Offshore Bay du Nord Project Leaps Forward

In early March, the governments of Canada and Newfoundland and Labrador announced signing of agreements to continue advancing the proposed Bay du Nord offshore oil development project. The agreements signed with partners (Equinor and BP) include life-of-field benefits, royalties and an equity option.

What is the Bay du Nord project?

The Bay du Nord project is a series of oil discoveries in the Flemish Pass Basin, roughly 500km east of St. John’s, NL. Bay du Nord was discovered in 2013 and has more than 400 million barrels of reserves expected (in its initial phase). The project is co-owned by Equinor and BP.

Bay du Nord sits between 600 metres and 1,170 metres deep and would require subsea development tied back to an FPSO (floating production, storage and offloading) vessel.

The total investment in the project would be an estimated $11.9 billion, with a final investment decision made by the developers in 2027. If the project moves forward, first oil is expected in 2031.

• Learn more by reading Energy 101 Series: Offshore Oil

What are the agreements?

• Life-of-field benefits: This project is the first life-of-field benefits agreement for an oil and gas project, to help ensure benefits continue throughout the project’s 25-year life, not just during development. The provincial government expects the project would result in more than 31 million person-hours of work over this period. Other agreement details include:
  • requiring 95% of subsea components to be fabricated in the province, among other work;
  • first consideration to local goods and services providers for the project’s contracting and procurement (in accordance with the Atlantic Accord Acts);
  • $200 million in fabrication funds. The province plans to use this funding to secure capital to build a large floating dry dock at Bull Arm, to expand capacity in vessel repair (including to help service the defense sector). The provincial government will takeover ownership of the site;
  • a $100 million contribution to research and development;
  • a commitment of at least 1.9 million person-hours of professional work in project management, procurement management, and engineering;
  • local onshore management of offshore operations of roughly 100 staff;
  • targets for the employment of skilled trades apprentices (10% in construction and 15% for onshore operations); and,
  • a comprehensive Gender Equity, Diversity and Inclusion Plan to support participation from underrepresented groups in the project.

• Royalties: This would be the first offshore development under the Generic Oil Royalty Regulations (GORR). Provincial royalties are expected be up to $6.4 billion in the project’s first phase.

• Equity option: The provincial government has an option for up to 10% equity ownership in the project.

Federal support:

The federal government has agreed to cover any Bay du Nord project fees that would come due under the United Nations Convention on the Law of the Sea (UNCLOS), which could reach $1 billion.

Canada ratified the UNCLOS treaty in 2003, which requires payments to the International Seabed Authority for development outside the exclusive economic zone (370 kms offshore). Bay du Nord would become Canada’s first offshore oil project outside the country’s exclusive economic zone.

Payments would begin after five years of production, first at 1 per cent of annual production value, and rising up to 7 per cent.

Quotes:

“This agreement gives us the clarity and confidence to continue moving the project towards a potential final investment decision next year.”

– Tore Løseth, Country President, Equinor Canada

“It [a deep water project] has been done by Equinor elsewhere, so there are 20 other basins out there with similar potential. And most exploration happening in the world is happening in deep water. Canada… has what the world needs right now with everything happening geopolitically, so we are really at a position to have all eyes on us.”

– Charlene Johnson, CEO, Energy NL

“Where once we had a federal government who told us what we cannot do, we now have a federal government who tells us what we can do.”

– Hon. Tony Wakeham, Premier, Newfoundland and Labrador

More information:

• Government of Newfoundland and Labrador, news release
• Government of Canada, news release
• Equinor, Bay du Nord project page
• Government of Newfoundland and Labrador, Energy and Mines, Offshore Petroleum
• Energy NL, news release
• CBC News, ‘Very attractive project’: Carney touts Bay du Nord as key project in stabilizing global energy markets
• CTV News, Ottawa agrees to cover Bay du Nord oil project’s UN fees, which could hit $1 billion
• VOCM, March 4, 2026 Morning Show
• Government of Newfoundland and Labrador, Premier Wakeham Speaking Notes