Ottawa approves Bay du Nord oil project

The decision by federal Environment and Climate Change Minister Steven Guilbeault was made public Wednesday after markets closed.

I have determined that the designated project is not likely to cause the significant adverse environmental effects referred to in subsection 5(1) of the Canadian Environmental Assessment Acthe writes.

Bay du Nord is a deposit that the Norwegian oil company Equinor and Cenovus Energy, a local partner, want to exploit. It is located in deep water in the Flemish Pass basin, about 500 kilometers east of Saint-Jean.

Equinor’s plan is to use a Floating Production, Storage and Offloading Unit (Floating production, storage and unloadingin English, or FPSO), a huge vessel capable of producing up to 200,000 barrels per day.

According to Equinor, the field could produce at least 300 million barrels of crude over 30 years.

Photo: Radio-Canada

The project is scheduled to come on stream in 2028. Bay du Nord would thus become the fifth offshore oil field in production in Newfoundland and Labrador.

An unexpected windfall for a heavily indebted province

Bay du Nord represents $3.5 billion in royalties for the government of Newfoundland and Labrador – the most indebted province in the country – as well as thousands of well-paying jobs for its residents.

In Newfoundland and Labrador, all of the federal and provincial deputies – with the exception of one – are behind Bay du Nord. Also, its rejection by Ottawa would have been perceived as a huge failure for the Liberal government of Andrew Furey, the oil industry representing approximately 30% of the province’s GDP.

Asked by Radio-Canada before the markets closed, the Prime Minister did not want to confirm the news, but he said he was convinced that he had succeeded in getting his message across to Ottawa.

I am hopeful that our voice has been heard by the people who make the decisions, he said. The merits of the project are sufficient in themselves.

Federal endorsement of Bay du Nord, according to the Prime Minister, will incredible economic benefits for the province.

This gives hope to the industry which has suffered in recent years. »

A quote from Andrew Furey, Premier of Newfoundland and Labrador

Conversely, some voices – such as that of environmentalist David Suzuki – have been raised in recent months calling for the federal government to refuse the project, as Canada strives to meet its increasingly ambitious commitments in terms of reduction of greenhouse gases.

In the past, government and oil industry proponents have touted the so-called low carbon oil that would be produced by Bay du Nord, calling the project a crucial part of a transition to renewable energy.

Climatologists and environmentalists, however, scoffed at this argument – ​​as did Steven Guilbeault, for that matter.

While it is true that the extraction of offshore oil from Newfoundland and Labrador emits fewer emissions than other types of production, it is important to note that extraction accounts for only about 15% of total emissions. of a barrel.

When this oil is burned for energy, it produces only 6% less carbon than diluted bitumen from the Alberta oil sands.

A source of division within the Trudeau cabinet

Considered a real economic lifeline for Newfoundland and Labrador, whose economy depends on oil royalties and offshore labour, Bay du Nord has taken years to prepare.

Oil company Equinor postponed the project to 2020 after oil prices plummeted in the early months of the COVID-19 pandemic, before announcing it would go ahead in 2021.

Initially scheduled for last December, the Minister of the Environment’s decision on Bay du Nord had been postponed until March 6 before being postponed again, the federal government explaining that it needed more time to assess whether the project is likely to cause significant adverse environmental effects.

On the show Everybody talks about itSunday, on ICI Télé, Minister Guilbeault had promised that the decision of his government in the Bay du Nord file would be known within two weeks.

The decision is delicate and controversial. According to our information, the oil project has caused divisions within Justin Trudeau’s cabinet. Cabinet members from Quebec, Ontario and British Columbia opposed its approval.

A drawing of a boat with technical elements going down to the bottom of the sea.

The installation of the mining infrastructure would cover 22 square kilometers of seabed.

Photo: Equinor

Today’s announcement comes the day before Deputy Prime Minister and Minister of Finance of Canada Chrystia Freeland will deliver her budget.

It also comes a week after the Trudeau government unveiled a climate plan that includes significant measures to reduce oil and gas emissions without imposing a production limit on the industry.

The Trudeau government has pledged to cut emissions 40% to 45% below 2005 levels by 2030. In recent weeks, however, it has been looking for ways to increase its energy exports to the United States. Europe to replace those of Russia, disdained since its invasion of Ukraine.

The oil and gas sector is the most polluting sector in Canada. It represents 26% of emissions.

In the wake of the publication of the sixth report of the Intergovernmental Panel on Climate Change (IPCC), Canada was also called upon to reject all new fossil fuel projects by the UN Secretary General himself, Antonio Guterres.

More details will follow.

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