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West White Rose agreement under scrutiny by opposition parties

Opposition parties say the resumption of the West White Rose oil project is good for Newfoundland and Labrador workers but they have questions about a new royalty structure between the government and the companies behind the project.

PC and NDP leaders say project resumption is good for workers, communities

Interim NDP Leader Jim Dinn says the resumption of the West White Rose project is good news for workers but called on the provincial government to make plans to transition away from fossil fuels. (Mark Quinn/CBC)

Opposition parties say the resumption of the West White Rose oil project is good for Newfoundland and Labrador workers — but they have questions about the agreement between the provincial government and the companies behind the project.

In a statement Tuesday, Cenovus said it has been able to "de-risk" its stake in the project over the past 16 months. Interim NDP Leader Jim Dinn said there are unanswered questions about how that will affect taxpayers.

"Suncor and Cenovus have both said they're going to de-risk," said Dinn. "What does that mean to Newfoundland and Labrador?"

West White Rose will be a fixed wellhead platform tied to the SeaRose floating production, storage and offloading vessel, known as an FPSO. According to Cenovus, the project is expected to add 14 years of production to the existing White Rose oil project. 

Originally sanctioned in 2017, the project was paused in March 2020 when oil prices plummeted at the beginning of the COVID-19 pandemic. Hundreds of employees in Marystown and Placentia were left without work.

In December 2020, the provincial government spent $41.5 million from the federal Oil and Gas Recovery fund to keep 331 jobs going, but there were no guarantees the project would restart.

In statements Tuesday, Cenovus and Suncor — the company with the second-largest stake in the project — said their agreement with the provincial government includes "safeguards to the project's economics in periods of low commodity prices."

Dinn said years of uncertainty over the future of the project highlights the volatility in the oil industry.

"That's the one constant in all of this," Dinn said. "It sends people, communities, workers into periods of great relief and great panic and anxiety." 

The cost for the eventual decommissioning of the project hasn't been made public.

Work to ramp up immediately: Parsons

Under the new royalty regime, the provincial government will get more money than originally agreed if oil trades at more than $90 US per barrel, but will get less if it trades at $75 US or less per barrel.

In the House of Assembly on Tuesday, Industry, Energy and Technology Minister Andrew Parsons emphasized the potential for the province to make more money if oil prices are high. He said the project is expected to create about 1,500 direct and indirect jobs through construction and 250 new permanent platform jobs.

This 2019 photo shows the concrete gravity structure for the West White Rose extension project under construction at Argentia in Placentia Bay. (Husky Energy)

"This is great news for Newfoundland and Labrador," Parsons said.

Parsons said employment at the work site in Argentia will begin to ramp up "immediately," and he expects the project to generate nearly $20 billion in gross domestic product and more than $7 billion in labour income. 

Interim PC Leader David Brazil said his party was pleased to see the project is restarting, though he hopes the new royalty arrangement won't have a negative impact.

"I would hope it was designed and thought given into what it would mean when the price is up versus when the price is down."

Future of the industry

Brazil said he hopes the new agreement is the "tip of a massive iceberg" for the oil industry in Newfoundland and Labrador.

 

"We should be doing everything possible to ensure that Newfoundlanders and Labradorians [are the] benefactors here, that jobs are created for people in this province," he said.

Interim PC Leader David Brazil said he hopes the news about West White Rose is the tip of the iceberg for the oil industry in Newfoundland and Labrador. (Mark Quinn/CBC)

The West White Rose announcement comes amid warnings from scientists about global warming and the impact of fossil fuel emissions.

Dinn said he wants to see the government introduce legislation to help oil industry workers through an economic transition away from fossil fuels. The NDP introduced a private member's resolution calling for a transition plan earlier in May, but it was unanimously rejected by Liberal and PC MHAs. 

"What is the plan in the long run to deal with the ups and downs?" said Dinn. "It will not happen overnight. That's what happened with the cod moratorium. We crashed out. It left and people migrated out of this province, 37,000 or more, and we weren't ready for it."

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ABOUT THE AUTHOR

Darrell Roberts is a reporter for The St. John's Morning Show on CBC Radio One. He has worked for CBC Newfoundland and Labrador since 2021. You can reach him at darrell.roberts@cbc.ca.