Province gives go ahead to White Rose Development

Mines and Energy Minister Lloyd Matthews and Industry, Trade and Rural Development Minister Beaton Tulk today announced that the Government of Newfoundland and Labrador has accepted the Canada-Newfoundland Offshore Petroleum Board's (C-NOPB) Decision Report approving the Development Plan for the $2.3 billion White Rose oil field, subject to the conditions set out in its Decision Report. 

"The approval of the Development Plan for the White Rose oil field is a significant milestone for the province's petroleum industry. It represents the third project in our maturing offshore oil and gas industry and will maintain the growth that has been established with Hibernia and Terra Nova. It also demonstrates industry's belief that it is economical to develop smaller fields in the province's offshore while at the same time ensuring that major industrial benefits accrue to the province," said Matthews. "The next, and probably most significant stage for the development of the White Rose oil field is project sanction by the proponents, Husky Oil and Petro-Canada."

Minister Matthews noted that Ralph Goodale, Minister of Natural Resources Canada, has also approved the C-NOPB Decision Report. Minister Matthews publicly released the C-NOPB Decision Report today. 

The ministers also announced that significant industrial benefits will accrue to Newfoundland and Labrador with the White Rose development, in addition to the estimated $500 million in royalties that will flow from the project.

Minister Tulk said, "Government has been working closely with the project proponent for more than a year to ensure that provincial benefits from the development of White Rose are maximized where we have the capability to participate on a reasonable commercial basis. This was a common theme heard throughout the public consultations on White Rose, and was echoed in the Public Review Commissioner's report." 

"I am pleased to announce that we have gone a long way toward achieving that goal, with firm plans by the proponent to undertake within Newfoundland and Labrador in excess of 80 per cent of the development phase work we can reasonably do in this province, and in excess of 80 per cent of all production phase employment," Minister Tulk said.

The proponent has also committed to make every effort to improve upon these levels of provincial participation, in keeping with the spirit and intent of the Atlantic Accord which provides that Newfoundland and Labrador shall be the principal beneficiary of the development of its offshore oil and gas resources.

"Of particular note is the high level of provincial participation in the strategically important areas of project management and engineering, as well as topsides fabrication and installation. We will play a substantially greater role in these critical areas with the White Rose project than we did going into the Terra Nova project. This is in keeping with our goal of building stronger local capabilities in the offshore industry with each successive project, and speaks highly about how far our local companies and our work force have come over a relatively short period of time," Mr. Tulk said.

The C-NOPB has imposed, in its Decision Report, specific monitoring and reporting conditions with respect to the industrial benefits commitments made by the project proponent.

The White Rose oil field, with recoverable oil reserves estimated at 230 million barrels, will be developed utilizing a Floating Production Storage and Offloading (FPSO) vessel. The FPSO will be designed to produce oil at a rate of 100,000 barrels of oil per day. 

To prevent waste of the oil resource, the C-NOPB has directed that the commercial production of gas must be deferred until oil recovery is substantially completed. The C-NOPB has determined that the 2.7 trillion cubic feet of natural gas discovered in this field is insufficient for commercial development on a stand alone basis at this time. However, this resource will be preserved for future possible development. The proponent will be required by the C-NOPB to re-inject any produced natural gas into the reservoir to conserve it for future development. The C-NOPB has also directed the proponent to update the evaluation of White Rose gas resources within two years of initial oil production.

The C-NOPB will also require the project proponent to commit to a number of specific safety related precautions. These include the demonstration that the FPSO disconnect time is short enough that it will reduce risk of iceberg impact. The Offshore Installations Manager will also be required to seek the advice of the Master Mariner in relation to marine matters and initiation of actual disconnect will be under the command of the Master Mariner.

Environmental protection was also an important issue for the public and a consideration by the C-NOPB for the approval of the Development Plan. Safety and environmentally-related information has been addressed in the Decision Report and will be made available to the public. 

Husky Energy and Petro-Canada submitted its Development Plan application to the C-NOPB on January 15. A Public Review Commissioner, appointed by the C-NOPB, held public meetings and provided the board with a report containing 32 recommendations in September 2001. The board considered these recommendations, to arrive at its decision regarding the application. The C-NOPB's Decision Report was submitted to the federal and provincial governments on November 27. Under the Atlantic Accord legislation, both governments must accept or reject a Decision Report of the C-NOPB within 30 days of its receipt.

Copies of the C-NOPB Decision Report can be obtained from the C-NOPB by calling 
(709) 778-1400 or through their Web site at www.cnopb.nfnet.com.

Media contact: Tara Laing, Mines and Energy, (709) 729-4890.
                      Josephine Cheeseman, Industry, Trade and Rural Development, (709) 729-4570.

2001 12 19                           2:35 p.m.