Newfoundland and Labrador’s foray into deepwater production scene took a step forward July 26 when the government signed a framework agreement for the Equinor Canada-led US$8.3 billion Bay du Nord oil project.

Discovered in 2013, the basin-opening development is said to hold some 300 million barrels of oil reserves in Flemish Pass offshore Newfoundland in the Atlantic Ocean. The volumes include the Bay de Verde and Baccalieu discoveries announced in 2016.

“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,” Unni Fjaer, vice president, offshore Newfoundland, Equinor Canada, said in a statement announcing the agreement. “We also welcome our new equity partner, the province’s energy company, to the project.”

The province's energy company would get a 10% equity stake. Equinor currently holds a 65% stake with partner Husky holding 35%.

Equinor has described the geology of the Flemish Pass Basin as “very encouraging,” pointing out its Jurassic reservoirs with high porosity, high permeability and mature source rocks. The company, formerly known as Statoil, said the basin’s geology is similar to that of the Norwegian Continental Shelf.

A final investment decision on the development is expected in 2020. If sanctioned, first oil would flow in 2025.

At 1,170 m deep, Bay du Nord’s resources would be produced via an FPSO. The development also calls for offshore construction, installation, hook-up and commission, drilling, production operations, maintenance and decommissioning activities plus surveys, field work, supply and servicing activities; however, no land-based activities are included, according to Equinor.

The core subsea development could include between five and 10 combined templates/satellites tied back via flowlines to a floater. Hopes are for core production to last between 12 and 20 years. But there is potential for additional wells and tiebacks if additional resources are discovered, which could extend the field’s life to 30 years.

Equinor estimates crude production rates between about 94,000 barrels of oil per day (bbl/d) and 188,000 bbl/d. Plans are for crude oil to be offloaded from the FPSO to shuttle tankers via a flexible hose from the production installation to a shuttle tanker and onto an existing transshipment facility or directly to market, according to Equinor.

Bay du Nord would mark Equinor’s fifth oil and gas development offshore Newfoundland and Labrador.

Dwight Ball, premier of Newfoundland and Labrador, said the companies’ commitment to the project shows the attractiveness of the province’s offshore assets.

“This government is dedicated to bringing economic activity to our doorstep and the Bay du Nord Project will provide significant benefits including new employment opportunities over the life of the project,” Hall said in the statement. “With today’s announcement, we take our first step into the new frontier; we mark a new era of deepwater exploration as well as the opening of a new basin—the Flemish Pass. The future of our offshore begins today.”

The project could bring in an estimated C$3.5 billion in revenue for the government and spur more than C$14 billion in economic activity, according to the province.

Velda Addison can be reached at vaddison@hartenergy.com.

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