Beefing up Bay du Nord: New estimates push Equinor's project to nearly 1 billion barrels

New estimates released by the board that regulates the offshore industry in Newfoundland and Labrador revealthat the amount of recoverable oil linked to the Bay du Nord project is now close to one billion barrels, effectively doubling previous estimates.

That is raising confidence that the oil companies linked to the project, Equinor and BP Canada, will eventually proceed with the massive development in the Flemish Pass.

"Energy N.L. is encouraged by the resource numbers," Energy N.L. CEO Charlene Johnson said in a statement to CBC News.The group, formerly known as Noia, advocates for the energy industry.

Johnson said it's long been speculated that the volume of oil linked to the project "would be very high," and the announcement of additional reserves "typically improves overall project opportunities."

The Canada-Newfoundland and Labrador Offshore Petroleum Board, known as the C-NLOPB, announced on Friday that it had issued a significant discovery licence for Cappahayden K-67, one of two oil discoveries made in 2020 in the vicinity of the original Bay du Nordfind.

The board also estimated the amount of recoverable oil at Cappahayden at 385 million barrels, which is nearly equivalent to the 407 million barrels thought to be recoverable from Bay du Nord.

When combined with thethree other significant discoveriesrelated to the project Mizzen (102 million barrels), Baccalieu (45 million) and Harpoon (40 million) it raises the total estimate of recoverable oil to 979 million barrels.

By comparison, Hebron was sanctioned by ExxonMobil Canada and its partners in late 2012 at an estimateof 700 million barrels.

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But nothing will happen unless the provincial government and the oil companies can agree to a benefits deal, including royalties andthe amount of construction that will take place in the province.

Talks are ongoing, and both sides are choosing their words carefully.

"Obviously that's good news, but to us it doesn't change anything," said Energy Minister Andrew Parsons.

Parsons would not say if one side or the other acquires more negotiating leverage from the higher resource estimates but acknowledged the importance of the project to the province and to Equinor.

The provincial government lobbied hard last year to ensure Bay du Nord received federal environmental approval. Parsons said the government will fight equally hard to make sure the province receives maximum benefits from the oil field.

"It's an issue within our department every single day. There's not a day that doesn't go by without a conversation on it," said Parsons.

Equinorofficials have said Bay du Nord will cost $16 billion to develop, inject some $10 billion in royalty revenue into the provincial and federal government treasuries, and create16,000 person-years of employment during the life of the field.

At its peak, the field will produce up to 200,000 barrels of oil per day.

Equinor, meanwhile, is taking a cautious approach, saying in a statement that estimates are "greater than 500million barrels."

A company spokesperson said its evaluation of recoverable estimates for Bay du Nordare based on volumes "considered economically and technically recoverable, as opposed to potential or possible recoverable resources. It is common to experience differences in how volumes are assessed and estimated in different evaluations."

If it goes ahead, Bay du Nord will be Canada's first deep water project. Equinor has said a formal approval could occur later this year, or in 2024.

Equinor plans to develop the field using a floating production, storage and offloading vessel, connected by subsea tiebacks to the various discoveries.

The federal government released Bay du Nord from the environmental assessment process nine months ago, a decision that led to protests from environmental groups and a lawsuit aiming to overturn the project.

At the time, federal Environment MinisterStevenGuilbeaultsaid one of the conditions of the approval is thatthe project would have to meet net-zero emissions by 2050, a step towardweaning Canadaoff oil and gas in order to battle climate change.

But Equinor has said Bay du Nord will be one of Canada's lowest-emitting oil production projects, and that such projects will be attractive as countries transition to a greener economy.

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