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

Equinor is sending strong signals that it plans to build the proposed Bay du Nord production vessel elsewhere, but says expanded subsea work, drilling activity and direct financial benefits to Newfoundland and Labrador will be significant.

Oil company sends strong signals about how it wants to build proposed production vessel

An illustration of the proposed Bay du Nord production vessel.
Equinor is signaling that its preference is to build the entire production vessel for the massive Bay du Nord project outside of Newfoundland and Labrador, but says the amount of local fabrication work and direct financial benefits to the province have increased significantly because of new oil discoveries made in recent years. (Equinor)

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 meanexpanded 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 Lseth,the new person in charge of Equinor'soperations in Canada,told CBC News on Monday.

Lseth saidBay 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.

An illustration of the Bay du Nord production vessel, and subsea drill centres.
The Bay du Nord project proposes at least eight subsea drill centres tied back to a floating production, storage and offloading vessel that will be capable of producing 200,000 barrels of oil per day. (Equinor)

As a result, Equinor has continually beefed up the amount of infrastructure needed to developBay du Nord, and say it now hasthe potential to become the company's largest ever subseadevelopment, 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 directfinancial benefits to the province relative to the 2018 numbers we had," said Lseth, who was named Equinor's country manager in Canada in January.

Lseth 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 Nordand 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.

An illustration of a Bay du Nord subsea platform
The subsea production platforms that will be linked back to the Bay du Nord FPSO will be roughly 15 metres high, or the equivalent to a five-storey building, and weigh several hundred tonnes, according to Equinor. (Equinor)

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.

ButLsethis balancing his excitement for the project with what he calls the "creeping costs" of developing Bay du Nord, and competition from various other Equinor projects including oil and gas and renewables such as hydrogen for capital.

"I cannot guarantee you that we will make it work, because now the project is commercially challenged. And you might find that a little bit strange because we have proven a lot of oil in the ground, andwe are making a lot of money these days, but it is the truth," saidLseth.

"Only the best projects will make it."

He said Bay du Nord checks all the boxes when it comes to emerging technology, low-emission production and helping with the transition to a greener economy.

Trades NL lobby effort targets Equinor

Last month, meanwhile, the powerful labour group Trades NL launched a campaign called "Build Right Here." The campaign is aimed squarely at Equinor, and aims to force the company to build various topside modules it's not possible to build the vessel's hull in Newfoundland and Labrador for its FPSO in the province, similar to the pattern used to build existing production oil platforms in the Hibernia, Terra Nova, White Rose and Hebron oil fields.

Building the entire Bay du Nord FPSO internationally would be"economically devastating" for the province and erode the skills of a workforce that has a long and proud history of fabricating topside modules for the offshore, Trades N.L. CEO Darin King told CBC News last month.

ButLseth said it's common for Equinor to build its oil producing vessels at international shipyards in places such as Singapore, even when the oil fields are locatedin Norwegian waters.

Equinor's Tore Lseth at his office in St. John's.
Equinor's operations in Canada are now led by senior vice-president Tore Lseth, who is based in St. John's. (Terry Roberts/CBC)

With Bay du Nord, he said, it's important to consider the vast amount of subseafabrication and installation work that will be required, much of which can be done at yards in Newfoundland and Labrador. Also, he said, up to 40 wells will also have to be drilled.

"These types of jobs are long-lived, so we are talking about about 10 years of continuous fabrication at yards. And over that time period we will also have marine operations and the drilling of wells. So this isreally long-lived jobs," he said.

That's before any production begins, he said, adding: "we will have a couple of decades of production."

The subsea drill centres will stand about 15 metres high, the equivalent to a five-storey building, and be "chock full of advanced technology," saidLseth.

Equinor and its partner expects to make a decision on whether to sanction Bay du Nord sometime next year. If approved, first oil is expected to begin later this decade, with daily production of up to 200,000 barrels.

Read more from CBC Newfoundland and Labrador