The benefits of the Bay du Nord oil project in Newfoundland
Canada’s commitment to achieving net zero by 2030 is clear, and major projects, such as Bay du Nord in Newfoundland and Labrador, are a key piece of the puzzle.
At a time when global oil consumption continues to grow, the world needs oil extracted from the ground using methods that are as environmentally friendly as possible, while ensuring energy security if necessary or the uninterrupted availability of energy sources at an affordable price.
In its World Energy Outlook 2021, the International Energy Agency said oil demand is expected to reach 104.1 million barrels per day by 2026 and then hover around 104 million bpd until the end. 2030s. S&P Global Platts predicted that oil demand will peak at 115 million barrels per day by the late 2030s or early 2040s.
The Bay du Nord project, in the Flemish Pass basin about 500km northeast of St. John’s in the Atlantic Ocean, would earn Newfoundland and Labrador royalties of $10 billion over its life 30-year life, plus additional royalties into federal coffers.
The project, a floating production, storage and offloading (FPSO) platform, obtained federal government approval last April after a lengthy environmental assessment.
Bay du Nord will provide 16,000 well-paying jobs for skilled workers. It could provide thousands more, if local content provisions for the FPSO are included (as intended) in the benefits agreement with Equinor, the project owner.
Newfoundland and Labrador has the capacity and skilled workers to build critical components for Bay du Nord, and the track record to prove it.
For example, 70% of the surface components, which deal with everything from heat to water treatment, on the Terra Nova FPSO and more than 90% of the SeaRose FPSO, were built in the province. Connection, trellising and commissioning of the two projects were also carried out in the province.
These projects have provided well-paying union jobs for the middle class, as well as substantial economic benefits for the province. By ensuring the local content requirements for Bay du Nord, the success achieved with previous FPSOs can be repeated.
Newfoundland and Labrador’s offshore produces one of the world’s lowest carbon barrels of oil, averaging less than 19 kilograms of CO2 (carbon dioxide). In fact, carbon emissions from Canada’s offshore oil and gas industry are estimated to be 30% lower than the world average at the time of extraction.
The world may be trying to kick the fossil fuel habit, but it will need oil for decades to come. And, as many executives discussed at the recent Offshore Northern Seas (ONS) conference in Norway, profits from a project, such as Bay du Nord, can and will be reinvested in renewable energy research and development. , so we can get to net zero, faster.
Some might think that the Bay du Nord endorsement would mean that Canada is trying to go in opposite directions at the same time. But our energy industries are so integrated that national zero emissions must include gas and oil.
For example, hydroelectric turbines are typically made from stainless steel alloys that require fossil fuels to mine and develop. You might be surprised that wind power uses a lot of energy from fossil fuels – from the machines needed to mine steel and other materials for building turbines to the big trucks and trains that transport it.
Cobalt, an essential mineral for renewable batteries in electric vehicles and other electric battery storage, is mined from both the ocean floor and terrestrial ore deposits using fossil fuels to do so. The copper wiring used in electric vehicles must be mined from the earth and then processed using energy generated by fossil fuels.
So, how are you.
Government in the 21st century requires pragmatism so that helping one sector can help another help society.
It is time to ensure that a project like Bay du Nord not only moves forward, but ensures maximum benefits for all Canadians.
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