Husky Seeks Government Bailout for $2.2-Billion Fossil Project Off Newfoundland Coast
Husky Energy is looking to federal and provincial governments for a bailout for its C$2.2-billion West White Rose project, an oil and gas drilling venture off the Newfoundland coast that it had planned to expand until the COVID-19 pandemic sent global fossil markets into a tailspin.
“The Calgary-based company suspended work on the expansion in March, because of the pandemic,” the Globe and Mail reports. “On Wednesday, it went a step further, announcing a review of the entire West White Rose project, the latest oil and gas development to wither in the face of decimated crude demand, low prices, and a chilly investment climate that has made it difficult for energy companies to secure capital.”
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Husky Senior Vice President Janet Annesley, a former chief of staff to then-federal natural resources minister Jim Carr, said the company had been pushing federal and provincial governments for “several months” to invest taxpayers’ dollars in the project. She declined to go into detail in an interview with the Globe, but called West White Rose a “unique” investment opportunity with “significant” returns.
“It would also preserve the jobs and the billions of dollars in taxes and royalties that the project will generate,” she said, adding that the expansion would create about 250 wellhead jobs and secure the company’s future in Atlantic Canada. However, “as a company, we have made it a priority to protect our balance sheet and preserve liquidity, which means it’s impossible to—on our own—fund the project to completion.”
The Globe compares Husky’s bailout pitch to the 8.5% “working interest” the federal government bought in the Hibernia oil field after Gulf Canada stepped out of the project in 1993. The paper says White Rose, about 350 kilometres off the Newfoundland shore, produces about 26,000 barrels of oil per day but is already in decline. The expansion would boost its output to 75,000 barrels per day.
In 2018, a Husky drilling platform in the White Rose field spilled about 250,000 litres of toxic material that could not be recovered, subjecting seabirds to an “agonizing death”, while “preparing to restart production during a fierce storm that was, at the time, the most intense in the world,” The Canadian Press reported from the scene.
This week, Newfoundland and Labrador Oil and Gas Industries Association (NOIA) CEO Charlene Johnson urged governments to step in and save the project. She said the province’s fossil industry is “on the brink of collapse”, with tens of thousands already out of work.
“The industry’s being decimated and political leaders are saying the right things—they’ve been saying the right things for months—but we’ve yet to see action,” she said.
“But as Husky eyes its balance sheets, so too does the Newfoundland and Labrador government, whose coffers have taken a beating from the pandemic-caused economic slowdown,” the Globe writes.
“We’re not talking about a million-dollar issue—we’re talking about a billion-dollar issue,” said provincial Industry, Energy and Technology Minister Andrew Parsons. “And for a province of half a million, that is extremely significant.”