MEDIA SUMMARY

THE DECISION: On November 26, 2001, the Canada-Newfoundland Offshore Petroleum Board approved the Benefits Plan and the Development Plan submitted by Husky Oil Operations Limited and its partner, Petro-Canada, for the White Rose oil field subject to 38 conditions related to benefits, production and conservation of the resource, safety of operations, and protection of the environment. The decision of the C-NOPB has been approved by both the provincial Minister of Mines and Energy and the federal Minister of Natural Resources. The project now awaits final sanction by the companies.

THE PROJECT: The White Rose field is located 350 kilometres east of St. John’s on the eastern edge of the Jeanne d’Arc basin. It will be developed through the use of a Floating Production Storage Offloading vessel (FPSO) with subsea wells. The estimated 283 million barrels of recoverable oil in the field will be extracted at an average rate of 92,000 barrels a day (100,000 bopd capacity), and brought to markets by shuttle tankers.

Cost of the project is estimated in the Development Plan at $2.1 billion. Over the life of the project, it is expected to yield:

• more than 5.9 million person hours of direct employment in Newfoundland and Labrador, and over 1.3 million person hours of direct employment elsewhere in Canada;
• over 400 long term jobs, with an additional 1,000 jobs in economic spin-off activity;
• an estimated $ 6.8 billion contribution to the provincial GDP; and
• taxes and royalties amounting to $1.4 billion.

The Governments of Newfoundland and Labrador and Canada have received estimates and objectives from the proponents with respect to their plans for achievable and measurable employment and expenditure benefits, and the C-NOPB will be monitoring performance against these objectives as requested by government.

In keeping with good oil field practice, produced gas at White Rose will be reinjected to allow for gas development at a later date when the natural gas resources in the Jeanne d’Arc basin prove to be economically recoverable.

THE CONDITIONS: The 38 conditions of approval are described in detail in the Decision Report. A number of key conditions relating to concerns raised in the hearings of the White Rose Public Review Commissioner include:

• The proponent must submit a plan for Research and Development initiatives and Education and Training activity to be carried out in the Province. The C-NOPB will establish a target for R & D and E & T which will be not less than $12 million during the pre-production stage.
• The proponent must provide quarterly forecasts of Project requirements to the C-NOPB and to the public.
• The proponent must provide to the C-NOPB a complete and detailed description of work commitments for the Province and for Canada when contracts are awarded. The proponent’s performance will be measured against these commitments, and may be subject to independent verification.
• The proponent must submit to the C-NOPB for approval a report on its approach to affirmative action.
• Quarterly reports will be provided by the proponent on project expenditure and employment, including Canada and Newfoundland and Labrador content. These reports will include an assessment of progress toward the achievement of Canada-Newfoundland and Labrador benefits commitments. The reports, as well as results of internal audits on benefits reporting and assessment of performance against contract goals, will be shared with the public.
• Compliance with the White Rose Benefits Plan and its conditions is a condition of the Development Plan approval.
• No changes are to be made to the design requirements for the FPSO, the turret and the sub-sea system, which provide for accommodating future deferred oil and gas production, without the approval of the C-NOPB.
• Within two years of initial production from the South Avalon pool, the proponent must submit a report, acceptable to the Board, that includes an assessment of the development potential of the West and North Avalon pools, and an updated evaluation of the White Rose field gas resources along with a description of planned activities, including a drilling schedule and locations for delineation or pre-development wells.
• The proponent must demonstrate to the satisfaction of the Board that the FPSO’s disconnect time will reduce the risk of iceberg impact to a level as low as reasonably practicable, and must provide a report for approval by the Board which describes how provision will be made for demonstration of, and training for, the disconnect procedure.
• Before commencing detailed design of the FPSO, the proponent must demonstrate to the C-NOPB that the location of the Temporary Safe Refuge and evacuation systems has reduced the risk to personnel to a level as low as reasonably practicable.
• At least one year before commencing production operations, the proponent must provide the C-NOPB with its plan for the development of operations procedures necessary for the safe operation of the installation. Contingency plans must address the possibility of simultaneous occurrence of any combination of high winds, sea ice, icebergs, and heavy seas, with an accidental event.
• In making decisions relating to marine matters, the Offshore Installation Manager (OIM) must seek the advice of the Master Mariner. The Master Mariner will be required to maintain an Official Log-Book and the List of the Crew, and must record all recommendations made to the OIM on marine matters. In the event of a disconnection procedure, initiation of the actual disconnection of the vessel will be under the command of the Master Mariner.
• Before operations begin in the field, the proponent must demonstrate to the C-NOPB that the best practicable evacuation technology is being used on the production and drilling installations.
• Provision must be made in the design of the FPSO topsides for the capability of installing equipment for produced water re-injection. The proponent must proceed with re-injection of produced water if, in the opinion of the C-NOPB’s Chief Conservation Officer, it is technically feasible and economically reasonable to do so.
• The Safety Plan and the Environmental Protection Plan for White Rose must indicate to the satisfaction of the Chief Safety Officer and the Chief Conservation Officer of the C-NOPB the extent to which the proponent will make safety and environmentally-related information available to the public.

THE ATLANTIC ACCORD: The Decision also deals with the recommendation by the White Rose Public Review Commissioner that the C-NOPB release a definitive statement on how it interprets and applies the provisions of the Atlantic Accord and the Legislation (the Atlantic Accord federal and provincial acts).

The Decision notes that there is a widespread misconception that the Atlantic Accord intended, and the Legislation prescribes, some measure of preference for Newfoundland and Labrador goods and services. In reality, not only is there no legislative obligation to introduce such a local preference policy, but the wording of the Legislation prevents the use of requirements which would have that effect. The Legislation clearly prescribes a competitive process.

While the C-NOPB has no authority under the Legislation to set targets for benefits relating to employment or the procurement of goods and services, the Board works with operators to ensure that goods and services are sourced from Newfoundland & Labrador and Canada to the maximum extent possible.

The Board does have latitude in establishing parameters and criteria for expenditures in Research & Development and Education & Training, and the White Rose decision goes further than any previous decision in these respects. It also breaks new ground in addressing opportunities for disadvantaged groups and individuals.

Any recommendation by the Public Review Commissioner which called for the C-NOPB to act outside the authority vested in it by the Legislation could not be included in the Board’s decision.

Edsel Bonnell
C-NOPB Public Information Coordinator
(709) 778-1440

• White Rose Decision Report 2001.01