Eldar Saetre, CEO of Equinor, gives the company quarterly capital market update in London on Feb. 6, 2020. Equinor is pausing its plans to develop the Bay du Nord oil project, which would open a fifth oilfield off the coast of Newfoundland.Alastair Grant/The Associated Press
Equinor EQNR-N has put on ice plans to develop a $16-billion oil project off the coast of Newfoundland, dealing a fresh blow to a province that has faced significant financial pressure in recent years.
The Norwegian energy giant announced Wednesday that its plans for the Bay du Nord project would be paused for up to three years. The project has had significant cost increases in recent months, mostly because of volatile market conditions, Equinor said in a news release.
Trond Bokn, Equinor’s senior vice-president of project development, said in a statement that Bay du Nord is an important development for the company, and it will reassess the project to see if “further optimizations” can be made.
The Bay du Nord project consists of several oil discoveries in the Flemish Pass basin, about 500 kilometres northeast of St. John’s. Originally set to tap up to 300 million barrels of oil over a 30-year lifespan, it could produce closer to one billion barrels through potential tie-in projects because of nearby discoveries in 2020. The development would open the province’s fifth offshore oil field and be its first deep-water oil project.
Equinor has estimated that Bay du Nord would bring billions in royalty revenue to the federal and provincial governments. Newfoundland and Labrador cited the project’s potential boon to the province in its 2023 budget speech, noting that it will be “the most carbon efficient development of its scale in Canada.”
Equinor revealed its decision as the province’s energy industry gathered in St. John’s for the second day of the Energy NL Annual Conference and Exhibition. Energy NL chief executive officer Charlene Johnson told the crowd it was “extremely disappointing” for the industry and the province, which has faced significant market volatility in recent years.
“This project has seen numerous delays in the past number of years, and this is just another bump in the road to what we still feel will be a successful project,” Ms. Johnson said.
“We have seen this before, and come through the other side. We will do so again. Our members will continue to prepare and show, as a sector, that we are ready to play a leading role in one of the world’s lowest-carbon energy projects.”
The federal government approved the project last April, just one week after it said the oil and gas sector needs to cut its emissions nearly in half by the end of the decade.
Environment Minister Steven Guilbeault said in his decision that Bay du Nord was “not likely to cause significant adverse environmental effects.” He gave it the green light with 137 conditions, including that the development have net-zero emissions by 2050.
Environmental groups slammed the decision. In March, a lawyer representing environmental and Indigenous groups argued in Federal Court that the approval of the project was flawed because it failed to account for emissions created when oil is burned as fuel.
The groups that launched the court challenge are still waiting on a decision. But James Gunvaldsen Klaassen, one of the Ecojustice lawyers representing the groups, said in a statement Wednesday that the project’s deferral presented an opportunity to properly scrutinize the harmful effects of downstream emissions, pollution from marine shipping routes and consequences on at-risk species.
“Ultimately, massive new fossil fuel projects like Bay du Nord should not proceed and can only cause great harm to our climate and our environment. They are incompatible with Canada’s climate commitments and the urgent action needed to tackle the climate crisis,” he said.
With a report from The Canadian Press
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