Husky plans $600M oilfield expansion on Grand Banks

Calgary-based Husky Energy is planning a $600-million expansion of the White Rose oilfield on the Grand Banks, about 350 kilometres east of Newfoundland.

The company told Canadian Press it is proposing to develop up to 25 million barrels of oil by late 2009 using what's known as a subsea tieback to the field's existing production infrastructure.

The additional oil was found several years ago during exploration drilling in the southern part of the White Rose field. It was declared a significant discovery in 2004.

Subsea tiebacks are commonly used in the North Sea to develop small pools of oil and gas up to 30 kilometres away from an existing production platform.

In this case, the White Rose southern extension is about four kilometres away from the field's southern glory hole, a man-made crater dredged in the ocean floor.

Husky owns 72.5 per cent of the oilfield, while Petro-Canada owns the remaining 27.5 per cent

The White Rose field produced first oil in November 2005, and by the following February, Husky was considering ways to develop the southern extension.

In September 2006, Husky filed documents with the Canada-Newfoundland and Labrador Offshore Petroleum Board applying for an amendment to its development plan that would allow for a southern extension.

"The south White Rose extension tieback is considered to have borderline economics," said the documents Husky filed with the board.

"The tie-back adds only a 10 per cent increment to the stated White Rose oil reserves but will cost 25 per cent of the original White Rose development budget. The escalation in cost is due to strong global demand for services, resources and materials," company officials wrote.

Husky estimates it will cost $308 million to drill five initial wells and $201 million for subsea production equipment.

The board, which regulates the province's offshore industry, has set a Feb. 16 deadline for public comments on the expansion plans.