Premier announces benefits agreement for Bay du Nord
Premier Tony Wakeham announced a benefits agreement with Equinor Tuesday for the proposed Bay du Nord oil project.
The says it reached a major milestone for Newfoundland and Labrador’s offshore industry to advance the Bay du Nord project. Agreements on life-of-field benefits, royalties, and an equity option have been reached with partners Equinor and BP. This is the province’s first new standalone offshore oil and gas development since Hebron and its first deepwater project.
In 2023, Equinor paused the project for up to three years. With today’s agreement, the Provincial Government has secured a path forward that delivers long‑term value, strengthens local employment, and ensures benefits remain in Newfoundland and Labrador throughout the entire life of the project. It puts Newfoundland and Labrador back on the map for global oil and gas investment.
The agreement exceeds what was negotiated in 2018 and will provide up to $6.4 billion in direct revenue to the Provincial Government in the first phase of the project.
This project is the first life-of-field benefits agreement for an oil and gas project, which ensures a focus on benefits throughout the life of the project and not just during development. This will result in over 31 million person-hours of work over 25 years.
Expressions of interest have been issued for construction work in Newfoundland and Labrador, including topsides components – an important step to ensuring local resources and expertise are fully utilized.
The agreement represents a commitment to fabricate a minimum of 95 per cent of the subsea components in Newfoundland and Labrador. An equity option gives the Provincial Government a seat at the table and a piece of future growth.
For the first time, the agreement includes targets for the employment of skilled trades apprentices – 10 per cent for construction and 15 per cent for onshore operations.
A key part of the agreement is $200 million in fabrication funds, which will facilitate long-term fabrication trades jobs in the province, intended to expand the province’s capacity for offshore and maritime fabrication and maintenance. The Provincial Government plans to use this funding to secure capital to build a large floating dry dock at Bull Arm. The floating dry dock will weigh approximately 7,000 to 8,000 tonnes.
Other significant benefits commitments include a $100 million contribution to research and development and a commitment of a minimum of 1.9 million person-hours of professional work in project management, procurement management, and engineering.
This government will continue working closely with Equinor, BP, industry partners, and community stakeholders as the project advances toward sanction.
Bay du Nord, discovered in 2013, has estimated recoverable resources of nearly 430 million barrels. Project sanction is targeted for 2027, with first oil expected in 2031. The development is located approximately 500 kilometres offshore in the Flemish Pass Basin in water depths of about 1,200 metres.
“Newfoundland and Labrador is officially back in the oil and gas business,” Wakeham said. “This project makes Newfoundlanders and Labradorians the primary beneficiaries of our own resources. It guarantees new trades jobs for the entire duration of the project along with billions of dollars in new revenue for services here at home. And with the new floating dry dock we are breaking the boom-bust cycle of previous mega-projects and creating long-term and lasting building trades jobs in a brand-new maintenance and repair sector.”
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