Agreement reached to advance Bay du Nord offshore project

The Newfoundland and Labrador government says it has reached agreements with industry partners to advance the Bay du Nord offshore oil project, a development expected to create thousands of jobs and generate billions of dollars in revenue.

The province announced it has finalized deals with Equinor and BP covering life-of-field benefits, royalties and an equity option related to the project.

Officials say the agreement clears a path forward for the project after it was paused in 2023, and is aimed at delivering long-term economic benefits while ensuring work and investment remain in the province over the life of the development.

The government says the terms exceed what was negotiated in 2018 and could provide up to $6.4 billion in direct revenue to the province during the first phase of the project.

Bay du Nord would be the province’s first new standalone offshore oil and gas development since the Hebron oil field and its first deepwater project.

Under the agreement, the project includes what the province calls the first life-of-field benefits arrangement for an oil and gas development in the region, with an estimated 31 million person-hours of work expected over about 25 years.

The government says expressions of interest have been issued for construction work in Newfoundland and Labrador, including topsides components, as part of efforts to maximize the use of local companies and workers.

The agreement also commits to fabricating at least 95 per cent of subsea components in the province and includes an equity option that would give the government a stake in the project.

For the first time in such an agreement, the province says targets have been set for apprentices, including 10 per cent of workers during construction and 15 per cent during onshore operations.

The deal includes $200 million in fabrication funding intended to support long-term jobs in the sector. The government says it plans to use the funding to help secure capital to build a large floating dry dock at Bull Arm to support offshore and maritime fabrication and maintenance.

Additional commitments include a $100 million contribution to research and development and a minimum of 1.9 million person-hours of professional work in areas such as project management, procurement and engineering.

Bay du Nord was discovered in 2013 and is estimated to contain nearly 430 million barrels of recoverable oil. The project is located about 500 kilometres offshore in the Flemish Pass Basin in water depths of roughly 1,200 metres.

The government says a final investment decision on the project is targeted for 2027, with first oil expected in 2031.