Is Equinor’s Bay du Nord ‘Delay’ a Cancellation in Slow Motion?

Posted to The Energy Mix in the The Energy Collective Group
image credit: Equinor
Mitchell Beer's picture
Publisher and Managing Editor, Energy Mix Productions Inc.

I’m publisher of The Energy Mix, an e-digest and online archive on energy, climate, and the shift to a post-carbon economy. Also president of Smarter Shift, an Ottawa-based firm that specializes...

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  • Jun 2, 2023

There’s growing speculation that the decision to “postpone” work on the giant Bay du Nord oil and gas project off the Newfoundland and Labrador coast is actually a cancellation moving in slow motion.

Norwegian state fossil Equinor announced Wednesday that it was suspending plans to develop the C$16-billion Bay du Nord megaproject in the province’s offshore for up to three years.

Equinor revealed the surprise “strategic postponement” of the project in a news release Wednesday, while the province’s annual energy industry conference was under way in downtown St. John’s. It said Bay du Nord had seen significant cost increases in recent months, mostly due to volatile market conditions.

As it happens, though, the announcement came just days after the International Energy Agency (IEA) reported a dramatic drop-off in investment in new project development by many of the world’s biggest oil and gas companies. The report shows the companies investing far less in new extraction projects—and next to nothing in self-styled low-carbon initiatives like biofuels, hydrogen, and carbon capture, utilization and storage (CCUS)—despite an “extraordinarily profitable” year that saw them take in US$4 trillion in profits in 2022. Oil and gas capital expenditures will stand at 48% of total spending in 2023, down from 61% last year, 73% in 2020, and highs of 93% and 94% in 2016 and 2010.

“Uncertainties over longer-term demand, worries about costs, and pressure from many investors and owners to focus on returns rather than production growth mean only large Middle Eastern national oil companies are spending much more in 2023 than they did in 2022,” the IEA said. “And they are the only subset of the industry spending more than pre-pandemic levels.”

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Matt Chester's picture
Matt Chester on Jun 2, 2023

It said Bay du Nord had seen significant cost increases in recent months, mostly due to volatile market conditions.

It is interesting because you would think the longer you wait the more the economics will slip away from the fossils industry, so they would want to be quicker to be up and running and pulling in the revenue

Mitchell Beer's picture
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