Two players in design battle for Equinor’s stalled project while EIS gets unfavourable review

Norwegian oil and gas company Equinor has selected two engineering players to carry out conceptual studies for the topsides of an FPSO vessel, which will operate in waters offshore Canada. Meanwhile, the review of the company’s environmental impact statement for the project deemed it an unreliable source of information for decision-making processes.

A spokesperson for Equinor told Offshore Energy that Norway’s Aker Solutions and the U.S.-based KBR are doing conceptual studies for an FPSO to be used for the Bay du Nord field development, explaining that this is part of ongoing work to improve the robustness of the development.

When asked about the timeline of the project, the spokesperson said: “We have not communicated any precise timeline for upcoming decision gates, but we have indicated first oil could be feasible in 2028.”

Offshore Energy has also reached out to Aker Solutions and KBR, seeking further information about their involvement in the project but we are yet to receive any response.

The Bay du Nord project consists of the three light oil discoveries in the Flemish Pass Basin off Newfoundland, Bay du Nord, Bay de Verde, and Baccalieu. The project area is located in a harsh, deepwater environment with water depths of approximately 1,200 m.

Previous estimates pointed to recoverable reserves of about 300 million barrels of oil but Equinor drilled two wells in the Flemish Pass Basin in late 2020, resulting in two new oil discoveries. At the time, there was no specific information on volumes from these two discoveries.

When asked about the latest estimate, Equinor’s spokesperson told us the company does not have any new estimate now other than the fact that new discoveries provide an upside to the 300 million barrels. However, the finds are still being evaluated.

“We are also drilling two more exploration wells this year that could add to the development, if successful,” the spokesperson added.

The overall development concept comprises subsea installations tied back to an FPSO for storage and offshore offloading to shuttle tankers and the drilling of up to 40 wells. The project would be in operation for approximately 30 years, with the potential for additional wells and tie-backs to the production facility.

The final investment decision for the development was previously expected in 2021 and the first oil in 2025. However, Equinor and its partner Husky Energy, now Cenovus Energy, have instead decided to defer the Bay du Nord development project to make it more robust for low commodity prices.

Meanwhile, the Canadian government’s Department of Fisheries and Oceans (DFO) Science this month released a review of Equinor’s environmental impact statement (EIS) for the project, which was made several years ago but only became public this month.

The department said that, while completing the review of the EIS, it had encountered multiple instances of mischaracterisation and/or omission of available research from the referenced literature.

The review said: “Overall, reported baseline information was incomplete and outdated for almost all chapters reviewed by DFO Science. This installed a bias, significantly undermined the reliability and credibility of the assessment process, which sometimes led to inappropriate conclusions.

“In its current form, and until the problems identified in this report are addressed, the EIS is not considered a reliable source of information for decision-making processes.”

Among other things, the review pointed out a missed opportunity by project partners to use data from an offshore oil spill at Husky Energy’s SeaRose FPSO in November 2018 to help determine environmental effects.

The DFO also said in the review that, for the modelling exercises, the most recent understanding of the behaviour of deepwater blowouts was not considered. The information used to run the models was, in some instances, oversimplified and parameterization details were not completely described, the review revealed.

Furthermore, the department said in the review that the oil spill modelling did not predict deposition of oil onto sensitive areas as was observed in the Gulf of Mexico’s Deepwater Horizon blowout. As a result, the potential effect of a subsea blowout on SBAs was discounted. The potential effects of hydrocarbon gas from a deep blowout was not modelled.

As such, the consequences for planktonic organisms including the larvae of species of economic importance (shrimp, cod, etc.) and of sensitive benthic species (corals and sponges) were ignored. The potential effect of produced water discharges on these larvae was also not considered.

The full review by the Department of Fisheries and Oceans of the Bay du Nord project’s EIS.

It is also worth mentioning that, Steven Guilbeault, Canada’s minister of environment and climate change, last December extended the time limit for his decisions on the Bay du Nord development project by 90 days to take into account the Impact Assessment Agency of Canada’s Environmental Assessment Report.

New oil and gas projects have been facing growing opposition and increasing public scrutiny over the last years and Canadian projects are no exception. Earlier this month, environmental groups launched an appeal to protect marine ecosystems off the coast of Newfoundland and Labrador from the harmful effects of unchecked exploratory oil and gas drilling. The appeal was filed with the Federal Court of Appeal by lawyers from Ecojustice, representing the Sierra Club Canada Foundation, World Wildlife Fund Canada, and Ecology Action Centre.

The groups say an increase in exploratory activity in Newfoundland and Labrador’s offshore waters threatens important marine ecosystems while also damaging Canada’s ability to reach net-zero emissions by 2050.