Bay du Nord on hold for up to 3 years

Canada's first deep water oil project has been shelved for three years "in the face of challenging market conditions," according to Norwegian oil giant Equinor.

The company sent a press release shortly after noon on Wednesday, in the midst of the Energy N.L. Conference and Exhibition in St. John's.

"We will utilize this postponement to continue to actively mature Bay du Nord towards a successful development," said Tore Lseth, head ofEquinor Canada.

A spokesperson said the project has incurred "significant cost increases" in recent months, due in part to a volatile market.

Trond Bokn, senior vice-president ofproject development, said the project is still important for Equinor.

"We will now look at the project again to see if we can do further optimizations to our concept and strategies," Bokn said.

Bay du Nordis made of up fiveoildiscoveries.

Equinorsaid it is continuing toassessexploration drilling around the field in 2024.

"Canada is one of Equinor's core areas and through both our partner-operated assets and Bay du Nord, we maintain a very strong business in the country," said Lseth. "We are also encouraged by the strong support in Newfoundland and Labrador and Canada for the project and look forward to the future development of Bay du Nord."

Yay and nay

The head of Energy N.L., Charlene Johnson, addressed the room during the industry conferenceshortly after Equinor broke the news Wednesday afternoon.

"Clearly this is extremely disappointing news for everyone in this room, and the entire industry and our province," Johnson said, notingthe project has already seen numerous delays already.

Johnson said she has spoken withLseth about herdisappointment and concern. Lseth is scheduled tospeak at the conference Thursday.

Johnson saidEnergy N.L. will remain in contact with Equinor over the coming weeks and still feelsthere arereasons for optimism.

"This is just another bump in the road to what we still feel will be a successful project," she said.

On the other side,Connor Curtis,head of communications with the Sierra ClubCanada Foundation, told CBC News the delay speaks to the fact that "the economics of this are uncertain."

Sierra ClubCanada, along with118 environmental and citizens' groups across Canada, havelong been against the Bay du Nordproject for environmental and economic reasons.

In March 2020, they banded together tocallon Ottawa to reject the project completely.

"Because we're aiming to meet our climate target, really in the long-term that means that a lot of that oil would not be needed. So developing long-term reserves of fossil fuels like the oil and gas fromprojects off of Newfoundland and Labrador, including Bay du Nord, really doesn't make much sense," Curtis said.

"I think to an extent we had questions about the viability of these projects for quite a long time," he said. "I'm not really surprised by it, but to a certain extent I hope that this does send a message to the provincial government and to the federal government."

"They need to start rapidly decarbonizing N.L.'s economy. If they're betting the future of the economy on an expansion in oil and gas and doubling production of oil and gas, that's just not going to happen. If that's what they're betting on, that's really misleading a lot of people."

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