Norway's Equinor and the Canadian province Newfoundland and Labrador have agreed to develop a deepwater oil project off Canada's eastern coasts that will cost US$5.2 billion (C$6.8 billion), the Premier of Newfoundland and Labrador, Dwight Ball, said on Thursday.
Equinor Canada is the operator of the Bay du Nord oil discovery, made in 2013 and estimated to hold more than 300 million barrels of light, high-quality crude oil.
The province of Newfoundland and Labrador is now buying a 10-percent equity stake in the Bay du Nord oil project, which is expected to be sanctioned in 2020 and aims for first oil in 2025.
Bay du Nord is the first remote, deepwater project in the province's offshore. It is located 500 kilometers (311 miles) from shore at a depth of around 1,200 meters (3,937 feet). The Bay du Nord project opens a new basin-the Flemish Pass-and is the first project to be negotiated under Newfoundland and Labrador's generic oil royalty regulations.
The project is expected to generate US$10.7 billion (C$14 billion) in economic activity and US$2.7 billion (C$3.5 billion) in government revenues.
"Today marks the global recognition of Newfoundland and Labrador as a preferred location for deepwater production. Equinor and Husky's commitment and investment in this project highlights the attractiveness of our industry and the potential that exists within this province in our offshore," said the Premier of Newfoundland and Labrador, Dwight Ball.
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"With today's announcement, we take our first step into the new frontier, we mark a new era of deep-water exploration as well as the opening of a new basin - the Flemish Pass. The future of our offshore begins today," Ball added.
"This marks an important milestone to progress a successful development at the Bay du Nord discovery. This framework agreement provides important clarity and stability as Equinor and our partner Husky Energy work to move this project toward a sanction decision in the coming years," said Unni Fjaer, Vice President, Offshore Newfoundland, at Equinor Canada.
By Tsvetana Paraskova for Oilprice.com
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