Husky and Come by Chance Updates #nlpoli

There is no good reason for governments to intervene in the oil sector even as much as they have.  It has nothing to do with the gibberish of "decarbonization" or whatever the greenies will yell down next to the peasants from the ivory tower.

It's just bad business. 

And bad business is the same as bad policy.

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When Husky shut down the West White Rose expansion, that should have been a clue the company was in serious financial difficulty.

SRBP pointed it out plainly.  Husky's financial statements confirm  it.  Announcement of the sale of Husky to Cenovus came as no surprise. 

It was also no surprise that the current owners of North Atlantic Refining are exploring the idea of turning the refinery into a tank farm.  Rumour around town was that Irving was more interest in the storage potential than in using the refinery for anything more than a tank farm.

Neither of these stories will lessen demands from the local oil patch, from companies, and from the politicians for the federal and provincial governments to prop up this company or that project.

Husky updates White Rose oil information information

Husky Energy announced on Monday an update to its drilling program related to the White Rose production project.

According to Husky North Amethyst E-17 (inside the area of production license 1007) drilled in 2008 has shown an estimated 60 million barrels of petroleum in place.  A further assessment of results from exploration well E-09 (within the area of production license 1006) the discovery “contains an estimate of discovered PIIP  [petroleum initially in place0 of 100 to 250 million barrels (best estimate of 170 million barrels) of light crude oil.”

That isn’t what the cbc.ca/nl online story says, by the way.

In any event, you can see both wells marked on this close-up of a map produced by the offshore regulatory board.

 

Now it is interesting to note that the legend for this map shows something rather odd when you match it up with the news release.

According to the legend – and if your humble e-scribbler is interpreting this correctly - North Amethyst E-17 is marked as an abandoned well using a symbol that appears to represent a dry hole. 

E-09 is marked as an abandoned well with oil and gas showing.

Plus, these two wells appear to be part of different structures:  North Amethyst and Hibernia Formation.

That’s something for your humble e-scribbler to follow up on with the offshore board for clarification. 

If you look at the release again, though, it doesn’t actually appear to add any new information to what has been announced previously. 

In early 2008, North Amethyst was said to hold about 70 million barrels of proven, probably and possible reserves.  That was based on delineation from 2006.

Now that isn’t the specific result from well E-17;  that was the result for the entire North Amethyst structure that is part of the satellite development. E-17 is actually quite far north of the glory hole for North Amethyst. 

This announcement on November 23 appears to deal with the structure E-09 explored  - if you read the release a certain way - back in the 1980s.  This announcement on Monday just reassesses old data.

So does the announcement on 23 November show  more oil or is it the same oil as before just described differently?  Good question.

It might be instructive to look at the fine print at the bottom of the release:

Discovered petroleum initially-in-place is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable. A recovery project cannot be defined for these volumes of discovered petroleum initially-in-place at this time. There is no certainty that it will be commercially viable to produce any portion of the resources.

Now this doesn’t mean the White Rose project and the extensions are not occurring.  Rather, there might just be some confusion in media reports about what this announcement means.

-srbp-

Danny and John get along well

From the Tuesday National Post, this article on the strong, positive relationship between Premier Danny Williams and Husky Energy's John Lau.

At Husky's annual meeting last week, for example, the Hong Kong-born accountant gushed that the premier has been "very helpful" to Husky and that his company, in return, is eager to "work with the government and share the upside."

The relationship between the Premier and the oil man stands out in light of other stories that there is tension between the Premier and the industry.

When asked about the secret of his relationship with Mr. Williams, Mr. Lau said Husky and the province are so transparent with each other it's resulted in a level of trust that is unusual "between a corporation and the government."

"We understand what the government wants, and the government understands what we want. We have no hidden agenda," Mr. Lau said, giving credit to his team in the province, led by East Coast vice-president Ruud Zoon.

Husky would not be averse to having the government as an equity partner as long as it doesn't affect its bottom line, Mr. Lau added.

The real clue to what makes this relationship work actually comes later in the piece. it has to do with the individual styles of the two men.

Some argue it's also a matter of style. Despite their vastly different backgrounds, the two leaders have kindred spirits: both see themselves as outsiders who don't get enough recognition, are highly successful, built organizations in their own image, are hands-own and hard to work for.

Fundamentally, though, Husky Energy is following a pretty standard approach to any relationship: the company is trying to find common ground, bearing in mind that whatever it might consider, including an equity position for the province, is governed by the corporate bottom line.

There are strong signals that Danny Williams is looking to change the perception of his policies if not the substance of the way he approaches relationships. In the confrontation with the federal government over Equalization, Williams has repeatedly stated he is not seeking confrontation for the sake of having a racket. He said much the same thing over the weekend following a meeting with federal Liberal leader Stephane Dion.

Ultimately, that's both factually accurate - he isn't really fighting for the sake of fighting - and a sign that Williams understands what is needed to foster mutually beneficial relationships. As Michael Harris said of Brian Peckford a quarter century ago, "dogma is no substitute for dialogue, and compromise no synonym for weakness."

Husky to expand Terra Nova presence

From Oil Week:

Husky Energy Ltd. (TSX:HSE) plans an active year of expansions and acquisitions, from bumping up its stake in the offshore Terra Nova project, to increasing upgrader and refinery capacity, the oil and gas producer said Thursday.

Husky, which held its annual shareholders meeting in Calgary on Thursday, said it would be growing its ownership stake in the offshore Newfoundland project by increasing its working interest in developing fields, rather than buying other partners‘ portions.