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Newfoundland and Labrador’s provincial government has signed a “formal legal agreement” with Equinor and BP to open the path for construction and production of the Bay du Nord offshore oil project, says Premier Tony Wakeham.
“Newfoundland and Labrador is officially back in the oil and gas business,” Wakeham told a room of supporters at the Delta Hotel in downtown St. John’s.
The agreement between the province and the Norwegian energy giant marks the next step in making the delayed project a reality.
The Bay du Nord project represents a potential $14 billion investment by Equinor and its partner BP, and will target an estimated 400 million barrels of oil in the Flemish Pass Basin in the opening phase.
If the project proceeds, it will become the fourth producing oil field in the offshore, and the first deep-water project outside of the Jeanne d’Arc Basin.
In a news release issued shortly after Wakeham’s announcement, the Department of Energy and Mines said the deal will provide life-of-field benefits, royalties and an equity option — providing up to $6.4 billion in its first phase.
The agreement includes a commitment to build at least 95 per cent of subsea components in Newfoundland and Labrador, with expressions of interest already issued for construction work including the topsides components.
There’s also employment targets for skilled trades apprentices — a promise Wakeham made during his election campaign that helped him gain the backing of influential labour group TradesNL.
Equinor has reshaped the project after postponing it in June 2023 because of skyrocketing costs.
Equinor had planned to proceed to what’s called Decision Gate 2 in December, which would see the company move forward with front end engineering and design work, and early procurement.
But the company hit the pause button following a change in government to give the PCs time to transition into power and begin talks on a benefits agreement.
“From the outset, the premier was clear that any agreement must deliver real and lasting value for the people of this province, and that clarity shaped our discussions,” said Tore Løseth, country director with Equinor.
In his address, Wakeham said this deal could make way for other projects down the line.
“Bay du Nord is not the finish line of our ambition in this sector. It is the starting line,” he said.
A final investment decision for Bay du Nord is scheduled for next year, with first oil planned for 2031.
More to come.
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