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BAY DU NORD: A GENERATIONAL PROJECT
More energy projects on the horizon
Newfoundland and Labrador is home to an offshore energy project that has the potential to provide tremendous long-term economic benefits to the province — as well as the rest of Canada. At the same time, it will set a new standard in sustainable development for oil and gas.
At this juncture, when Canada is stepping up climate change mitigation at a time of entrenched economic headwinds, the Bay du Nord project offers the ability to accelerate the shift to a low-carbon economy without jeopardizing the medium-term potential of Canada’s natural resources.
Bay du Nord includes industry leading innovations in environmental mitigations, employee safety, and production. It will be the most carbon efficient offshore oil and gas project in Canada, with an emission intensity of approximately 8.0 kilograms per barrel and also half of the international average of 16.1 kilograms per barrel. Global demand for oil and gas is continuing to increase and lower carbon intensity projects like Bay du Nord are part of a credible path to achieve net zero by 2050.
SIGNIFICANT ECONOMIC BENEFITS
While the Bay du Nord project is set to be a leader in the oil and gas sector for ensuring low emissions, it will also provide significant financial benefits and employment opportunities to Newfoundland and Labrador and all of Canada.
A study of the project’s economic impact commissioned by Energy NL and based on production of one billion barrels, estimates that Bay du Nord would boost Canada’s GDP by $97.6 billion and create or sustain 13,800 jobs. And most of these jobs would offer above-average wages.
While Newfoundland and Labrador would be the largest beneficiary, with $82 billion in GDP and more than 8,900 jobs, Bay du Nord would benefit the entire country. For example, Ontario would see an additional $7.2 billion in GDP and more than 2,200 jobs; Alberta would see $3.1 billion in GDP along with almost 700 jobs; and Quebec would see a GDP boost of $2.6 billion and more than 900 jobs.
Government revenues across Canada will also rise, which means more money to pay for health care, education, and other social priorities. Over the life of the project, the federal government will gain $10.7 billion in tax revenue, while provinces and municipalities outside Newfoundland and Labrador can expect to see $2.8 billion in tax revenue
In 2021, Suncor and the Terra Nova finalized an agreement to move forward with the Asset Life Extension Project which is expected to extend production life by approximately 10 years.
because of Bay du Nord. Newfoundland and Labrador will receive an estimated $11 billion in taxes and another $12.8 billion in revenue from royalty payments.
This generational project will set the standard for future energy projects in Newfoundland and Labrador, in Canada, and the world. In doing so, it will create thousands of jobs, including in the construction industry. Equinor plans further exploration this year in the Flemish Pass Basin with the West Hercules vessel and that exploration should finish before the end of this year, depending on progress made. Equinor Canada CEO, Torstein Hole, said at the Energy NL Annual Conference & Exhibition 2022 at the end of May that project sanction is likely two years away, but said he feels chances are very good it will be approved. First oil is anticipated in 2028 and a lot of Energy NL and NLCA members will be busy working on this project as it progresses.
MORE TO COME
While being the standard for future projects and a substantial part of our energy future, Bay du Nord is just the beginning of our new energy mix. Exploration for new, low carbon fields continues and renewable energy projects are in the offing.
There is great excitement that the operator of our first (Hibernia) and most recent (Hebron) project — ExxonMobil Canada — plans to explore in the Flemish Pass Basin via two wells. Aside from the typical interest that accompanies an offshore exploration campaign, there is heightened attention in this program as Qatar Energy recently purchased a 40 per cent interest in the licence block associated with the campaign. This will be the first time Qatar Energy has been involved offshore Newfoundland and Labrador and given a long association with Qatar that our province has had through the College of the North Atlantic, we welcome them to our industry and look forward to their increasing engagement.
BP Canada holds a significant prospect in our offshore, one that for years has been known as Cape Freels — the closest land point to the prospect — but more commonly referred to as Ephesus by bp Canada. The company is planning to explore next year, and ROV surveys for corals and sponges in their potential exploration area were conducted earlier this year. As well, in the spring, bp acquired a 35 per cent interest in the Bay du
The West White Rose project is expected to fully restart in 2023. First oil from the platform is anticipated in the first half of 2026.
Nord project. When you combine this activity with the company opening an office in St. John’s — it makes Energy NL members feel optimistic about what is yet to come for this prospect.
Significant prospects are held by BHP and we are hopefully that once a merger with Woodside is completed, they will explore. The BHP licence bid in 2018 was the largest monetarily in the history of Newfoundland and Labrador’s offshore. It is also important to note that both the bp and BHP exploration programs would occur in the Orphan Basin where there currently are no producing projects, thus opening a new basin for the industry.
As the Bay du Nord story has much of it yet to be told, so too is the story of the West White Rose project. While 65 per cent of the concrete gravity structure offshore wellhead has been completed, work was largely suspended during COVID-19 and the crash of energy markets.
During construction 1,400 skilled tradespeople were working on the project at peak construction undertaken in Argentia. A decision to restart the project was announced May 31, and we look forward to the return of upwards of 1,700 workers to complete the project. There would also be roughly 1,500 jobs for the supply and service sector related to the project and $11 billion in future capital and operating expenditures.
Similarly, the industry received good news when the Asset Life Extension (ALE) program for the Terra Nova FPSO (floating, production, storage and offloading vessel) was announced earlier this year. To help put perspective on the value of this project,
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The Government of Newfoundland and Labrador lifted a moratorium on wind projects in 2022. World Energy GH2’s proposed project would see 164 turbines built on the Port au Port Peninsula.
beside the additional 10 years of production and 70 million barrels it will produce, Energy NL had an economist review the economic impacts of the ALE. The study estimated that the capital investment phase would support almost 1,800 jobs, while annual operations would support more than 1,200 and revenue from annual royalties and corporate tax to the province would support an additional 2,100 jobs.
OPPORTUNITIES IN RENEWABLE ENERGY & CLEAN TECHNOLOGY
Early in 2022, the Government of Newfoundland and Labrador lifted a moratorium on wind projects and the industry reacted quickly. World Energy GH2 INC. submitted a project for provincial environmental assessment which would be Canada’s first commercial green hydrogen/ammonia production facility, created from 1 GW of renewable energy. The electricity generated from the wind farm will be used to produce hydrogen and ammonia at a 0.5 GW hydrogen facility to be built and operated on a brownfield site at the Port of Stephenville with other sites throughout the area including the Port au Port Peninsula.
The project could result in both 1,200 direct jobs (1,100 during construction and 100 during operation and maintenance) and 1,300 indirect jobs through the construction and operation of a windfarm with up to 164 turbines, as well as supporting infrastructure, including access roads, transmission lines, and pads and foundations for the turbines. It is also anticipated that temporary workforce accommodations will be developed to house construction workers in or near Stephenville.
Further, the Port of Argentia and Pattern Energy — one of the largest producers of wind energy in Canada which operates a project fleet of over six gigawatts of renewable energy globally — have signed an Option to Lease agreement to advance the development of a substantial multi-phase renewable energy project, including a wind energy project and green hydrogen and derivative renewable fuels production and export facility.
Liquefied Natural Gas (LNG) is an energy product in demand — particularly by European countries like Germany — and LNG NL has an offshore FLNG and pipeline project in the offing. The proponents are proposing exporting natural gas from the Jeanne d’Arc Basin to a floating liquid natural gas facility located at the Port of Grassy Point via a 600 km underwater pipeline. A lot of preliminary work has been undertaken and the project has also been submitted for provincial environmental assessment. Capital costs have been estimated to be approximately $10 billion, with between 1,300 and 1,500 direct construction jobs at peak, with potentially 400 permanent jobs for the facility.
“The outlook for the Newfoundland and Labrador energy industry is bright and I look forward to Energy NL members and Newfoundland and Labrador Construction Association members playing a leading role in the development of these projects. Our sector is evolving, and our opportunities are growing along with it. I look forward to working together to seize those opportunities for our collective success,” said Energy NL CEO Charlene Johnson.
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