Pennecon, a member of the SNC-Lavalin-Dragados-Pennecon General Partnership (SDP), shows continuous pours for each quadrant of the concrete gravity structure for the West White Rose fixed drilling platform. In order, SDP poured the northwest quadrant, the southeast quadrant, the southwest quadrant, then the northeast quadrant. 

Cenovus’ Pourbaix said the company was confident about resuming the project next year.

“With the project about 65% complete, combined with the work done over the past 16 months to firm up cost estimates and rework the project plan, we are confident in our decision to restart this project in 2023,” Pourbaix said.

While main construction on the project was suspended in 2020, a Cenovus spokesperson said work did not completely stop. 

“The past two years have seen a significant preservation and maintenance program undertaken at all construction sites, as well as the completion of some critical path work that was required to maintain the option to re-start,” the spokesperson told Hart Energy.

At 65% complete, remaining capital is expected to be CA$3.5 billion-CA$4.1 billion gross [CA$2 billion-CA$2.3 billion net to Cenovus and CA$1.4 billion-CA$1.6 billion net to Suncor] for completion of the platform, subsea drilling and completion, and the SeaRose FPSO asset life extension, according to TPH’s Murphy. To restart the project, 2022 capital will total about CA$215 million gross, Murphy added.

Construction includes the completion of the concrete gravity structure and topsides, which will serve as the drilling platform for the project. Once installed, the platform will be tied into existing infrastructure.

A scheduled 70-day drydock program for the SeaRose FPSO is slated for 2024, according to Cenovus.

The Cenovus spokesperson said the major scopes for the drydock program include tank inspections and repairs, turret buoy maintenance, fabric maintenance and hull coating, and other minor modifications to prepare for tie-in with the West White Rose platform.

Kiewit fabricated, constructed and integrated the 25,000-ton topsides including the facilities services block, a 144-person living quarters, a flare boom, a helideck, two lifeboat stations, drilling substructures, drilling floor and utilities. Fabrication was completed at Kiewit’s yards in Ingleside, Texas, and Marystown, Newfoundland and Labrador.

The SNC-Lavalin-Dragados-Pennecon General Partnership (SDP) fabricated the concrete gravity structure in the Argentia Graving Dock.

COVID-19 is only one factor that affected the expansion project. 

In September 2020, Husky CEO Rob Peabody said in a press release that the COVID-related delay combined with continuing market uncertainty left the company with “no choice but to undertake a full review of the project and, by extension, our future operations in Atlantic Canada.”

That review, Peabody said, was to consider the scope, schedule and cost of the project with an eye on maintaining the strength of the balance sheet with ample liquidity.

While the project’s longer-term fundamentals remained attractive, Husky said at the time, “sustaining project costs through a long delay in a negative economic environment is not an option.” 

Shortly after, Cenovus closed its purchase of Husky. 

In September 2021, Cenovus announced it would reduce its interest in White Rose while Suncor’s interests would increase. 

Cenovus reduced its working interests in the original White Rose Field in the Jeanne d’Arc Basin from 72.5% to 60% and its interest in the satellite extensions from 68.875% to 56.375%. 

Partner Suncor’s interest in the White Rose asset increased from 27.5% to 40% and in the West White Rose project from 26.1% to 38.6%. Nalcor retained its 5% working interest in the satellite fields.