Page 9 - NorthAmOil Week 20

NorthAmOil COMMENTARY NorthAmOil
Canada’s offshore industry struggles to stay afloat
Much has been made of the troubles faced by Canada’s oil sands producers, but the country’s offshore industry is also struggling for survival
EASTERN CANADA
WHAT:
Canada’s offshore oil industry is battling to stay afloat.
WHY:
Offshore production is among the areas that typically suffer during oil price slumps.
WHAT NEXT:
The offshore industry is exploring options that could help prop it up but nothing significant has emerged as yet.
THE fact that Canada’s oil sands are under severe pressure owing to low crude prices has been widely reported, including in NorthAmOil. Less publicised is the impact on the country’s offshore oil industry, which, like other offshore produc- tion regions around the world, tends to be hit hard by a drop in crude prices. Unsurprisingly, the news from offshore Eastern Canada is bleak, though the industry is exploring how it can be propped up during this time.
Industry groups have called for federal assis- tance, which they suggest can come in the form of tax credits and other incentives to keep off- shore operators working. Canada’s federal gov- ernment has thus far offered programmes that appear to be more geared towards supporting the energy transition. This includes pledging CAD75 ($54mn) to help reduce greenhouse gas (GHG) emissions offshore Newfoundland and Labrador. Industry players have said that such programmes do not go far enough in addressing their immediate needs at a time of unprecedent- edly difficult market conditions.
Under pressure
Eastern Canadian waters are thought to hold considerable oil potential and in previous years – when oil prices were more favourable – there
were hopes that a new production boom was close to kicking off. In particular, these hopes centred on the deepwater Bay du Nord field, which was discovered by Norway’s Equinor in 2013 in the Flemish Pass Basin offshore New- foundland and Labrador.
The find was the largest to be made globally that year, and was initially seen as heralding a new era of Canadian offshore exploration and development. Instead, momentum in the region was derailed by the crude price collapse that began in 2014. In 2018, Equinor said it was tar- geting a final investment decision (FID) on Bay du Nord in 2020. However, the project was one of the early victims of the latest oil price collapse. On March 19, Equinor and its partner, Cal- gary-based Husky Energy, said they were delay- ing the development of Bay du Nord in light of the deteriorating market conditions.
“Equinor will now take the time to further improve the project business case and assess the duration of this deferral,” an Equinor spokes- man, Morten Eek, told Reuters at the time.
It is unsurprising that delays to the develop- ment timelines for existing discoveries spell even worse news for pending exploration. In late 2019, Nalcor Energy, a provincial Newfoundland and Labrador corporation, said the province had
Equinor is planning
to use a floating production, storage
and offloading (FPSO) unit at its Bay du Nord project, which has been delayed.
Week 20 21•May•2020 w w w . N E W S B A S E . c o m
P9