Oil and gas supermajor BP has acquired a stake in Equinor’s controversial Bay du Nord project and sold its 50 percent non-operated interest in the Sunrise oil sands project in an agreement reached with Calgary-based Cenovus Energy.
Total consideration for the transaction includes around $465 million in cash, a contingent payment with a maximum aggregate value of $465 million expiring after two years, and Cenovus’s 35 percent position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador.
Starlee Sykes, BP senior vice president for Gulf of Mexico & Canada, said: “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. 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. The company currently holds an interest in six exploration licenses in the offshore Eastern Newfoundland Region while the non-operated stake in the Bay du Nord project will expand BP’s position offshore Eastern Canada.
According to BP, the transaction is expected to close in 2022, subject to regulatory approvals.
As for Bay du Nord, the project consists of several oil discoveries in the Flemish Pass Basin, some 310 miles 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. Namely, the Impact Assessment Agency of Canada determined that the proposed Bay du Nord Development Project was “not likely to cause significant adverse environmental effects when mitigation measures are taken into account.”
Environmental groups are challenging the Minister of Environment and Climate Change’s decision to approve the $12 billion Bay du Nord oil and gas project. Ecojustice, on behalf of Équiterre and Sierra Club Canada Foundation, filed the lawsuit against minister Steven Guilbeault in Federal Court on May 6. In the meantime Equinor is now working to achieve the final investment decision for the project. If developed, it would be in operation for 30 years.
The operator of the project, Equinor, has already started its drilling campaign off Canada which could contribute to resources at the Bay du Nord project. The campaign includes the drilling and completion of the Cambriol Central prospect and the Sitka prospect, adjacent to Equinor’s Cappahayden and Cambriol Central discoveries – where BP is the partner.
For more information visit www.cenovus.com