N.L. reaches deal to open path for construction and production of Bay du Nord offshore oil project

newfoundland dog and Labrador’s provincial regime has signed an accord with Equinor and BP to open up the track for construction and production of the Bay du Nord offshore oil project, says Premier Tony Wakeham.

"Newfoundland and Labrador is officially back in the oil and gas business," Wakeham told a room of supporters at the Delta Hotel in downtown St. John’s on Tuesday.

The agreement between the province and the Norwegian energy giant marks the next step in making the delayed project a reality.

The government said it exceeds what was negotiated in 2018, and will provide up to $6.4 billion in direct revenue to the province in the first phase of the project.

It's also the first "life-of-field" benefits agreement for an oil and gas project, according to a government news release shortly published shortly after Wakeham's announcement, which "ensures a focus on benefits throughout the life of the project and not just during development" and includes royalties, and an equity option

This will result in over 31 million person-hours of work over 25 years.

If the project proceeds, it will become the province’s first new standalone offshore oil and gas development since Hebron, its first deepwater project and its fourth producing oil field in the offshore.

The deal also allows the province to take an up to 10 per cent equity stake in the project. Wakeham said that's actively being explored, and it could translate to hundreds of millions in additional revenue.

A final investment decision for Bay du Nord is scheduled for next year, with first oil planned for 2031.

The deal will also create jobs, with a commitment to build at least 95 per cent of subsea components in Newfoundland and Labrador, with expressions of interest already issued for construction work including the topsides components.

There's also employment targets for skilled trades apprentices — a promise Wakeham made during his election campaign that helped him gain the backing of influential labour group TradesNL. It will work out to be 10 per cent for construction and 15 per cent for onshore operations.

Equinor reshaped the project after postponing it in June 2023 because of skyrocketing costs.

Equinor had planned to proceed to what's called Decision Gate 2 in December, which would see the company move forward with front end engineering and design work, and early procurement.

But the company hit the pause button following a change in government to give the PCs time to transition into power and begin talks on a benefits agreement.

"From the outset, the premier was clear that any agreement must deliver real and lasting value for the people of this province, and that clarity shaped our discussions," said Tore Løseth, country director with Equinor.

"We see this agreement as the beginning of the next chapter of this partnership."

The development is located approximately 500 kilometres offshore in the Flemish Pass Basin in water depths of about 1,200 metres.

Wakeham said the deal will see Equinor and BP spend $3.2 billion in capital expenditures and $15 billion in operating expenditures over the its lifetime, and that this deal could make way for other projects down the line.

"Bay du Nord is not the finish line of our ambition in this sector. It is the starting line," he said.

The next step, Wakeham said, is working with the federal government to ensure that Bay du Nord becomes designated as a project of national importance. He thanked Prime Minister Mark Carney by name, calling him a steadfast supporter of the project.

"Where once the federal government told us what we cannot do, we now have a partner who is asking about what we can do," Wakeham said. "The sun is shining on our offshore, because cannot will be no more."

Federal Fisheries Minister and St. John's East MP Joanne Thompson said the project will give Newfoundland and Labrador a competitive advantage in the industry, should it proceed.

"The Bay du Nord project is a generational one. It is a $14 billion investment with the potential to shape Newfoundland and Labrador's economy for decades," Thompson said. "This project means real, lasting prosperity for families and communities across the province and across Canada."

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