Equinor's top executive in Canada, Tore Løseth, says the Norwegian oil giant is exploring all options as it attempts to bring down development costs for the stalled Bay du Nord project in offshore Newfoundland.
One consideration is a scenario where Equinor and its partner, BP Canada, hires another company to supply and operate a ship-shaped production vessel commonly known as an FPSO.
Previously, Equinor had planned to build and operate its own floating production, storage and offloading vessel, but Løseth said that's now one of several options under consideration.
"We simply have to improve the project in order to make it economically feasible," Løseth told CBC News Friday during an interview at the company's offices in downtown St. John's.
'Strong team' working on Bay du Nord, says Løseth
Løseth said improving the project so it gets the nod from Equinor's and BP's decision makers is a challenging task, but a "very strong team" is dedicated to making it happen, and he believes it can be done.
"We have been successful in the past improving projects like this, so when it comes to the future of Bay du Nord, we remain optimistic," said Løseth.
The Hercules semi-submersible rig will return to the Newfoundland offshore in the coming months to drill an exploration well for Equinor in the Flemish Pass basin. The well will target a prospect called Sitka, and is part of Equinor's effort to firm up the amount of oil in the Bay du Nord field. (Danny Arsenault/CBC)
In a further signal that Equinor is still committed to Bay du Nord, the company has hired the semi-submersible rig Hercules to drill an exploration well sometime this year in a prospect called Sitka.
"This is not a cheap undertaking. But we want to clarify the resource potential in and around Bay du Nord," he said.
Delayed for 3 years
Bay du Nord is an oil-rich discovery — some estimates put the number of recoverable barrels at close to one billion — in the Flemish Pass, located in deep water about 500 kilometres northeast of St. John's.
Bay du Nord would be the province's first deep water project, and was long being touted as the future of the Newfoundland and Labrador oil industry, with daily production of up to 200,000 barrels. It received federal environmental approval in April 2022.
But Equinor shocked the industry eight months ago by announcing it was delaying a sanction decision by up to three years. The company blamed inflationary pressures, saying it had to lower costs in order to make the project viable.
Equinor signalled to the market earlier this month that it's taking a clean-sheet approach with a series of expressions of interest. One of those EOIs is for a contractor who could build, install and operate an FPSO. While such a scenario would be a first for offshore Newfoundland, Løseth said it's not an uncommon approach in the oil industry.
"We need to look at other ways of developing Bay du Nord," Løseth explained. "We don't know what it will look like. It will look different. But we are looking at everything we can to improve the project."
This is an illustration of the ship-shaped oil production and storage vessel that Equinor had planned to build and operate in the Bay du Nord field in offshore Newfoundland. But in a bid to lower costs, Equinor is now seeking proposals from other companies who can build, install and operate a production vessel. (Equinor)
Equinor's shakeup of the project is raising questions, including whether it will mean less fabrication work for local companies, and whether Equinor remains committed to making Bay du Nord one of the lowest carbon emitting oil projects in Canada.
Løseth said it's difficult to answer many obvious questions because the project is now being viewed through a fresh lens, but he said Bay du Nord will deliver big benefits to the province, and will fit into the company's energy transition plan.
"If we can make Bay du Nord happen, there will be a lot of jobs to the province, there will be a lot of revenues coming into the province. That is for certain," said Løseth.