Federal environment minister approves Bay du Nord oil project off Newfoundland

Federal Environment Minister Steven Guilbeault has approved a controversial new oil project off the coast of Newfoundland with what Ottawa is calling the strongest emissions rules ever imposed.

His decision released Wednesday by the Impact Assessment Agency of Canada says Equinor’s Bay du Nord project can proceed as long it achieves net-zero greenhouse gas emissions by 2050.

That means the company will have to offset or capture any emissions the project produces by 2050. The announcement says this is the first time the federal government has imposed such a condition on an energy project.

“At five times less emissions-intensive than the average Canadian oil and gas project, and 10 times less than the average project in the oilsands, the Bay du Nord Development Project is an example of how Canada can chart a path forward on producing energy at the lowest possible emissions intensity while looking to a net-zero future,” the news release says.

Until 2050, Equinor is also legally required to consider and incorporate the best available options for reducing emissions. The government signalled Wednesday that these conditions, including net-zero by 2050, will become the legal standard for any future oil and gas project seeking federal approval.

Guilbeault told a House of Commons committee that there will still be oil and gas produced in 2050, it just will have to be produced without emissions.

Bay du Nord is expected to produce around 300 million barrels of oil over its lifetime, though industry insiders in Newfoundland and Labrador say that figure could be more than 800 million barrels. Equinor has said Bay du Nord would likely start pumping in the latter half of the decade, and continue producing for 20 to 30 years. Production is expected to peak at around 200,000 barrels a day.

“Equinor is pleased with the strong support that the Bay du Nord project has received from stakeholders across the province and Canada,” company spokeswoman Alex Collins said in an emailed statement after the decision was published. She said the project “has the potential to produce the lowest carbon oil in the country.”

Collins noted in an earlier statement the company and its partners haven’t yet sanctioned the development. That decision, she said, is expected “in the next couple years.” Equinor has said the project will provide about $3.5 billion in total revenues for the cash-strapped government of Newfoundland and Labrador.

Premier Andrew Furey was beaming at an evening news conference, saying the project will be an economic driver for his province. He said greenhouse gas emissions from the project will be among the lowest in the world for an oil project and it will help meet global demand for “low-carbon, ethical oil.”

“This will be a giant step forward in our economic recovery,” Furey added.

In his decision, Guilbeault said the project “is not likely to cause significant adverse environmental effects” as defined in the Canadian Environmental Assessment Act. But climate scientists and environmentalists have opposed the project, saying it would undermine Canada’s goals for reducing greenhouse gas emissions.

“(The) decision represents a triumph of the kind of politics that will only deepen the climate crisis and global addiction to planet-wrecking fossil fuels,” Keith Stewart, senior energy strategist at Greenpeace Canada, said in an emailed statement. “This decision isn’t just a climate failure, it is a failure to imagine and invest in a sustainable energy future for the Atlantic region.”

Caroline Brouillette, national policy manager at Climate Action Network Canada, said progress on climate over the last few years is being undermined by this approval.

“Frankly I think this is heartbreaking,” she said.

Brouillette said it’s coming just two days after a United Nations climate report that was clear there is no room for more oil and gas production if the world is to avoid the worst of the climate crisis.

“It’s so clearly not compatible with climate safety,” she said.

This report by The Canadian Press was first published April 6, 2022.

— With files from Mia Rabson in Ottawa