Oil company Equinor is postponing its decision on whether or not to go ahead with the Bay du Nord oil megaproject. The company, which got the green light from the Trudeau government last year, could exploit nearly a billion barrels of oil in deep waters off the coast of Newfoundland and Labrador.
In a statement released Wednesday, the Norwegian multinational said market conditions have driven up the cost of this ambitious offshore oil project, “in many aspects of development.”
If it goes ahead, Equinor aims to drill up to 60 production wells over a 30-year period, while continuing exploratory drilling, in an area located 470 kilometers from the Canadian coast and more than 1000 meters from depth.
The Bay du Nord oil project is the result of various drillings that led to discoveries of oil under the seabed. When the project was approved last year by the Trudeau government, it was essentially talking about a potential of 300 million barrels exploited over a period of about 30 years.
However, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-TNLOHE) confirmed earlier this year a “significant discovery” of 385 million barrels which, combined with other discoveries in the sector, would bring the potential to 979 million barrels of oil.
Sierra Club Canada and Greenpeace on Wednesday welcomed the postponement of the Bay du Nord project. The Greenpeace spokesperson sees this as “excellent news” and stresses that “there is no room for new fossil fuel projects if we want to respect the Paris Agreement”.
Spill Hazards
Fisheries and Oceans Canada experts also warned against the risks of a crude oil spill in their analysis of the proponent’s impact statement. In this document, dated January 2022, the ministry refutes the claims of Equinor, which affirmed in its impact study that the risk of a spill is “extremely low”. “If 40 wells are drilled in 30 years, the probability of an extremely large spill is 16%,” write the federal experts.
The final report of the Impact Assessment Agency of Canada concluded that “taking into account the implementation of the mitigation measures, the Agency concludes that the proposed development of Bay du Nord does not is not likely to cause significant adverse environmental effects”.
The assessment nevertheless highlighted several environmental issues. The Equinor project is located in an “ecologically and biologically significant area of the United Nations Convention on Biological Diversity”, but also in “vulnerable marine ecosystems”.
The approval of the project is also challenged in court by the Sierra Club Canada Foundation and Équiterre, an organization co-founded by Steven Guilbeault.
The Bay du Nord project is highly anticipated in Newfoundland and Labrador. The provincial government wants to double offshore production after 2030. It would then reach 650,000 barrels per day, or a potential of more than 237 million barrels per year. In partnership with the Trudeau government, calls for tenders for new exploration permits have also been launched in recent months.
More details to come.