Equinor to press on with procurement processes for Bay du Nord oil project

Following a green light by the Canadian government in April 2022, Norwegian energy giant Equinor is working on early-phase concept studies for its operated Bay du Nord offshore oil project with expectations to file the development application within the coming year.

Equinor-operated Bay du Nord project consists of several oil discoveries in the Flemish Pass basin, some 500 km northeast of St. John’s in Newfoundland and Labrador, Canada.

A spokesperson for Equinor told Offshore Energy that the early-phase concept studies related to Bay du Nord are ongoing.

The spokesperson also added that, as the development project matures, Equinor will continue its procurement processes related to Bay du Nord, including options such as the recent expression of interest for FPSO Topside Engineering and Procurement for FEED, with an option for execution.

Back in January 2022, Equinor confirmed that Norway’s Aker Solutions and the U.S.-based KBR were doing conceptual studies for the FPSO as part of ongoing work to improve the robustness of the development.

Oil major BP will join Equinor as a partner in this project soon. Namely, in June 2022, BP agreed to sell its 50 per cent non-operated interest in the Sunrise oil sands project to Cenovus. Total consideration for the transaction includes C$600 million (about $466 million) cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years, and Cenovus’s 35 per cent position in the Bay du Nord project.

The sale of the oil sands business is part of BP’s strategy to shift the focus in Canada to future potential offshore growth. The transaction is expected to close in 2022.

Speaking during BP’s 2Q 2022 presentation earlier in August, BP CFO, Murray Auchincloss said the company is excited about Bay du Nord. He also added: “A fantastic discovery. We are looking forward to opening that up. I think maybe we’ll describe it as another hub in an extended Gulf of Mexico over time. I am winking at you as I say that.

“So, we are very excited about it. It is a lovely reservoir. We are happy to take the 35 per cent interest in that and work with the operator Equinor. We’ll talk to you more about it once we close because then we can actually say stuff; right now, we are on the outside.”

As reported by Offshore Energy in May 2022, Equinor that month began its operated two-well exploration drilling campaign in the Flemish Pass Basin. The success of this campaign would boost Bay du Nord’s resources.

According to the spokesperson, operations on the first well, named the Cambriol, are completed and have now moved to the Sitka prospect. The wells are being drilled using the West Hercules semi-submersible drilling rig.

The campaign is expected to be completed in the fall of this year and the rig’s contract with Equinor is slated to end in October 2022. After that, the management of the 2008-built rig will be transferred from Seadrill to Odfjell Drilling.

The final investment decision for Bay du Nord is expected in the next couple of years while the first oil could be achieved as early as late 2028. Previously, the FID was expected in 2021 and the first oil in 2025. Equinor’s spokesperson also told us that the company anticipates submitting its development application “within the coming year.”

However, in addition to supply chain challenges and growing energy security concerns amid the current geopolitical situation, the project is also facing hurdles related to its environmental impact. While the project received the green light from the government of Canada, despite opposition by environmentalists, Canadian environmental groups last May launched a lawsuit to overturn the approval, calling for a reduction in global emissions.