Canada’s stalled $12-billion oil project takes step forward with new FPSO awards

Norwegian state-owned energy giant Equinor has started the ball rolling to develop its controversial Bay du Nord oil project off the coast of Newfoundland and Labrador by awarding preliminary front-end engineering design (pre-FEED) work to BW Offshore and Altera Infrastructure. The Canadian project, which the operator paused for three years a couple of years ago, is expected to be among the world’s lowest-carbon projects per barrel of oil.

While Newfoundland and Labrador’s offshore oil sector is already seen as one of the lowest-emitting in the country, Bay du Nord, the 12-billion oil project, was approved with the historic requirement to reach net-zero emissions by 2050. Like all other oil- and gas-producing provinces, NL implements a price on industrial carbon emissions via its provincial output-based pricing system.

As Equinor’s plan to develop the Bay du Nord project entails an FPSO suitable for the tie-back of adjacent discoveries and new prospects, Salt Ship Design disclosed in September 2022 that it had designed a hull for a harsh environment unit destined for the project. The 2013-made discovery is estimated to hold around 300 million barrels of light, high-quality oil.

Other discoveries followed in 2014, 2016, and 2020. The Bay du Nord discovery lies in waters approximately 1,170 meters deep, whilst these other discoveries are in adjacent exploration license EL1156, Cappahayden and Cambriol, in approximately 650 meters, and are potential tie-ins in a joint project development.

Equinor and its partner, BP, see the opportunity to apply digitalization principles throughout the life of the field to improve the efficiency of the development. Following delays, Equinor received approval from the Canadian government to develop the Bay du Nord project in April 2022.

This project, situated in the Flemish Pass basin approximately 500 km northeast of St. John’s in Canada, was put on a shelf for three years in 2023 because of the rise in costs. This move did not end legal battles over the project’s approval, as environmental groups decided to appeal the court’s dismissal of their lawsuit last year.

The previous hiatus set back the original timeline for the final investment decision (FID) and first oil, which were expected in 2021 and 2025, respectively. The revised timeline, with the FID target in the next couple of years and the first oil as early as late 2028, is not likely to come to pass as the project was put on ice again two years ago.

According to Equinor, the postponement will be utilized to optimize the project and continue to mature Bay du Nord towards development. To this end, the firm works with its partners, contractors, and stakeholders to improve overall project competitiveness. Subsea Integration Alliance, comprising OneSubsea and Subsea7, secured a long-term strategic agreement for collaboration on early, joint concept studies last year.

BW Offshore disclosed on January 22, 2025, the award of the pre-FEED study for the Bay du Nord FPSO project, which came from Equinor Canada, a subsidiary of Norway’s Equinor. The company sees this project as “an exciting step forward” for the offshore energy sector in Canada.

“This project underscores our expertise in floating production solutions and commitment to delivering sustainable and innovative solutions for our partners. The pre-FEED study plays a critical role in supporting Equinor Canada’s strategic goals for the Bay du Nord development,” outlined BW Offshore.

In addition, Altera Infrastructure also revealed the receipt of an FPSO pre-FEED contract for Equinor’s Bay du Nord project, which follows the firm’s work with Equinor on other harsh environment operations and projects. In alignment with Equinor’s strategy for a low-carbon future, the development is designed to optimize energy efficiency.

Altera highlighted: “The Bay du Nord FPSO required by Equinor is well aligned with our long history of delivering vessels specifically designed for harsh environments. Situated in the Flemish Pass, 500 km offshore Newfoundland, Canada, Bay du Nord faces challenging remote, deep water conditions.

“Altera and our partners are honored to extend our collaboration with Equinor, competing for yet another demanding project.”