West White Rose in the wings? Husky downplays reports that deal is near

Husky Energy is refuting a report that it has decided to proceed with a labour-intensive wellhead platform for the long-awaited West White Rose extension project in Newfoundland`s offshore.

A company official said Monday that Husky and its partners are still evaluating its options for the project, and remain hopeful that a final decision on sanctioning may occur sometime this year.

The other option is a sub-sea tieback, similar to existing sub-sea drill centres already operating in the White Rose field and connected to the SeaRoseFPSO,a vessel known as a floating production, storage andoffloadingunit.

The sub-sea option isa cheaper alternative but would not allow the company to recover as much oil over the long-term.

The number of construction jobs and local spinoffs would also be significantly lower, industry insiders say.

Sanctioning could happen in March

But well-placed sources are telling CBC News that a concrete gravity structure, also known as a wellhead platform similar in appearance to Hibernia and Hebron, has emerged asthe preferred option, and that sanctioning could happen as early as next month.

Sources say companies are aggressively competing on lucrative contracts on the project, and that the concrete base for the platform will be constructed at a purpose-built graving dock in Placentia, at the Argentia site.

Sources say the living quarters module will be built in Newfoundland and Labrador, with three local companies competing for the contract.

Some are saying the drilling module is likely to be built in Asia, while others are saying it may be built at a fabrication yard somewhere in the Gulf of Mexico.

'I have nothing to say'

Husky vice-president Malcolm Maclean refused to talk about the project Monday during his appearance at the official launch of Newfoundland and Labrador Oil and Gas Week.

"I have nothing to say," Macleanquipped when asked for comment.

But a Husky spokesperson stressed that no decision has been made, and that the contract bidding process is part of the ongoing cost analysis of both options.

Natural Resources Minister Siobhan Coadyconfirmed the company's position Monday, saying Husky and partners Suncor and Nalcor Energy remain in talks about "which is the best way to move forward."

But she left little doubt about the province's preferred option.

"The preference for the province, obviously, would be to ensure that we get maximum employment, maximum benefits to the province, and that is with the wellhead platform," she said.

Husky had deferred investment decision

This latest development comes more than two years after collapsing oil prices prompted Husky to defer a final investment decision on the extension project.

The struggling construction industry is alsohopeful that Husky will build a wellhead platform, since it will generatelarge numbers of jobs at a time when the offshore oil business has been struggling.

The timing is also crucial, with jobs quickly disappearing from Bull Arm as the massive Hebron Project nears completion, with that platform scheduled to be towed offshore in the coming months.

Meanwhile, while a wellhead platform may look similar to Hibernia and Hebron, there's one major difference: the oil will be pumped to the SeaRose FPSOfor processing.

The extension will prolong the life of the White Rose oil field some 350 kilometres southeast of St. John's, on the eastern edge of the Jeanne d'Arc Basin.

It's one of three producing oil fields in the offshore, along with Hibernia and Terra Nova.

• Read more articles by Terry Roberts

First oil from the West White Rose extension was originally scheduled for 2017.

A new date for first oil is not known.