BP entering Bay du Nord project in Canada as part of its focus on future offshore growth

Oil and gas major BP is expanding its footprint offshore Canada by entering the Equinor-operated Bay du Nord project development.

BP said on Monday it will increase its acreage position offshore Eastern Canada and sell its 50 per cent non-operated interest in the Sunrise oil sands project in an agreement reached with Calgary-based Cenovus Energy.

Total consideration for the transaction includes C$600 million (about $466 million) cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years, and Cenovus’s 35 per cent position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador.

Starlee Sykes, BP senior vice president, Gulf of Mexico & Canada: “This is an important step in our plans to create a more focused, resilient and competitive business in Canada. Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador. Along with BP’s active Canadian marketing and trading business, this will position BP Canada for strong future growth.”

In Canada, BP will no longer have interests in oil sands production and will shift its focus to future potential offshore growth. BP currently holds an interest in six exploration licenses in the offshore Eastern Newfoundland Region. The oil major is planning to drill an initial exploration well called Ephesus in the Orphan Basin in 2023. The non-operated stake in the Bay du Nord project will expand BP’s position offshore Eastern Canada.

Subject to regulatory approvals, the transaction is expected to close in 2022.

The Bay du Nord project consists of several oil discoveries in the Flemish Pass Basin, some 500 km northeast of St. John’s in Newfoundland and Labrador, Canada. Despite opposition from environmental groups, the project was approved by the Canadian government in early April 2022. However, a lawsuit was filed in May, aiming to overturn this approval.

Equinor is now working to achieve the final investment decision for the project. If developed, it would be in operation for 30 years.

Also in May, Equinor started its drilling campaign off Canada, the success of which would contribute to resources at the controversial Bay du Nord project. As part of this campaign in the Flemish Pass, Equinor will drill the Cambriol Central prospect and complete the Sitka prospect, using the West Hercules semi-submersible rig. BP is Equinor’s partner in the Cappahayden and Cambriol Central discoveries.