Page 15 - NorthAmOil Week 03 2021

NorthAmOil PROJECTS & COMPANIES NorthAmOil

Suncor, Husky take White

Rose royalty battle to court

NEWFOUNDLAND CANADIAN producers Suncor Energy and publicly on the matter.
AND LABRADOR Husky Energy – now part of Cenovus Energy – The court case is not without precedent
have filed a lawsuit against the provincial govern- – indeed, Suncor and Husky noted that the
ment of Newfoundland and Labrador, alleging owners of the Terra Nova field filed court
that they overpaid royalties for the White Rose actions in 2010 and again in 2015 over similar
project. concerns about royalty calculations. Those
Husky Oil Operations and Suncor are saying cases were settled before a judge could issue
that the intent of the royalty regulations is for a final ruling.
them to pay the greater of two royalty levels in Husky operates White Rose with a 72.5%
a certain period, but not both. However, they interest, while Suncor owns the remaining
The future of the claim that the system is not always working as 27.5%. The ownership structure of the West
stalled West White intended. White Rose expansion is slightly different,
Rose expansion is They are seeking a ruling that their interpre- with Husky holding 68.875%, Suncor owning
increasingly in doubt. tation of the regulations is correct, and would 26.125% and provincial energy corporation Nal-
apply to “all past, current and future royalties cor Energy holding the remaining 5%.
payable” for White Rose, according to CBC Work on the expansion stalled last year amid
News. The exact amount they are seeking has the coronavirus (COVID-19) pandemic, and its
not been disclosed, but affidavits from both future remains uncertain as Husky reviews the
companies claim that they overpaid more than project. West White Rose received a further blow
CAD32mn ($25mn) between 2014 and 2017. earlier this month when Suncor announced it
This includes spending on the currently stalled would take a CAD425mn ($336mn) impairment
West White Rose expansion, as well as the origi- charge on its share of both the existing White
nal White Rose field. Rose field and the expansion.
The Newfoundland and Labrador govern- The acquisition of Husky by Cenovus has cast
ment had not filed any documents as of the further doubt on the future of West White Rose,
middle of last week, and has not commented which is around 60% complete.™

Tellurian hopes to start Driftwood

construction this summer

LOUISIANA US LNG developer Tellurian is hoping to begin was quoted by Reuters as saying.
construction on its proposed Driftwood LNG Driftwood LNG has already been hit by
terminal in Louisiana this summer, even though delays, and Tellurian postponed an FID last year
a final investment decision (FID) has not been after the coronavirus (COVID-19) pandemic
made on the project yet. Tellurian’s co-founder depressed demand for LNG, exacerbating an
and executive chairman, Charif Souki, was cited existing market oversupply. The company subse-
by Reuters as saying last week that starting con- quently redesigned the first phase of the project
struction in the summer was what the company in an effort to cut costs, deferring three out of
was now aiming for, thanks to rising demand for four planned pipelines aimed at supplying feed-
LNG. stock gas to the terminal. The application for the
Customer interest in offtake from Driftwood most costly of the deferred pipelines, Permian
had increased “pretty dramatically” over the past Global Access, was subsequently withdrawn
month, according to Souki. His comments come altogether, though Tellurian has said that it will
as LNG spot prices in Asia are spiking on cold hold another open season for capacity on the
winter weather driving up demand while some pipeline if market conditions rebound.
supply-side outages persist. This appears to be The redesigned first phase of Driftwood LNG
driving up interest in securing more stable long- would cost $16.8bn. If construction begins this
term supply as well. summer as hoped, the first phase would start
“There is a strong need for additional lique- up in 2025, producing about 16.5mn tonnes
faction capacity and we’re probably the project per year of LNG. Under current plans, capacity
that is the closest to starting construction,” Souki would eventually be expanded to 27.6mn tpy.™

Week 03 21•January•2021 www. NEWSBASE .com P15