'I do believe it will happen,' says Equinor CFO on Bay du Nord project
Company gives strongest signal since project was shelved for up to 3 years on May 31
One of the most senior executives at Norwegian oil giant Equinor expressed confidence in the massive Bay du Nord offshore oil project on Wednesday, despite his company's decision to delay it for up to three years.
Chief financial officer Torgrim Reitan told investors on a quarterly call that the decision to postpone was merely a strategic choice and doesn't mean the project is doomed.
"We do think we can make it better by redesigning it and taking it out of a very heated market now and placing it in a time where it will work better," Reitan said. "I do believe it will happen."
That's the strongest signal from the company since the project was shelved at the end of May. The decision came like an unwanted guest in the middle of Energy N.L.'s annual conference, which began with a focus on Bay du Nord as a potential boon for the industry.
Equinor's country manager for Canada,Tore Løseth, said the company needed to find ways to lower costs and optimize the project, while also establishing the total cost and break-even point. It was originally slated at $16 billion, though Løseth said the price tag had likely risen significantly.
Løseth's tone in June was much different from Reitan's tone on Wednesday.
"We'll give it three more years to develop," Reitan said. "We'd rather postpone investments to make them better than pushing them forward as soon as we can. So this is value over volume."
Reitan said the company took the same approach with a new project in the Barents Sea last year, and with all its projects in the same region about five years ago.
"There's no mystery to it," he insisted.
Environmental groups remain opposed to project
Équiterre, an environmental activism group, agrees that there's no mystery. But in a release sent before Reitan's comments, the group said it believes the decision to delay spells the end of the project.
"We are confident that this setback heralds the definitive abandonment of the Bay du Nord project," the group wrote to Radio-Canada. "If there is one thing we are convinced of, it is that Canada can no longer afford to authorize new fossil projects."
Équiterre was part of a coalition of environmental groups that launched court action to overturn Canada's decision to sanction the Bay du Nord project. The federal court dismissed the action in June. Despite that, Équiterre says it remains committed to the cause.
"We will make sure that Bay du Nord never sees the light of day here."
'It is important for Newfoundland. It is important for Equinor.'
The collective hopes of the offshore industry in Newfoundland and Labrador hang on just that — the project seeing the light of day.
Industry leaders like OilCo CEO Jim Keating believe the next phase of oil production is in deep-water reserves off Newfoundland's east coast. Bay du Nord was shaping up to be the first project the province had ever seen off the continental shelf, in depths up to 1,170 metres.
If Bay du Nord were to be first, the industry hoped BP's exploration of the Ephesus well off the island's northeast coast would lead to the second project.
Now Bay du Nord is on hold for up to three years, and BP has abandoned Ephesus, with all signs indicating their exploration in the area was less than successful.
This comes as the industry faces mounting pressure over its impact on climate change, and crushing projections for the future of oil. The Canadian Energy Regulator is predicting offshore production will peak in the early 2030s and could nearly disappear by 2050.
Despite all that, Reitan told investors the company still sees the project's potential in a positive light.
"It is important for Newfoundland. It is important for Equinor."
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With files from Patrick Butler, Terry Roberts