Statoil term sheet on Bay du Nord 'weeks away,' premier says

Newfoundland and Labrador Premier Paul Davis surprised delegates at an oil and gas conference in St. John's Tuesday by announcing that the province is just "weeks away" from signing a term sheet with oil giant Statoil for development of the deep-water Bay du Nord field.

When pressed later for a firmer timeline, Davis said he hoped a tentative deal for what could be this province's next megaproject could be signed before the Nov. 30 provincial general election.

• Statoil's newly discovered N.L. oilfield among the biggest in years

Davis made the statement during a keynote address to delegates attending the annual Newfoundland and Labrador Oil and Gas Industries Association (NOIA) conference.

The Bay du Nord field, located in the Flemish Pass Basin, about 500 kilometres northeast of St. John's, was described by Davis as "the largest conventional oil discovery in the world." 

He said the project could bring benefits to this province for more than half-a-century, further bolstering a critical industry that already includes three producing fields — Hibernia, Terra Nova and White Rose — and a fourth, Hebron, that is scheduled to come online in 2017.

Racheting up negotiations

Davis said there are many factors at play, including the ongoing slump in oil prices, but suggested it could be four or five years, "or earlier," before the field begins producing oil.

Statoil announced in 2013 that Bay du Nord was a "high-impact discovery." While competing last year to win the leadership of the governing Progressive Conservative Party, Davis said reaching a deal on the negotiating a development deal with Statoil would be a priority.

He said talks have been ongoing, but told delegates "it's time to rachet our attention up a notch."

He said the province is seeking an equity stake in the project, similar to others negotiated over the years, and said any deal will include generous royalties and local benefits.

Statoil wants a deal. We want a deal.- Premier Paul Davis

"Statoil wants a deal. We want a deal," Davis said, adding both sides are "on the path to get this done."

Officials with Statoil, however, declined to comment on Tuesday. The immediate buzz around the convention was that Davis's announcement came as a surprise to company officials.

Jez Averty, Statoil's senior vice-president of exploration in North America, is scheduled to address NOIA delegates on Wednesday morning.

Meanwhile, Davis also announced that the provincial Crown energy corporation, Nalcor, is close to finalizing a new royalty regime that will "enable us to move with more agility ... and move rapidly on offshore deals."

He said an equity stake in future projects is a key component in this regime.

Davis spoke with great optimism about the province's future and the importance of the oil and gas industry, noting "we have only barely tapped the potential for production."