Equinor trumpets potential subsea work, enhanced benefits in quest to develop Bay du Nord

In a move that's not likely to be popular with labour groups, Equinor is sending strong signals that it would prefer to build the entire Bay du Nord production vessel at an international shipyard, likely in Asia.

But the oil giant says the increased size of the project will mean expanded local fabrication work related to subsea infrastructure, significantly more drilling activity, and more lucrative financial benefits to Newfoundland and Labrador. 

That's if the project is sanctioned by Norwegian oil giant Equinor and its partner, BP Canada.

"The project will be a great project for Newfoundland and Labrador if we can make it work. Both in terms of jobs and in terms of money to the province," Tore Løseth, the new person in charge of Equinor's operations in Canada, told CBC News on Monday.

Løseth said Bay du Nord is a much different project than it was nearly five years ago, when a framework development agreement was signed between the company and the provincial government.

New discoveries since then, such as Cappahayden, have seen the amount of proven reserves in the field increase from 300 million to "greater than" 500 million barrels of recoverable oil, according to Equinor. However, the offshore petroleum board has released data showing there's a potential for one billion barrels.

As a result, Equinor has continually beefed up the amount of infrastructure needed to develop Bay du Nord, and say it now has the potential to become the company's largest ever subsea development, with eight or more massive drill centres — connected back to the floating production vessel via flow lines and power cables — positioned on the seabed, over an area the size of the Avalon Peninsula.

"We are thinking that this project has the potential of doubling the amount of fabrication here in the province and quadrupling the direct financial benefits to the province relative to the 2018 numbers we had," said Løseth, who was named Equinor's country manager in Canada in January.

Løseth would not provide specific numbers, but the 2018 agreement envisioned 5,000 metric tonnes of fabrication work in Newfoundland and Labrador, and $3.5 billion in direct revenues for the provincial government.

The agreement also projected an estimated $11 billion in so-called life-of-field expenditures, with more than half of that to be spent in the province.

That 2018 agreement, however, was upended by the arrival of the global pandemic in 2020, with Equinor pausing Bay du Nord and exploring ways to make it more economical.

A subsequent drilling campaign that added two new discoveries renewed industry hopes about Bay du Nord, and last year, the federal government gave the project environmental approval following a controversial and extended review process.

The company is currently in talks with the provincial government over a new Bay du Nord benefits agreement.

"We have to make sure that the project is competitive so that we can actually make it work, so that we can get some benefits from it. And then we need to be providing jobs and money to the province. That is important," he said.