(Cenovus Energy, 31.May.2022) — Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) and its partners have agreed to restart the West White Rose Project offshore Newfoundland and Labrador. First oil from the platform is anticipated in the first half of 2026, with peak production anticipated to reach approximately 80,000 barrels per day (bbls/d), 45,000 bbls/d net to Cenovus, by year-end 2029.
“The joint venture owners have worked together to significantly de-risk this project over the past 16 months. As a result, we’re confident restarting West White Rose provides superior value for our shareholders compared with the option of abandonment and decommissioning,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “With the project about 65% complete, combined with the work done over the past 16 months to firm up cost estimates and rework the project plan, we are confident in our decision to restart this project in 2023.”
The restart decision builds on Cenovus’s September 2021 restructuring of its working interests in the White Rose and Terra Nova fields, improving the strategic alignment across the two assets. Cenovus and Suncor, as part of the restructuring, have entered into an agreement whereby Cenovus will decrease its working interest in the White Rose field and satellite extensions while Suncor will take a larger stake, with the approval of the West White Rose project restarting. Cenovus has reduced its stake in the original field to 60% from 72.5% and to 56.375% from 68.875% in the satellite extensions. Nalcor has a 5% working interest in the satellite fields.
Contributing to the decision to restart the project is an amended royalty structure with the Government of Newfoundland and Labrador which provides safeguards to the project’s economics in periods of low commodity prices.
The remaining capital required to achieve first oil is expected to be approximately $2.0bn to $2.3bn net to Cenovus. This includes construction costs of approximately $1.6bn to $1.8bn net to Cenovus for the completion of the West White Rose full platform, and about $400mn to $500mn net to Cenovus for subsea drilling and completions work and the SeaRose floating production, storage and offloading (FPSO) vessel’s asset life extension. Capital to complete the project is largely offset by deferral of planned decommissioning costs of $1.6bn to $1.8bn over the next five years that had been assumed in the business plan presented at Cenovus’s Investor Day in December 2021.
Included in the West White Rose Project capital estimate is $120mn net to Cenovus to be spent in 2022 as the company works towards full restart of the West White Rose Project in 2023. This amount will be added to Cenovus’s 2022 Corporate Guidance at its next update later this year.
About the West White Rose Project
The West White Rose Project will add an expected 14 years of production to the White Rose field and is about 65% complete. The field’s production has tidewater access to global markets and receives Brent-like pricing. Construction includes the completion of the concrete gravity structure and topsides, which will serve as the drilling platform for the project. Once installed, the platform will be tied into existing infrastructure. A scheduled 70-day drydock program for the SeaRose FPSO will proceed in 2024.