Canada’s first deep water oil project has been shelved for three years “in the face of challenging market conditions,” according to Norwegian oil giant Equinor.
The company sent a news release shortly after noon on Wednesday, in the midst of the Energy N.L. Conference and Exhibition in St. John’s.
“We will utilize this postponement to continue to actively mature Bay du Nord towards a successful development,” said Tore Løseth, head of Equinor Canada.
A spokesperson said the project has incurred “significant cost increases” in recent months, due in part to a volatile market.
Trond Bokn, senior vice-president of project development, said the project is important for Equinor.
“We will now look at the project again to see if we can do further optimizations to our concept and strategies,” Bokn said.
Bay du Nord is made of up five oil discoveries.
Equinor said it is continuing to assess exploration drilling around the field in 2024.
“Canada is one of Equinor’s core areas and through both our partner-operated assets and Bay du Nord, we maintain a very strong business in the country,” said Løseth. “We are also encouraged by the strong support in Newfoundland and Labrador and Canada for the project and look forward to the future development of Bay du Nord.”
Yay and nay
The head of Energy N.L., Charlene Johnson, addressed the room during the industry conference shortly after Equinor broke the news Wednesday afternoon.
“Clearly this is extremely disappointing news for everyone in this room, and the entire industry and our province,” Johnson said, noting the project has already seen numerous delays already.
Johnson said she has spoken with Løseth about her disappointment and concern. Løseth is scheduled to speak at the conference Thursday.
Johnson said Energy N.L. will remain in contact with Equinor over the coming weeks and still feels there are reasons for optimism.
“This is just another bump in the road to what we still feel will be a successful project,” she said.
On the other side, Connor Curtis, head of communications with the Sierra Club Canada Foundation, told CBC News the delay speaks to the fact that “the economics of this are uncertain.”
Sierra Club Canada, along with 118 environmental and citizens’ groups across Canada, have long been against the Bay du Nord project for environmental and economic reasons.
In March 2020, they banded together to call on Ottawa to reject the project completely.
“Because we’re aiming to meet our climate target, really in the long-term that means that a lot of that oil would not be needed. So developing long-term reserves of fossil fuels like the oil and gas from projects off of Newfoundland and Labrador, including Bay du Nord, really doesn’t make much sense,” Curtis said.
“I think to an extent we had questions about the viability of these projects for quite a long time,” he said. “I’m not really surprised by it, but to a certain extent I hope that this does send a message to the provincial government and to the federal government.”
“They need to start rapidly decarbonizing N.L.’s economy. If they’re betting the future of the economy on an expansion in oil and gas and doubling production of oil and gas, that’s just not going to happen. If that’s what they’re betting on, that’s really misleading a lot of people.”