Splashing out: off Newfoundland
Newfoundland takes White Rose stake
Husky Energy and Newfoundland have finalised terms allowing the oil company to expand its White Rose offshore oilfield, including the sale of a 5% stake to the Eastern Canadian province, both sides said today.
The deal, agreed in principle in September, lets Husky and its partner, Petro-Canada, start work on the 70 million barrel North Amethyst project, a satellite field to the White Rose development in the North Atlantic.
North Amethyst would cost an estimated C$1.3 billion (US$1.3 billion), according to a regulatory filing, and Husky said last week it had budgeted C$425 million to spend on it in 2008.
The companies agreed to do all of the work that they can within Newfoundland on North Amethyst and two other extensions, West White Rose and South White Rose, Reuters reported.
That is expected to translate into 93% of the work over the project's lifetime, Reuters reported.
They will also pay a 6.5% super royalty - which kicks in when oil prices are higher than $50 a a barrel - on top of a 30% generic royalty. Crude prices were just under $90 a barrel today.
In September, the government of Premier Danny Williams said it would pay C$44 million for the stake in the White Rose extensions. The deal came after Newfoundland agreed to buy 4.9% of another oil development, the 731 million barrel Hebron field, operated by US supermajor Chevron.
Some of the work on the expansion has started and first oil is expected in the fourth quarter of 2009.
The original White Rose field can produce up to 140,000 barrels per day. It is located 350 kilometres (217 miles) south-east of the Newfoundland capital St John's.