Ice floe threat suspends White Rose production

The taps have been turned off on about 130,000 barrels a day of oil production at...

  The taps have been turned off on about 130,000 barrels a day of oil production at Husky Energy Inc.'s White Rose project in the Atlantic as an approaching ice floe forced workers to flee the development's floating platform early Wednesday.The threat came as Calgary-based Husky learned the government of Newfoundland and Labrador granted final regulatory approval for a major White Rose expansion. Icebergs moved to within "three nautical miles, or a few kilometres" of the SeaRose, the project's floating production, storage and offloading vessel, but winds were favorable and appeared to be slowing the encroaching ice, said Graham White, a Husky spokesman. White said 32 non-core personnel out of 91 workers on the SeaRose were transported by helicopter 350 kilometres to St. John's."The rest of the personnel are on standby, ready to either resume production or move the vessel," he said. Production is shut in, but the SeaRose is still connected to facilities tied to the ocean floor, which means a quick turnaround is possible should the situation improve.If the SeaRose is forced to disconnect and move away from the area, the production curtailment would obviously last longer, White said.Icebergs are common in the frigid waters of the Jeanne d'Arc basin, which is home to all three of Canada's offshore oil projects -- White Rose, Terra Nova and Hibernia -- but a heavier ice floe such as this year's moves through the basin every five to seven years, White said.ExxonMobil Corp., operator of the nearby Hibernia oil project, which is a gravity-base structure built to withstand icebergs, was monitoring the situation.Exxon spokesman Merle MacIsaac said the company does not expect the ice floe to affect operations. "We're about 30 nautical miles away from the ice," MacIsaac said.Petro-Canada, Terra Nova's operator and also a partner with Husky at White Rose with a 27.5 per cent stake, said Terra Nova operations were not impacted by the ice.As the evacuation of staff from White Rose was occurring, Husky was learning that the Newfoundland and Labrador government granted final approval to a major White Rose expansion.The North Amethyst oilfield is the first of three satellite oil pools due to be developed adjacent to White Rose, with first production slated for late 2009 or early 2010, White said.The field holds about 70 million barrels of proved and probable reserves and will extend the life of the White Rose project.The expansion is the first project off Newfoundland approved since the province, under Premier Danny Williams, introduced a new energy policy last year.The formal agreement's fiscal terms gives the province a five per cent equity stake, which the government must pay for, White said.A super royalty of 6.5 per cent, on top of the 30 per cent generic royalty regime, kicks in post-payout when oil prices are above $50 US a barrel."First oil production . . . could begin by late 2009, which is just three years after the field's discovery date," the province's natural resources minister, Kathy Dunderdale, said in St. John's. "This turnaround time shows Newfoundland and Labrador are a very effective and efficient place to do business."The agreement provides industrial benefits, through a commitment by Husky that all work that can be done in the province will be done in the province, Dunderdale said.