N.L. reaches deal with Equinor, BP to open the way for construction, production of Bay du Nord

Newfoundland and Labrador’s provincial government has signed an agreement with Equinor and BP to open the path for construction and production of the Bay du Nord offshore oil project.

"Newfoundland and Labrador is officially back in the oil and gas business," Premier Tony Wakeham told a room of supporters and industry leaders at the Delta Hotel in downtown St. John’s on Tuesday.

The agreement between the province, Equinor and BP marks the next step in making the delayed project a reality.

A final investment decision for Bay du Nord is scheduled for next year, with first oil planned for 2031. If the project proceeds, it will become the province’s first new standalone offshore oil and gas development since Hebron, its first deepwater project and its fourth producing oil field in the offshore.

"What I've been told is that once a project's reached this stage, that 90 per cent or more of them go on to final sanctions. So, I'm pretty confident of what's been accomplished here today," Wakeham told reporters after his address.

The government said the agreement exceeds what was negotiated in 2018, according to a government news release shortly published after Wakeham's announcement, and will provide up to $6.4 billion in direct revenue to the province in the first phase of the project.

The deal also allows the province to take an up to 10 per cent equity stake in the project. Wakeham said that's actively being explored, and it could translate to hundreds of millions in additional revenue.

It's also the first "life-of-field" benefits agreement for an oil and gas project in the province, according to the release.

That kind of benefits agreement ensures a focus on benefits throughout the project's life, the release said. It also includes royalties, and guarantees more than 31 million person-hours of work over a quarter century.

It also includes a commitment to build at least 95 per cent of subsea components in Newfoundland and Labrador. Wakeham said expressions of interest have already been issued for construction work by Equinor, including the topsides components.

"They've issued the expression of interest for topside work, but it comes down to whether or not Newfoundland and Labrador companies can provide, compete on time and on their schedule," Wakeham told reporters.

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. It will work out to be 10 per cent for construction and 15 per cent for onshore operations.

Equinor reshaped Bay du Nord after postponing it in June 2023 because of skyrocketing costs.

The Norwegian energy giant had planned to proceed to what's called Decision Gate 2 in December, which would see them move forward with front end engineering and design work, and early procurement.