Equinor Buys Out BP's Stake in Bay du Nord Project off Newfoundland
Equinor has bought out the interests of its partner BP in the Bay du Nord offshore field off the coast of Newfoundland and Labrador, making it full owner of a promising oil project in a famously difficult operating region.
"Over the past few years, we have strengthened Bay du Nord by improving the business case and reducing key risks. This transaction reflects our confidence in the project as we continue maturing it towards a final investment decision," said Equinor EVP Philippe Mathieu in a statement.
BP says that it is selling its 37 percent stake in 10 various Bay du Nord licenses in order to simplify its portfolio, maintain "strict capital discipline," and focus its attention on its highest-ROI projects. It will retain full ownership of two separate exploration licenses in the area, unrelated to its Equinor partnership.
Bay du Nord is a prospect in the Flemish Pass frontier basin, about 270 nautical miles to the east of St. John's. Statoil (now Equinor) took an interest in the basin in 1998, and drilled the Bay du Nord exploratory well C-78 in 2013. By 2017, it had drilled at five nearby sites in a cluster - Bay de Verde, Mizzen, Harpoon and Baccalieu.
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Thirteen years later, the sites remain undeveloped, in part because the conditions are quite harsh. This region of the North Atlantic is known for severe storms and drifting icebergs, both hazardous for drilling and production operations. Icebergs can be managed by towing or nudging them away with anchor handling tugs, but this adds cost. In addition, the extra-long distance from shore means extra costs and extra time for transportation, both for goods and for personnel transfers.
Challenges notwithstanding, Equinor is progressing through the FEED process and looking for ways to make its FPSO-based development proposal less expensive. It plans to take a final investment decision on the $10 billion Bay du Nord project next year. The state-owned oil company believes that its experience on the Norwegian shelf has prepared it for the harsh North Atlantic conditions off Newfoundland. It also has relevant experience as a non-operating partner in the Hibernia and Hebron fields, both located next door to Flemish Pass.
