Canada’s federal government has again delayed taking a vital decision on Equinor’s Bay du Nord oil development offshore Newfoundland & Labrador, disappointing project supporters.

The 40-day extension to mid-April came after the federal government had already given itself an extra 90 days in early December to assess the project’s environmental impact.

Every major upstream scheme in Canada is subject to an environmental assessment report, which the federal government can approve — with or without conditions — or refuse.

There has been a growing clamour among anti-fossil fuel campaigners recently for Ottawa to reject Equinor’s plan, claiming the development would go against the government’s decarbonisation agenda.

The lobby group Newfoundland & Labrador Oil & Gas Industries Association (NOIA) said the delay is “disappointing” but expressed confidence in the merits of Bay du Nord “and looks forward to the government approving the project as soon as possible based on the information reviewed as part of the Impact Assessment Agency of Canada [IAAC] process”.

NOIA chief executive Charlene Johnson said: “This project is environmentally sound and critically important to the future of our province.”

She referred to the IAAC’s August 2021 recommendation to approve the project because it is “not likely to cause significant adverse environmental effects”.

Bay du Nord is due to be tapped by a major subsea production system tied back to a large minimally manned FPSO.

NOIA said the project is expected to cost more than C$12 billion (US$9.4 billion), providing C$3.5 billion in government revenues, 11,000 person years of employment, with C$300 million invested in research and development.

These benefits, it noted, are “very conservative” as they were calculated before the oil resources in the greater Bay du Nord area increasing after Equinor discovered additional oil at the nearby Cappahayden and Cambriol prospects.

“We need to do what is right for Newfoundland and Labrador and follow the recommendation of the IAAC to approve this world-class project,” Johnson said, highlighting the project’s relatively low-emissions crude oil.

NOIA recently hired an independent firm to survey public opinion on the province’s offshore oil and gas industry, with that 84% of respondents supporting the sector and 89% of respondents with knowledge of the Bay du Nord project supporting its approval.

Newfoundland & Labrador Premier Andrew Furey and Energy Minister Andrew Parsons said: “We remain optimistic that the government of Canada recognises the value of the Bay du Nord project.”

Furey added: “I have been in contact with [Canada’s] prime minister and he understands the importance of this project to our province.”

He noted that Bay du Nord will be by far the best performer in the province’s offshore with emissions estimated to be under 8 kilogrammes per barrel of oil compared with an average of 13.8 kilogrammes in Newfoundland & Labrador currently, and an international average of 16.1 kilogrammes.

Canada’s Ministry of Environment & Climate Change said the government “recognises the importance of the decision” on Bay du Nord and that to better assess all views it extended the decision-making period by 40 days from 6 March.

“To provide more time to review the considerable amount of complex information and make an informed decision, the legislation allows for extensions,” the ministry noted.

Environment Minister Steven Guilbeault has to review the extensive information before deciding whether the Bay du Nord project is likely to cause significant adverse environmental effects.

In making his decision, the minister must consider the IAAC’s Environmental Assessment Report, comments received from the public and indigenous groups, and expert advice from federal departments.

Last week, 118 climate-change organisations in Canada and 81 international environmental groups wrote independent letters to the government, calling on it to ditch the Bay du Nord project.

Angela Carter, an associate professor at Canada’s University of Waterloo and member of Newfoundland & Labrador’s Net-Zero Advisory Council, said Bay du Nord “poses significant environmental risks and it would undermine the urgent global effort to reduce emissions and protect climate stability”.

She argued that instead of expanding oil production, our immediate priority challenge is managing a wind down of oil production that allows workers and communities to seize the benefits of the low-carbon energy transition.

Carter said approving Bay du Nord would take Newfoundland and Labrador “in the wrong direction, in terms of the climate crisis and long-term economic security”.

Gretchen Fitzgerald, national programmes director at the Sierra Club Canada Foundation, added: “Federal cabinet members need to reject this project and show true climate leadership. It’s time to support transition and jobs in wind energy, clean transportation, and kick-start deep energy retrofits to provide energy savings for people in Newfoundland and Labrador.”

Are you missing out on ACCELERATE?
Gain valuable insight into the global oil and gas industry's energy transition from ACCELERATE, the free weekly newsletter from Upstream and Recharge.