$Billions of contracts and infrastructure development will commence offshore Newfoundland with the: West White Rose project restarting, Bay du Nord project progressing, new opportunities with land sale plays, and the Terra Nova refurbishment and commencement. It’s very exciting times. Talk about a rebound our of a very dark time. Newfoundland is poised for great opportunities ahead.
Suncor announced the West White Rose re-start whereby Suncor has increased its ownership in the White Rose asset. In exchange for a cash payment of approximately $50 million from Cenovus to Suncor and in accordance with the conditional agreement announced on September 8, 2021, Suncor’s interest in the White Rose asset increases from 27.5% to 40.0% and in the West White Rose project from 26.1% to 38.6%.
The decision to restart the West White Rose project is the result of a robust project evaluation which included the impact of a finalized agreement with the Government of Newfoundland and Labrador on a competitive royalty framework for the project. This amended royalty structure provides safeguards to the project’s economics in periods of low commodity prices. “We have a responsibility to the oil and gas industry, to our province and our people to plan for the future. As we advance efforts to achieve net zero by 2050 and plan for a transition, we will foster an environment that supports our economy by embracing renewable energy while maximizing our low-carbon oil and gas advantage,” said Honourable Andrew Furey, Premier of Newfoundland and Labrador.
“This project is expected to extend the production life of the White Rose field, securing long-term value for shareholders and the people of Newfoundland and Labrador,” says Shelley Powell, Senior Vice President of Exploration and Production, and In Situ. “The decision to restart the West White Rose project and increase our interest 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.”
Suncor will assume capital commitments on the 12.5% additional interest on a go-forward basis only. No significant capital spend is expected before 2023.
The West White Rose Project joint venture owners are Cenovus (operator), Suncor and Nalcor. The province’s royalty share is improved in a higher commodity price environment. In addition, the province will receive a $200 million Royalty Abandonment credit as well as $100 million to establish a Green Transition Fund. Further details of the fund will be released in the coming weeks.
The revised fiscal agreement de-risks new capital investment by the WWRP proponents and provides safeguards to the project’s economics in periods of low commodity prices. WWRP is expected to generate almost $20 billion in gross domestic product and over $7 billion in labour income for the province over the 14-year life of the project. It will create approximately 250 permanent platform jobs, as well as 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. The proponents also commit to work with the province and other third parties on advancing natural gas development. In October 2013, Cenovus (formerly Husky) announced plans to develop WWRP via a fixed wellhead platform to tie back to the existing SeaRose FPSO. The project was released from Federal Environmental Assessment in September 2013.
Originally sanctioned in 2017, major construction work on WWRP was suspended in March 2020 and a project review was announced in September of that year. As a result of this agreement, and the efforts of the Cenovus and its partners, the project has been re-started.
On April 6, 2022, the Bay du Nord Development Project was released from the Government of Canada’s environmental assessment process. The Bay du Nord project will play a key role in helping the province meet global demand for responsible, lower carbon oil while supporting our government’s commitment to Net Zero by 2050. It is also critical to the Newfoundland and Labrador economy, and will provide significant employment and economic activity.
On September 25, 2020, the Federal Government announced $320 million in funding to be administered by the Province to support direct and indirect employment in the Newfoundland and Labrador oil and gas sector and activities that generate environmental and co-benefits. This Oil and Gas Industry Recovery Assistance Fund provided $41.5 million in funding (50 per cent of total costs) to maintain near-term jobs and protect the option of re-starting WWRP.
In May 2020, the Provincial Government committed to net zero emissions by 2050. Newfoundland and Labrador fully supports protecting the environment, reducing carbon emissions and achieving net zero by 2050.
“Other parts of the world will continue to produce oil – and our oil and gas is a responsible choice. Newfoundland and Labrador recognizes and supports both the significant opportunities renewable energy presents in terms of economic development and environmental progress as well as the important role that oil and gas will continue to play for the foreseeable future,” said Honourable, Andrew Parsons, Minister of Industry, Energy and Technology.
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