WorleyParsons wins in tough environment

AUSTRALIA'S WorleyParsons has secured a new $135 million contract to provide fabrication, modularisation and construction services with a major exploration and production company in Canada to construct a significant oil sands mining project.
WorleyParsons wins in tough environment WorleyParsons wins in tough environment WorleyParsons wins in tough environment WorleyParsons wins in tough environment WorleyParsons wins in tough environment

Haydn Black


The contract will be carried out by the multinational's Canadian subsidiary WorleyParsonsCord from its Edmonton location, and is the latest in several decades of work by the services firm in the oil sands space.

The project will be completed in mid-2016.

"We are pleased to have been awarded this contract that will support an expansion in the Canadian oil sands," WorleyParsons CEO Andrew Wood said in a statement.

The identity of the oil sands project has not been disclosed but comes at a tough time for the tar sands industry, which claims its future is being held hostage by US President Barrack Obama's threat to veto the controversial Keystone XL pipeline.

If Canada wants to expand its exports of oil sands it may need to further examine one of several backup plans for the KXL pipeline: two planned routes to the west coast for Asian transport — Northern Gateway and Trans Mountain — as well as TransCanada's larger-than-KXL Energy East line that would cost $A12 billion and run along the country's Eastern Corridor.

The sector is looking for export solutions, and while those options remains stalled is unable to expand as quickly as it would like, a situation not helped by falling oil prices

Companies such as Pengrowth Energy Corp have started shelving planned developments.

Last week Pengrowth announced it was delaying its expansion plans by at least a year. The expansion was designed add 17,500 barrels per day to take its Lindbergh thermal oil sands project to 30,000bopd.

Capital expenditure was also savaged by 75% on 2014 levels to $A200 million.

Shell Canada also told employees this week it will cut up to 10% of 3000 jobs at the Athabasca oil sands project in an effort to improve efficiency, despite a plan to expand the Jackpine oils sands mine by 100,000bopd.

Oil sands producers have emphasised cost-cutting in recent capital budget announcements and said they are hoping for reduced bills from service providers as activity wanes.

Thermal oil sands giant Cenovus Energy said last month it will cut its spending in 2015 to between $2.5 billion and $2.7 billion, down about 15% from 2014, but will retain its 3750 staff.

MEG Energy has cut its 2015 spending plan to $305 million from $1.2 billion.

WorleyParsons' new contract win follows on from last month's extension of an existing engineering and procurement multi-use agreement with Canadian giant Suncor and the award of preferred status framework agreements for BP's downstream business.