Bay du Nord oil project’s court saga draws to a close but will there be an encore?

Canada’s Federal Court has thrown out a case challenging the Minister of Environment and Climate Change’s decision to approve the development of the controversial Bay du Nord oil project located off the coast of Newfoundland and Labrador. Will this be the end of legal scrutiny and attempts to overturn the government’s approval for the giant $12-billion project?

Back in March 2023, Equinor spent two days in a court in Ottawa, as Ecojustice was challenging the government’s approval of the Bay du Nord project on behalf of Équiterre, Sierra Club Canada Foundation, and Mi’gmawe’l Tplu’taqnn Incorporated (MTI). The outcome of the challenge and its impact on the project depended on the court’s decision.

Gretchen Fitzgerald, National Programmes Director, Sierra Club Canada Foundation, commented: “Our legal challenge to the federal approval of the Bay du Nord oil drilling project was rejected in federal court. According to the judge, we will now have to pay the government and Equinor for the pleasure of asking them not to burn the planet. Yes, even as large parts of the country are still on fire or recovering from the impacts of the wildfires we have already seen.

“A legal challenge like this is a big deal, and we take it very seriously. It takes time, expert resources, and – yes –  money. It takes guts and fortitude to sit and hear Equinor try to argue that people who raised issues late in the process (after the company itself had delayed submitting its assessment for years) should be ignored. Thankfully this argument was shut down in the decision – a small win for Indigenous consultation and public participation in impact assessments.”

After the Federal Court made up its mind about this, deciding to dismiss the case, the environmental and Indigenous groups, which brought the case to court, have expressed their disappointment and are in the process of exploring options to appeal this decision. They see the potential appeal as a way to ensure the impact of Bay du Nord will be “properly scrutinised” before the project can move forward.

Taking into account that Equinor recently put the Bay du Nord project on a shelf for three years due to – what it considers to be – “challenging market conditions,” as the rise in costs takes its toll, this project is not likely to be developed any time soon.

“We know we have a few short years to cut climate pollution. The recent announcement that Equinor will delay its decision on the project another three years shows how risky this project always was from an economic perspective. In three years’ time, the movement toward safer, cleaner energy will be even more advanced and the climate crisis will be even more apparent to all. The courts have failed us this round, but we and our members and allies plan to use the precious months ahead to protect our ocean and climate from this terrible project,” outlined Fitzgerald.

According to environmentalists, the rapid expansion of oil and gas drilling off the eastern coast of Newfoundland and Labrador, including Bay du Nord, poses “significant threats” to the climate, marine ecosystems, and the communities that depend on them, even though the country’s government expects this project to be among the world’s lowest carbon projects per barrel of oil.

However, Ecojustice claims that the $12-billion project is expected to produce up to one billion barrels of oil over its lifetime, which will in turn generate about 400 million tonnes of GHGs, which is the equivalent of running 100 coal facilities for a year or adding 89 million fossil fuel cars to the road for a year.

James Gunvaldsen Klaassen, Ecojustice lawyer, remarked: “Just days after the United Nations issued a statement that called further approval of fossil fuel extraction projects ‘moral and economic madness,’ Minister of Environment and Climate Change Steven Guilbeault approved the Bay du Nord project. In recent weeks, communities across Canada have witnessed the devastating impact of the climate crisis.

“Wildfires have forced thousands from their homes, and the resulting smoke has impacted millions. Ultimately, massive new fossil fuel projects like Bay du Nord should not proceed and can only cause great harm to our climate and our environment.”

Furthermore, the project was required to meet 137 conditions to gain approval, including a condition that the project be net-zero on emissions by 2050. The environmentalists argue that this target fails to account for the downstream emissions the project will generate. When assessing the likely climate impacts of a large fossil fuel project like Bay du Nord, Ecojustice underscores that all project emissions need to be assessed, encompassing both direct and downstream ones.

“It is hard to listen to lawyers from our federal government argue – in this case successfully – that the federal Minister of Environment and Climate Change does not have to account for climate pollution that will take us beyond 1.5 degrees global warming. And that the Mi’gmawe’l Tplu’taqnn (MTI) are wrong when they say they were not consulted appropriately and that in fact their concerns about Atlantic salmon were addressed during the assessment,” added Fitzgerald.

Canada’s largest environmental law charity reminds that the International Energy Agency warned in 2021 there was no path to net-zero emissions by 2050 with the continued approval of new fossil fuel projects. While the Canadian government considered this report in its decision to refuse approval of other fossil fuel projects – such as the Énergie Saguenay LNG project – Ecojustice is adamant that the government disregarded climate science in its approval of Bay du Nord. 

The environmental law charity justifies its view by pointing out that the added shipping traffic the project would generate could have detrimental impacts on the constitutionally protected fishing rights of Indigenous communities and on species at risk and marine biodiversity off the coast of Newfoundland and Labrador such as endangered cod, Atlantic salmon, humpback whales, corals and sponges.

“When we first called out the government for approving Bay du Nord, it forced them to start seriously exploring alternatives to oil and gas dependence in Atlantic Canada for the first time. Public pressure against Bay du Nord also led to Minister Guilbeault’s rejection of one of Suncor’s major oil projects, on the very same day that Bay du Nord was approved. Now, Bay du Nord’s three-year delay has put even more pressure on governments to start delivering on real solutions for ending economic dependence on oil,” emphasised Fitzgerald.

In addition, Ecojustice highlights that a DFO Science report on the Bay du Nord project identified numerous threats to ocean life, including the risk of an uncontrolled blowout while recent experience shows that spills in the region are commonplace and hard to recover from. To hammer this point home, the environmental law charity mentions the White Rose field offshore production facility, which spilt 250,000 litres into the ocean in November 2018 with no oil recovered.

Colleen Thorpe, Executive Director, Équiterre, stated: “The Bay du Nord project would fuel the climate crisis and threaten biodiversity. That’s why we challenged the government’s approval in federal court. The judge’s decision doesn’t change the environmental risks of the project. Equinor recently voted to put the project on hold for three years due to financial and market risks. These risks will not go away. We will continue to mobilise against new fossil fuel projects.”

Several oil discoveries in the Flemish Pass basin, some 500 km northeast of St. John’s in Newfoundland and Labrador, Canada, are part of the Bay du Nord project. The first discovery was made by Equinor in 2013, followed by additional discoveries in 2014, 2016, and 2020 while the confirmed discoveries in 2020 in adjacent exploration license EL1156 – Cappahayden and Cambriol – are potential tie-ins in a joint project development.

The Norwegian energy giant’s plans for the development of the Bay du Nord project entail an FPSO vessel, suitable for the tie-back of adjacent discoveries and future prospects. In line with this, Salt Ship Design disclosed in September 2022 that it had designed a hull for a harsh environment FPSO, which would serve on the Bay du Nord project.

“We need to make sure governments stop approving new fossil fuel projects, stop funding the fossil fuel industry, and cap its climate pollution, for real,” concluded Fitzgerald.

This is not the only project facing opposition from environmentalists, as Equinor is also having similar issues with the one it is working to develop West of Shetland, which is called Rosebank. The FID is slated for 3Q 2023.

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