ST. JOHN'S, N.L. — Equinor says the Bay du Nord project has been deferred due to low oil prices and concerns for the economic impact of COVID-19.
In a release, the company says a joint decision from itself and Husky Energy will re-evaluate the project, amid plummeting global oil prices.
“The energy industry has been impacted by the deep fall in the price of oil and the sharp economic downturn as countries scale down their activities to limit the spread of the virus,” reads the statement.
“Bay du Nord remains an important part of our international project portfolio and Equinor will now take the time to further improve the project business case and assess the duration of this deferral. The project will continue its planning based on an FPSO concept and will progress the ongoing evaluations of existing tenders. Equinor will develop an adjusted work program according to new timelines.”
As of Wednesday, Brent Crude was trading at $28.73 per barrel. On March 18, 2019, the price was $67.84 a barrel.
Natural Resources Minister Siobhan Coady says she takes comfort in the project being deferred and not canceled outright.
“It’s deferred, not canceled. If there’s anything to be taken away from this, that’s a good sign. It’s a good sign they’re going to keep the project team in place. It’s a good sign they’re going to continue evaluating the tenders,” she said.
“While this is very, very disappointing news and difficult news, these are really difficult times. When they advise they’re going to delay decision gate two, but continue with the project team, I think that we should hopefully come through this and still see a project.”
Coady says she has not received any indication from Equinor on just how long the deferral is expected to last.
The Bay du Nord project was set to be the first deep-water oil field in the province’s offshore, with drilling taking place 500 kilometres offshore more than 1,200 meters beneath the Atlantic. Some 300 million barrels of oil are due to be pumped. The project was expected to be sanctioned this year, with first oil originally planned for 2025.
The project is owned 65 per cent by Equinor, 35 per cent by Husky Energy. Nalcor’s “OilCo” was due to purchase a ten per cent equity state in the project.
The project was estimated to bring in $3.5 billion to the provincial government in oil royalties over the life of the project.
Twitter: @DavidMaherNL
