By Canadian Press

N.L. Bay du Nord oil project highlights tension between economy, climate goals

Apr 6, 2022 | 9:29 AM

ST. JOHN’S, N.L. — As Newfoundland and Labrador awaits word from Ottawa on a proposed new oilfield off the coast of St. John’s, Shears Mercer says he’s not worried — he’s frustrated.

Mercer is the mayor of Brigus, a picturesque town on Newfoundland’s Conception Bay, popular among tourists and day-trippers from nearby St. John’s. The oil industry is important to his town, Mercer said. Its paycheques buy houses overlooking Brigus Bay and line the pockets of visitors spending their weekends in local bed and breakfasts.

If the federal government doesn’t approve the Bay du Nord project, “Newfoundland and Labrador is going to suffer for a long, long time,” Mercer said in a recent interview. “We’re broke. The province is broke.”

But above all, Mercer said he wishes the province could untangle itself from the fate of the oil industry and figure out how to support itself.

Led by Norwegian oil giant Equinor, the Bay du Nord project is expected to put billions of dollars into the provincial purse and spew millions of kilograms of greenhouse gases into the atmosphere each year. The project is under review by federal Environment Minister Steven Guilbeault, who must determine if it poses a significant environmental threat.

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Guilbeault has asked twice for more time to review the proposal, and his decision is now expected before April 15.

The company says Bay du Nord will be worth about $3.5 billion to the Newfoundland and Labrador government, with oil production beginning in the latter part of the decade. Bay du Nord would be Canada’s first deep water project to produce oil, with wells in about 1,200 metres of water pumping around 188,000 barrels of oil a day.

The Newfoundland and Labrador government is selling Bay du Nord as a “cleaner oil” project, saying it will emit less than eight kilograms of carbon dioxide for each barrel of oil sucked out of the ground. The global average for offshore oil is just over 16 kilograms per barrel.

But climate scientists and environmentalists say that figure doesn’t account for the CO2 released when the oil is eventually burned as fuel. Those 188,000 barrels a day will release roughly 30 million metric tons of CO2 into the atmosphere each year.

“The messages are very clear that expanding oil and gas extraction is incompatible with a 1.5-degree world,” said University of Waterloo associate professor Sarah Burch, referring to the 2015 Paris Agreement commitment to keep global temperature increases below 1.5 C. Burch was an author of the sustainable development chapter of the Intergovernmental Panel on Climate Change report on climate change mitigation, released Monday.

“If we want to avoid the worst impacts of climate change, we have to wean ourselves off of fossil fuels. And the reality is that most of the existing reserves have to stay in the ground,” Burch said in an interview Tuesday.

Chris Bataille co-authored the chapter on industry. The adjunct professor at Simon Fraser University in Burnaby, B.C., said offshore oil projects do have fewer emissions compared with the oilsands in Alberta, for example. They also tend to produce a lighter, higher-quality oil that produces fewer emissions when it’s burned, he added. 

“If you look at the project specifically by itself, there are merits,” Bataille said in an interview Tuesday about Bay du Nord. “But if you look in the larger context, if they tightened up their operations, the Saudis are just as clean.”

He said Canada should be aiming to stop producing oil and gas entirely by 2050 to meet its climate goals. The federal government — ideally alongside governments from oil-producing countries across the globe — needs to come up with a plan that clearly outlines which resources will be developed and what will stay in the ground.

Those talks need to include regional political considerations like who needs the oil revenue and who doesn’t, Bataille added, noting there may be an argument for allowing Bay du Nord to proceed in place of other projects in Alberta because Newfoundland and Labrador is the poorer province with fewer economic alternatives.

“We don’t have a national plan for what we’re doing with oil and gas,” he explained, echoing a similar comment from Burch. Bay du Nord, they said, is underscoring how badly one is needed.

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

Sarah Smellie, The Canadian Press