While the Newfoundland and Labrador oil industry remains on edge over the fate of the Terra Nova oilfield, Norwegian oil major Equinor is sending strong signals about its plans for a group of oil discoveries in a frontier area known as the Flemish Pass Basin.
Company executives highlighted the Bay du Nord and neighbouring discoveries 500 kilometres east of St. John's during Equinor's capital markets day on Tuesday.
During a video presentation to investors, Equinor's international vice-president for exploration and production, Al Cook, listed Bay du Nord as one of 15 "key projects" in six countries that have been identified as "great opportunities to invest in."
"Their quality can be seen in their numbers," said Cook.
High value, lower carbon: Equinor
Equinor is pursuing a strategy that focuses on high value investments, with low carbon emissions.
He said projects like Bay du Nord can produce at less than eight kilograms of carbon dioxide for every barrel of oil, which is less than half the global average, and provide the company with annual rates of return above 20 per cent.
"In a world where oil demand is expected to decrease in the 2030, these projects deliver value during the 2020s. So these projects high-grade our business on value, and these projects high-grade our business on carbon," he said.
Equinor deferred the project last year as the coronavirus pandemic was sweeping the globe, and sending oil markets into a tailspin.
But oil prices have rebounded, and it appears Bay du Nord checks all the boxes for Equinor as its looks to accelerate its plans for net zero emissions by 2050.
"It's robustness and its scale come from the fact that it's six fields combined into one hub," Cook said.
He added that "we're still some way" from a final investment decision, but noted that the 13 wells already drilled in the area is "giving us real confidence in the sub-surface and in the reserves."
Two further exploration wells are planned for next year on two other prospects, known as Citka and Cambriol Central.
"Successful exploration here can add to a high value development which already has peak production of 200,000 barrels per day and a break-even of less than US$35 per barrel," said Cook.
If sanctioned, Equinor would use a floating production, storage and offloading vessel similar to the Terra Nova FPSO and the SeaRose FPSO.
While the SeaRose remains in production in offshore Newfoundland, the Terra Nova has not produced oil since late 2019, and the operator, Suncor Energy, has not yet made a decision on whether or not it will resume production, or decommission the field.
Equinor is one of the seven companies that form the Terra Nova joint venture, and Cook confirmed during his presentation that Equinor, with its 15 per cent ownership interest, will "exit" the partnership.
Bay du Nord an Equinor flagship?
Meanwhile, Cook offered favourable comparisons between Bay du Nord and Equinor's Bacalhau offshore development in Brazil, which received a final investment decision earlier this month. Construction of an FPSO is underway, with production to commence by 2025 at a daily rate of 220,000 barrels.
Cook described Bacalhau, an $8 billion US development off Brazil, as Equinor's "flagship international development," but noted Bay du Nord "has the potential to become bigger."
"So as one flagship sets sail in Brazil, the next is in the Canadian shipyard," he said.
Online oil and gas magazine UpStream reported earlier this month that the Bay du Nord project could produce nearly one billion barrels of oil, compared to earlier estimates of 300 million barrels.