Canada Touts Oil Potential for Newfoundland and Labrador

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

In the midst of a trade war with the United States, the Canadian government is bent on establishing the nation as an energy superpower. It's holding out Newfoundland and Labrador as the next frontier.

Bay du Nord to Do the Heavy Lifting

The development of the Bay du Nord prospect off the coast of Newfoundland and Labrador is expected to add to the long-term prospects for offshore oil production, the Canadian government said last week.

A market snapshot published Wednesday by the Canadian Energy Regulator said it expects Bay du Nord to be the first deepwater oil development in Newfoundland and Labrador. It represents a "new frontier," the government said, with first oil expected by 2031.

According to Industrial Info Resources data, there are more than 400 active capital oil and gas production projects in Canada, with a total investment value of nearly US$203 billion. The Global Market Intelligence (GMI) Oil & Gas Production Project Database offers a list of detailed project reports.

The largest offshore project by investment value is the Bay du Nord offshore development, with US$12 billion.

The federal Canadian government reported that regional production is not as high as it was in the early 2000s, but it's been on the rise lately because of investments in floating production, storage and offloading vessels (FPSOs).

"Looking ahead, continued production from existing fields, together with the proposed Bay du Nord development, which is being advanced through regulatory and commercial processes, could become significant factors in the long-term outlook for the province's offshore oil sector," it said.

Tapping BW Offshore for preliminary design work, Industrial Info Resources data find that Norwegian energy company Equinor would use an FPSO to drill 40 development wells in the so-called Flemish Pass Basin. Production could reach a peak capacity of 160,000 barrels per day (bpd) and would include as much as 1.2 million barrels in storage.

The Canada Energy Regulator reported that, in terms of percent, Newfoundland and Labrador is the fastest-growing province for oil production in the nation, with an annual increase last year of 15%, or 30,000 bpd. If sanctioned, Bay du Nord would not only become the first deepwater project in Canada, but at 310 miles from shore, the furthest of any other oil project of its kind globally.

The government finds the provincial waters cover a larger area than the Gulf of Mexico and has already hosted a handful of developments.

The eastern shores of Canada are considered something of pioneer territory for oil and gas developers looking for revival amid field maturations from existing programs. The oil offshore, meanwhile, is light, while oil-rich Alberta produces a heavy type of oil that needs steam to help move it to a production well.

Newfoundland and Labrador accounts for about 12% of the light oil production in Canada.

Energy Part of Canada's Overall Economic Agenda

While spared in the latest round of tariff disputes with the United States, energy is a central theme of Prime Minister Mark Carney's economic strategy. About 20% of Canada's total value for exported goods globally came from exports of crude oil, refined petroleum products and natural gas last year.

Aiming to cut U.S. trade dependence, Carney has set his sights on establishing Canada as an energy superpower, though its energy trade networks are tightly bound to the U.S. economy. "Virtually all" of Canada's natural gas exports go to the United States, the government said, while Canadian crude oil accounts for 60% of total U.S imports of foreign oil.

Though trade arteries will be difficult to diversify, Carney announced a new strategic partnership with the European Union last year while playing host to the annual meeting of the Group of Seven advanced economies. The prime minister said at the time that his nation was the one to lead a new era of global cooperation.

A former central bank governor, Carney has managed to broker new trade arrangements from China to the Middle East.

By the Numbers

• 12% of the light oil production in Canada comes from Newfoundland and Labrador
• 160,000 barrels per day expected by Bay du Nord

Key Takeaways

• Energy is a central theme of Canadian Prime Minister Mark Carney's economic strategy.
• Newfoundland and Labrador is set to host the nation's first-ever deepwater development.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).