Page 10 - NorthAmOil Week 20

NorthAmOil COMMENTARY NorthAmOil
amassed around CAD4bn ($2.9bn) in offshore work commitments. This equates to around 60% of the total invested in Newfoundland and Lab- rador’s offshore to date, and was talked up as a significant step forward for the region.
Eight oil companies were expected to take part in this exploration push, including both domestic companies and super-majors. How- ever, much has changed since this announce- ment was made, and super-majors and Canadian producers alike have been slashing capital expenditure budgets. While budget revisions have tended to detail cuts and slowdowns affect- ing existing projects, rather than exploration, it is safe to assume that plans for new offshore activity in Eastern Canada will suffer as a result.
Indeed, in neighbouring Nova Scotia, the annual call for exploration bids has already been delayed until 2021, with this marking the second time in three years that the province has held off on offering up exploration acreage.
As well as oil price volatility, the coronavi- rus (COVID-19) has also taken a toll on work offshore Eastern Canada. In March, Husky sus- pended major construction work on its West White Rose expansion project, saying it wanted to prevent transmission of COVID-19 among its employees. In April, the company said construc- tion on West White Rose would not resume this year.
“Due to the time required to safely secure sites, and to ramp them back up again, combined with uncertainty surrounding COVID-19 time- lines, construction is suspended for the remain- der of the year and the timing for restarting construction activities is undetermined at this time,”HuskytoldCBCNewslastmonth.
First oil from West White Rose was initially
anticipated in 2022 but will now be pushed back.
What next?
Fears over the fate of Eastern Canada’s offshore oil industry have even extended to fields that are already in production. On May 12, Suncor Energy stated that contrary to reports that the company was shutting down production at the Terra Nova field until 2022, no such decision had been made.
However, Suncor has decided not to proceed to dry dock in 2020 on COVID-19 concerns, and has been “evaluating alternative scenarios” to complete maintenance work at Terra Nova that the company says is critical.
“At this time we do not have an approved alternative for the asset life extension project,” Suncor said in its statement. “We are now work- ing towards stopping operations offshore and safely preserving the floating, production storage and offloading (FPSO) vessel quayside by this summer. A final decision from the Terra Nova joint venture partners to go quayside is expected in the coming weeks. The location and duration have not been determined at this time.”
With market conditions taking a toll on exist- ing and planned projects alike, industry groups such as the Newfoundland and Labrador Oil and Gas Industries Association (NOIA) have been in talks with federal and provincial government officials over potential assistance. Thus far, little has emerged that appears likely to prop up the ailing industry at a time of shutdowns, delays and extensive job losses.
The concern expressed by some supporters of the industry is that if oil companies leave Nova Scotiauponshuttingdownoperations,theymay not come back.™
Fears over the fate of Eastern Canada’s offshore oil industry have even extended to fields that are already in production.
Husky Energy has suspended major construction work on the West White Rose project and will not resume it this year.
P10
w w w . N E W S B A S E . c o m Week 20 21•May•2020