A decision on whether to complete the stalled West White Rose oil project in Newfoundland and Labrador will be made in the coming weeks, said the president and CEO of Cenovus Energy.
During the company's first-quarter results conference call on Wednesday, Alex Pourbaix said the fate of the project depends on whether it will bring meaningful increased value for Cenovus shareholders, relative to the other option, which is decommissioning and abandoning.
But he telegraphed where Cenovus leadership is leaning, saying "we have taken the time over the past 16 months to substantially de-risk this project," which is now 65 per cent complete.
Work suspended more than two years ago
West White Rose is a $3.2 billion expansion project for the White Rose offshore oil field, and includes a fixed wellhead platform that will be connected to the existing SeaRose FPSO.
The massive concrete gravity structure, which will rise to a height of 145 metres from base to top once complete, is being built at a project-specific graving dock in Argentia, Placentia Bay, while the main topside modules are being built in Texas. Several smaller modules have already been constructed in Marystown.
Work on the project was largely suspended in March 2020 after the global pandemic sent oil markets into a tailspin.
The West White Rose expansion is intended to extend the life of the oil field by 14 years, with access to an additional 200 million barrels of oil.
"If the decision is made to move forward, we estimate production net to Cenovus would ramp up by 2026 to a peak of around 45,000 barrels per day by the late 2020s," said Pourbaix.
Cenovus acquired the 69 per cent ownership interest in West White Rose after it acquired Husky Energy in late 2020. Its partners include Suncor, at 26 per cent, and Newfoundland and Labrador's energy corporation, Nalcor, at five per cent.
Cenovus and Suncor are also partners in the Terra Nova oil field, which has not produced oil since late 2019.
Pourbaix also gave an update on the Terra Nova FPSO which is undergoing a refit at a dry-dock in Spain.
He said the floating production, storage and offloading vessel is scheduled to return to the Grand Banks by the end of 2022, "adding about 10,000 barrels of production per day" to the Cenovus upstream portfolio.
Cenovus reported Wednesday it invested $53 million in the first quarter of 2022 on the Terra Nova refit and to preserve the West White Rose project.