West White Rose project suspended for rest of 2020; first oil delayed another year

Husky Energy has confirmed that construction on the West White Rose project will not resume this year. That means hundreds of construction workers have been cast into limbo, as well asanother setback for Newfoundland and Labrador's beleaguered oil industry.

Calgary-based Huskybegan demobilizingtwo large construction sites in the province one in Placentia and another in Marystown a month ago because of safety concerns about the COVID-19 pandemic.

The company did not offer a time frame for the resumption of work at the time, but that changed late Tuesday with a statement from the company.

"Due to the time required to safely secure sites, and to ramp them back up again, combined with uncertainty surrounding COVID-19 timelines, construction is suspended for the remainder of the year and the timing for restarting construction activities is undetermined at this time," Husky told CBC News.

• A double win for Husky: Company sanctions West White Rose and announces new discovery

Because of the limited weather window for towing the massive concrete gravity structure, or CGS, and the topside modulesto the Grand Banks, Husky also confirmed that first oil for the project is delayed by ayear, until 2023.

When the project was sanctioned three years ago this month, first oil was slated for 2022.

Husky announces further cuts to capital spending

There's no reference to financial considerations in Husky's statement to CBC, but the company also announced this week it is further slashing capital spendingthis year by $700 million, bringing the total to $1.7 billion, or half the original budget for what's called capex.

It's the latest blow for an oil industry that has been hit hard by a combination of a collapse in demand and prices for fuels because of the global pandemic, and worldwide inventories that are nearly at capacity as countries like Russia and Saudi Arabia crossed swords in a production war.

• No plans for job cuts, despite 'tremendous' impact on cash, Ball says
• Facing union pressure, Husky agrees to demobilize workers in Marystown

The Husky decision means uncertainty for the roughly 650 workers who were helping construct the concrete gravity structure at a graving dock in Argentia, and another 230 workers were employed by Kiewit Offshore Services at the Cow Head fabrication facility in Marystown, building the living quarters and other smaller modules for the wellhead platform's topsides.

The main topside module is being built by Kiewit in Texas.

• Husky delays tow-out operation to west White Rose oil field by a year

As of last fall, the CGS was more than 50 per cent complete. Itwill eventually be towed to the White Rose oil field 350 kilometres east of St. John's.

The topsides will befloated out separately aboard a massive ship called the Pioneering Spirit and mated with the CGS after it is fixed in place on the bottom of the ocean.

The wellhead platform will be tied back to the SeaRoseFPSO, which has been producing oil in White Rose field since 2005.

Husky and its partnerssanctioned the projectthree years ago at a cost of $2.2 billion. Husky has not said how these setbacks will affect construction costs.

CBC News has attempted to get reaction from some of the unions representing workers on the project.

Read more from CBC Newfoundland and Labrador