Transactions - MAY 30, 2017

Husky Energy greenlights $1.6b offshore project

by Andrea Waitrovich

Husky Energy has greenlighted the C$2.2 billion ($1.6 billion) offshore West White Rose project, located on the Atlantic coast near the Newfoundland and Labrador’s offshore, according to media outlets.

Husky has a majority 70 stake in the project and is partners with Suncor Energy and Nalcor Energy of St. John’s, Newfoundland.

Husky Pesident and CEO Rob Peabody tells the Financial Post that the attractiveness of the project has improved thanks to cost savings that improved returns and “very constructive negotiations” with a motivated provincial government.

Unlike in western Canada, where unsupportive governments, strident local opposition and pipeline bottlenecks have made investment decisions difficult, “Newfoundland and Labrador has positioned itself at the forefront of the global oil and gas industry,” according to Premier Dwight Ball, who notes that West White Rose is the largest oil and gas production project to move forward in Canada this year.

Husky Energy expects first oil from the long-delayed project by the year 2022, after which the site will reach peak production at 75,000 barrels per day by 2025. And Husky Energy said it expects to increase profitability and production under a five-year plan that shows resiliency to lower oil prices.

The project is expected to create about 250 permanent platform jobs once it starts operations.

Hong Kong billionaire Li Ka-shing, who owns a controlling stake in Husky, announced a new discovery in the White Rose production area this week.

The latest megaproject, the $14-billion Hebron led by Exxon Mobil Corp., is nearing completion and expected to start producing oil at the end of the year.

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