Equinor is pausing its plans to develop a controversial $16-billion oil project off Newfoundland’s east coast.
The Norwegian energy giant announced Wednesday that it was postponing its plans for the Bay du Nord oil project for up to three years. The project has seen significant cost increases in recent months, mostly due to volatile market conditions, the company said in a news release.
Trond Bokn, Equinor's senior vice-president of project development, said the company will reassess the project to see if "further optimizations" can be made.
“Bay du Nord is an important project for Equinor," he said in a news release.
The Bay du Nord comprises five different discovery areas that are said to hold a total of 979 million barrels of recoverable oil, according to estimates in February from Newfoundland and Labrador's offshore oil regulator. The development would open the province's fifth offshore oilfield and be its first deep-water oil project.
Newfoundland and Labrador’s latest provincial budget factored in economic gains from the Bay du Nord project beginning in 2025.
The federal government gave the project environmental approval last April, drawing sharp criticism from environmentalists. Equinor and the Newfoundland and Labrador government have said the project will produce far fewer greenhouse gas emissions while extracting oil than any other project in Canada. But environmentalists and climate scientists counter that the bulk of the greenhouse gas emissions from fossil fuels are produced when they are burned as fuel.
In March, a lawyer representing environment and Indigenous groups argued in Federal Court that the federal approval of the project was flawed because it did not consider these “downstream” emissions.
Environment Minister Steven Guilbeault said in January that approving Bay du Nord was the “most difficult decision” he’s had to make since assuming the portfolio in 2021.
At the time, Equinor had not yet confirmed it would make the full investment necessary to carry the project through to development. The company’s website says that before the delay, the Bay du Nord project was forecast to produce its first oil by the end of the decade.
This report from The Canadian Press was first published on May 31, 2023.