(Bloomberg) -- Equinor ASA has delayed by as many as three years its controversial Bay du Nord project due to escalating costs, the company said Wednesday.
The project to develop an oil field about 500 kilometers (311 miles) off Newfoundland’s coast has “experienced significant cost increases” in recent months, the company said in an emailed press release. The Norwegian company and its partner BP Plc will continue to move the project toward development during the postponement, Tore Loseth, Equinor Canada country manager, said in the statement.
Prime Minister Justin Trudeau’s decision to greenlight the then $12 billion offshore oil project last summer was considered a major victory for the fossil-fuel sector and drew a strong backlash from environmental groups. The government, which has also pledged to curtail Canada’s emissions, approved the project after Russia’s invasion of Ukraine prompted policymakers to reconsider the importance of Canada’s oil reserves.
Project costs have risen due to higher inflation globally and the growing prices of supplies both nationally and internationally, Alex Collins, spokesman for Equinor, said by email. The consumer price index in Canada unexpectedly rose 4.4% in April from a year ago, the first increase in the rate of headline inflation since June 2022, Statistics Canada reported last month.
Bay du Nord includes five discoveries and could produce as many as 200,000 barrels of oil a day when it goes into operation, according to the company. The project was on-track to become the first major new crude production site in Canada since Suncor Energy Inc.’s Fort Hills oil-sands mine began operation in 2018.
(Updates with cost increase details in fourth paragraph)
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