(Reuters) - Canada's Husky Energy HSE.TO said on Wednesday it would review its West White Rose project in the country's Atlantic region, following the suspension of major construction because of the new coronavirus outbreak.
The review makes sense as the oil and gas industry in North America reels from lower crude prices, forcing producers to explore ways to save cash and survive the downturn.
Husky, which is the operator of the field located off the coast of Newfoundland and Labrador, said the project is 60% complete but all major construction remains on hold while the company determines a way forward.
“It’s a difficult day but we will continue to work with them,” Andrew Parsons, Newfoundland and Labrador’s Minister of Industry, Energy and Technology, told Reuters.
“When you take a province that has half a million people and take away a thousand jobs, that has a reverberating impact. Not just on workers, but also supply chains and the spin-off jobs,” he added.
Husky Chief Executive Officer Rob Peabody said the halt to construction would add an at least one-year delay to the first oil produced from the project, leaving it with “no choice” but to undertake a full review of the project and its future operations in Atlantic Canada.
The West White Rose project had already faced long delays before Husky, majority-owned by Hong Kong tycoon Li Ka-shing, finally signed off on it in 2017. [reut.rs/3bHRPTx]
“We are at the table with the province right now, hammering out the concrete steps needed to support the offshore,” Canadian Minister of Natural Resources Seamus O’Regan said.
While the provincial and federal governments are in close communication with other operators in the region, each operator and company has to “look internally” to determine the best way forward amid the downturn, Parsons added.
Reporting by Shruti Sonal in Bengaluru; Editing by Sriraj Kalluvila and Bernard Orr
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