Cost concerns over Bay du Nord? Equinor VP not worried yet

Recent comments by a high-ranking Equinorofficial indicate the company hasconcerns about the viability of a deepwater project off the coast of Newfoundland, but those concerns were not part ofa keynote speechin St. John's on Friday.

It's been several weeks since Herald Eliassen, the head of international projects, told a Norwegian conference that the Bay du Nord reserves off Newfoundland were "limited for a deepwater, harsh-environment and far-from-shore development, so for this project we need to work hard to get costs down and improve the business case."

Speaking to the St. John's Board of Trade on Friday, Equinor'svice-presidentof Canadian operations didn't confirm or deny the concerns.

"Well, the short answer is that we need to make the project as good as it can be to be able to compete in our global portfolio," said Unni Fjaer.

"I think we'll do as good as we can here and work towards a potential sanction next year, but it's too early to say what the sanction will be."

Fjaer said Equinor hopes to have key contractors chosen late this year or early next year, with a target for first oil by 2025.

The company believes it can recover 300 million barrels of oil from three reserves in the Flemish Pass region, about 500 kilometres off St. John's.

Breakeven costs coming down?

Eliassen's comments were recorded by oil and gasnews website Upstream Online.

When the project was announced by the Equinor and the provincial government last July, it was stated that oil prices must stay at $50 a barrelfor the project to break even.

Upstream Online claimed sources told them the break-even price would need to come down for the project to go ahead.

"In the phase we are in now, it's extremely important that we make the project as good as it can be," Fjaer said on Friday."We are optimistic, but have a lot of work we still have to do."

This could potentially be a project that is marginal- Alison Coffin, NDP leader

Eliassen's comments were raised by NDP MHA Lorraine Michael during Question Period earlier this month.

She pressed Natural Resources Minister Siobhan CoadyonEliassen's comments, andCoady repeated that, as far as government knew, there had been no changes to the project.

Reacting to Fjaer'scomments on Friday, NDP leader Alison Coffin said she gained a littleconfidence in the project, but still had concerns.

"This could potentially be a project that is marginal, and that's going to have a significant impact on employment here in the province, it's also going to have an impact on revenues here in this province and we are in a very delicate balance here right now," she said.

"So I do have some concerns but I am buoyed by the direction this is moving in."

FPSO will use fewer workers

This project is different than any other in the province's offshore or any other project in existence.

Should it go ahead, it would hold the distinction of being the furthestoil production site from shore in the world, Fjaer said.

It is remote. It is a harsh environment. And we will deal with it- UnniFjaer, VP Equinor Canada

Being so far offshore, there are logistical issues that would affect the manpower onboard the floating production storage and offloading vessel (FPSO).

Since the helicopters carrying crew would have a further distance to cover, they would have to carry fewer passengers, meaning the platform would be staffed with fewer employees.

In terms of water, Fjaer said the 1,200-metre depth is of less concern, since it is on par with other deepwater drilling sites in the world.

"It is remote. It is a harsh environment. And we will deal with it."

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