Danny’s got oil in his veins
After a few years wrangling with Big Oil for a better deal, Newfoundland Premier
Danny Williams has joined the petro-set, and hopes to reap even bigger rewards
Danny Williams has finally achieved his
oft-stated goal to get into the oil and gas
business, joining the ranks of the industry
that has alternatively confounded and
enervated the fiery Newfoundland and
Labrador premier ever since he first rose
to power in 2003.
On December 17, the province
announced it officially partnered with
Husky Energy and Petro-Canada in the
development and eventual production
phase of three offshore oil reservoirs—
South White Rose, North Amethyst, and
West White Rose—considered satellites
to the 300-million-barrel White Rose field
on the Grand Banks.
On behalf of the province, crown corporation Newfoundland and Labrador
Hydro (NL Hydro) handles all business
related to the venture.
“We are very pleased to have reached
this agreement with the province, and we
look for ward to working with our new equity
partner, the province’s energy corporation,”
says John Lau, Husky’s president and chief
executive officer. Costing $3.5 billion to
develop, the satellites will lengthen the
lifespan of the entire White Rose complex
to 16 years from its presently estimated 12
years. First oil is expected during the last
quarter of 2009.
“With equity negotiated, the energy
corporation will now assume its role as a
partner and participant at the management
committee table,” NL Hydro president Ed
Martin says. “The White Rose expansion
project is a strong addition to our portfolio
and will provide us with good returns and
cash flows beginning in 2009.”
Each satellite’s wells will be tied back
to the Sea Rose, a floating production,
storage, and offloading (FPSO) vessel
that has been producing 150,000 barrels
of crude oil per day from the Main White
Rose field since November 2005.
At their St. John’s offices, engineers on
the tie-back team are finishing up detailed
engineering and design work, key groundwork before construction can begin.
“This agreement gives us clarity, stability, and fiscal certainty, and will allow
us to advance the tie-backs in a timely
manner,” says Lau. “Development of the
satellite tie-ins is a positive step for the
future of the White Rose development and
will provide significant opportunities for the
proponents, their shareholders, and the
people of Newfoundland and Labrador.”
The South White Rose extension has
already received regulatory approval,
and North Amethyst could get the green
light from the Canada-Newfoundland and
Labrador Offshore Petroleum Board (
C-NLOPB) as early as this spring. Meanwhile,
Husky is currently evaluating the results of
a delineation well drilled at West White
Rose while it awaits word on that project.
“We do expect all these approvals to
be obtained in the normal course of business during the next 12 months,” says
Ruud Zoon, vice-president of Husky’s East
Coast operations. “We dug a glory hole
last summer and that allows us to move
the rig and start drilling the development
holes, I would say, by mid-2008. Then our
goal is to start production from these satellite fields by the end of 2009.”
Combined, the satellites contain 214
million barrels of crude. The province paid
$30 million for a 5 per cent stake in the
discoveries and is obliged to pay about
$175 million for its share of capital costs.
The investments should see a return of as
much as $500 million, depending on oil
value fluctuations.
“Our government is particularly proud
to join into this equity with Husky Energy
