Equinor sets 2031 as new target for first oil at Bay du Nord

Oil production at Bay du Nord is now slated to begin in 2031, with the director of the stalled offshore project saying he's "cautiously optimistic" it will go ahead.

That's about three years later than previous estimates, made before Bay du Nord was put on hold nearly two years ago.

Bay du Nord — which would be Canada's first deep-water oil project — was paused by Norwegian energy giant Equinor in May 2023, sending shockwaves through the Newfoundland and Labrador oil industry amid an energy conference in St. John's happening at the same time. The company blamed "challenging market conditions" that forced project costs skyward. 

"It's a difficult project because it's 500 kilometres offshore, it's 1,000 metres of water depth. Icebergs and so on. So it is a costly endeavour. There is no infrastructure out there," Tore Løseth, Equinor's manager for Canada, said on Tuesday.

Løseth said despite nearly two years of efforts to "reshape the project," he's still unsure whether Bay du Nord will become a reality.

"We don't have a project yet. We're not certain we can make it work," he said.

The company has been reviewing its project design since that hiatus. The plan initially aimed to extract crude oil from five oil fields in the Flemish Pass, an area 500 kilometres east of St. John's that represents a new frontier for Newfoundland and Labrador's oil industry.

Thousands of jobs have been promised, as well as billions of dollars in royalties for the heavily indebted provincial government.

Equinor is now aiming for a phased approach, first launching production in the two most promising fields: Bay du Nord and Cambriol.

"We have a great project team that has done a lot of work to improve the project. And so now the project looks different because we've improved it," Løseth said.

The production, storage, and offloading vessel that Equinor intends to build will also be manufactured by a third-party contractor. It will therefore be built faster and cost less, Løseth said, without specifying where construction will take place.

A decision to move forward to the project's next phase, leading to further engineering and planning work, is expected by the end of the year. A final investment decision is expected in 2027.

"When you make a huge investment decision like that, there's a lot of risks. One of the risks, and one of the things we are focusing on, is what oil price level do we need in the future actually to have a profitable project, to make money," said Løseth.

He said the project remains an important one for Equinor and his confidence in the project can vary on any given day.