The world’s fourth-largest oil producer, the Canadian government has approved the launch of a controversial oil project in the Atlantic. It was announced today by the Minister of Environment and Climate Change, Stephen Gilbo. The project, called ‘Bay du Nord project (BdN, North Bay) and maintained for years by Norwegian oil and gas firm Equinor, will allow the exploitation of an oil field more than a kilometre deep in Flemish Pass, located 500 kilometres off the coast of Newfoundland, east of St. John’s.
The project is expected to begin extracting oil in 2028. According to the company, it will be the fifth oil platform of its kind in Canada and will allow about 300 million barrels of oil to be extracted in 30 years.
The North Gulf Operation Project can continue, subject to the strictest environmental conditions imposed once, including the historical requirement for an oil and gas project – to reach carbon neutrality by 2050, said Gilbo, a former climate environmental activist. According to an in-depth environmental assessment, the project is unlikely to impact the environment negatively. “The world still needs oil,” Gilbo told Radio Canada. In October, he was elected environment minister by Prime Minister Justin Trudeau because of his past as an environmental activist.
Bay du Nord Project
The $12 billion offshore oil project was discovered in 2013.
Later more discoveries followed in the region in 2015, 2016, and 2020. The initial discovery was at a water depth of about 1,170m, while the latest findings are around 650m.
Northern Bay project includes multiple oil discoveries containing an estimated 300 million recoverable barrels, as per Equinor. Other estimates say the recoverable oil is two to three times higher.
Equinor, on calculations based on 300 million barrels, says the project could generate $2.8 billion in government revenue and create thousands of jobs in Newfoundland.
The environmental assessment process for the North Bay project began in 2018. The project is Canada’s first deep-water drilling site. The company proposes to use a floating production, storage and offloading vessel. Cenovus Energy Inc. and BP Plc have partnered with Equinor in the project.
The approval makes Bay du Nord the first major new Canadian oil production site after Suncor Energy Fort Hills oil-sands mine began oil production in 2018. The latest new production platform off the Newfoundland coast is the Exxon Mobil Hebron project, which started pumping oil in 2017.
Canada’s energy companies had mostly quit proposing major new oil projects after the prices collapsed in 2014. The companies now favour drilling for shale oil than investing in multibillion-dollar oil sands and offshore projects that last for decades.
Bay du Nord can produce about 200,000 barrels of oil a day when it goes online, according to Equinor. The company plans to drill two exploration wells this year.
Equinor, as per a decision statement released by the Canadian government, has to comply with 137 legally-binding conditions during the life of the offshore oil project.
Equinor is now required to obtain authorisations and permits from the federal departments and the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB).