One project that could soon make a final investment decision (FID) is so far offshore Canada’s coast that it falls in international waters and would require Canada paying royalties to the United Nations based on production from the project.
This is the Bay du Nord project offshore Newfoundland and Labrador, led by Norway’s Equinor. In April, the $12-billion project received a positive environmental assessment from the Government of Canada. The project has yet to make an FID, with first oil expected to be produced in the late 2020s. The positive view from Canada takes Bay du Nord “a step closer to being the first offshore oil and gas project in the world to trigger Article 82 of the United Nations Convention on the Law of the Sea (UNCLOS),” reports Energy Regulation Quarterly.
Apart from Equinor, BP has also seen the potential of Bay du Nord. While announcing it was quitting Canada’s oil sands, the UK supermajor also bought Cenovus Energy’s 35% stake in the Bay du Nord project as it shifts its focus to future potential offshore growth in Canada.
Commenting on BP’s deal, Starlee Sykes, bp senior vice president, Gulf of Mexico & Canada, saidin June:
“This is an important step in our plans to create a more focused, resilient and competitive business in Canada. Bay du Nord will add sizable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador.”
Offshore Contracts Set To Surge Through 2026
Overall, offshore oil and gas engineering, procurement and construction (EPC) spending globally is expected to total $276 billionbetween 2022 and 2026, which would be a 71% increase compared to the preceding five-year period, according to Westwood Global Energy Group. Asia, the Middle East, and Latin America will dominate expenditure, the energy analytics group said.
Moreover, high-impact drilling is also back, with a much higher success rate so far this year, compared to 2011.
High-impact exploration has returned to the scene after a dismal 2021, which saw a low success rate—one of the lowest on record—in discovering new oil and gas resources.
So far this year, E&P firms have discovered over 1.7 billion barrels of oil equivalent (boe) at high-impact wells, nearly quadrupling the 450 million boe discovered for the whole of 2021, Rystad Energy said earlier this month. So far into 2022, the success rate at such wells has stood at 47%, much higher than the meager 28% success rate last year, Rystad Energy noted.
The much higher success rate at high-impact wells drilled this year is a good signal for global supply at a time when oil and gas prices are high, and trade has been upended following the Russian invasion of Ukraine and the subsequent sanctions and embargoes on Russian oil. OilPrice.com
