Feb 06, 2023
New estimates released by the board that regulates the offshore industry
in Newfoundland and Labrador reveal that the amount of recoverable oil
linked to the Bay du Nord project is now close to one billion barrels,
effectively doubling previous estimates.
That is raising confidence that the oil companies linked to the project,
Equinor and BP Canada, will eventually proceed with the massive
development in the Flemish Pass.
"Energy N.L. is encouraged by the resource numbers," Energy N.L. CEO
Charlene Johnson said in a statement to CBC News. The group, formerly
known as Noia, advocates for the energy industry.
Johnson said it's long been speculated that the volume of oil linked
to the project "would be very high," and the announcement of additional
reserves "typically improves overall project opportunities."
The Canada-Newfoundland and Labrador Offshore Petroleum Board, known
as the C-NLOPB, announced on Friday that it had issued a significant
discovery licence for Cappahayden K-67, one of two oil discoveries made
in 2020 in the vicinity of the original Bay du Nord find.
The board also estimated the amount of recoverable oil at Cappahayden
at 385 million barrels, which is nearly equivalent to the 407 million
barrels thought to be recoverable from Bay du Nord.
When combined with the three other significant discoveries related to
the project — Mizzen (102 million barrels), Baccalieu (45 million)
and Harpoon (40 million) — it raises the total estimate of recoverable
oil to 979 million barrels.
By comparison, Hebron was sanctioned by ExxonMobil Canada and its partners
in late 2012 at an estimate of 700 million barrels.
But nothing will happen unless the provincial government and the oil
companies can agree to a benefits deal, including royalties and the
amount of construction that will take place in the province.
Talks are ongoing, and both sides are choosing their words carefully.
"Obviously that's good news, but to us it doesn't change anything,"
said Energy Minister Andrew Parsons.
Parsons would not say if one side or the other acquires more negotiating
leverage from the higher resource estimates but acknowledged the
importance of the project to the province and to Equinor.
The provincial government lobbied hard last year to ensure Bay du Nord
received federal environmental approval. Parsons said the government will
fight equally hard to make sure the province receives maximum benefits
from the oil field.
"It's an issue within our department every single day. There's not a
day that doesn't go by without a conversation on it," said Parsons.
Equinor officials have said Bay du Nord will cost $16 billion to develop,
inject some $10 billion in royalty revenue into the provincial and federal
government treasuries, and create 16,000 person-years of employment
during the life of the field.
At its peak, the field will produce up to 200,000 barrels of oil per day.
Equinor, meanwhile, is taking a cautious approach, saying in a statement
that estimates are "greater than 500 million barrels."
A company spokesperson said its evaluation of recoverable estimates for
Bay du Nord are based on volumes "considered economically and technically
recoverable, as opposed to potential or possible recoverable resources. It
is common to experience differences in how volumes are assessed and
estimated in different evaluations."
If it goes ahead, Bay du Nord will be Canada's first deep water
project. Equinor has said a formal approval could occur later this year,
or in 2024.
Equinor plans to develop the field using a floating production, storage
and offloading vessel, connected by sub-sea tiebacks to the various
discoveries.
The federal government released Bay du Nord from the environmental
assessment process nine months ago, a decision that led to protests from
environmental groups and a lawsuit aiming to overturn the project.
At the time, federal Environment Minister Steven Guilbeault said one of
the conditions of the approval is that the project would have to meet
net zero emissions by 2050, a step toward weaning Canada off oil and
gas in order to battle climate change.
But Equinor has said Bay du Nord will be one of Canada's lowest-emitting
oil production projects, and that such projects will be attractive as
countries transition to a greener economy.
New estimates released by the board that regulates the offshore industry
in Newfoundland and Labrador reveal that the amount of recoverable oil
linked to the Bay du Nord project is now close to one billion barrels,
effectively doubling previous estimates.
That is raising confidence that the oil companies linked to the project,
Equinor and BP Canada, will eventually proceed with the massive
development in the Flemish Pass.
"Energy N.L. is encouraged by the resource numbers," Energy N.L. CEO
Charlene Johnson said in a statement to CBC News. The group, formerly
known as Noia, advocates for the energy industry.
Johnson said it's long been speculated that the volume of oil linked
to the project "would be very high," and the announcement of additional
reserves "typically improves overall project opportunities."
The Canada-Newfoundland and Labrador Offshore Petroleum Board, known
as the C-NLOPB, announced on Friday that it had issued a significant
discovery licence for Cappahayden K-67, one of two oil discoveries made
in 2020 in the vicinity of the original Bay du Nord find.
The board also estimated the amount of recoverable oil at Cappahayden
at 385 million barrels, which is nearly equivalent to the 407 million
barrels thought to be recoverable from Bay du Nord.
When combined with the three other significant discoveries related to
the project — Mizzen (102 million barrels), Baccalieu (45 million)
and Harpoon (40 million) — it raises the total estimate of recoverable
oil to 979 million barrels.
By comparison, Hebron was sanctioned by ExxonMobil Canada and its partners
in late 2012 at an estimate of 700 million barrels.
But nothing will happen unless the provincial government and the oil
companies can agree to a benefits deal, including royalties and the
amount of construction that will take place in the province.
Talks are ongoing, and both sides are choosing their words carefully.
"Obviously that's good news, but to us it doesn't change anything,"
said Energy Minister Andrew Parsons.
Parsons would not say if one side or the other acquires more negotiating
leverage from the higher resource estimates but acknowledged the
importance of the project to the province and to Equinor.
The provincial government lobbied hard last year to ensure Bay du Nord
received federal environmental approval. Parsons said the government will
fight equally hard to make sure the province receives maximum benefits
from the oil field.
"It's an issue within our department every single day. There's not a
day that doesn't go by without a conversation on it," said Parsons.
Equinor officials have said Bay du Nord will cost $16 billion to develop,
inject some $10 billion in royalty revenue into the provincial and federal
government treasuries, and create 16,000 person-years of employment
during the life of the field.
At its peak, the field will produce up to 200,000 barrels of oil per day.
Equinor, meanwhile, is taking a cautious approach, saying in a statement
that estimates are "greater than 500 million barrels."
A company spokesperson said its evaluation of recoverable estimates for
Bay du Nord are based on volumes "considered economically and technically
recoverable, as opposed to potential or possible recoverable resources. It
is common to experience differences in how volumes are assessed and
estimated in different evaluations."
If it goes ahead, Bay du Nord will be Canada's first deep water
project. Equinor has said a formal approval could occur later this year,
or in 2024.
Equinor plans to develop the field using a floating production, storage
and offloading vessel, connected by sub-sea tiebacks to the various
discoveries.
The federal government released Bay du Nord from the environmental
assessment process nine months ago, a decision that led to protests from
environmental groups and a lawsuit aiming to overturn the project.
At the time, federal Environment Minister Steven Guilbeault said one of
the conditions of the approval is that the project would have to meet
net zero emissions by 2050, a step toward weaning Canada off oil and
gas in order to battle climate change.
But Equinor has said Bay du Nord will be one of Canada's lowest-emitting
oil production projects, and that such projects will be attractive as
countries transition to a greener economy.
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