NorthAmOil: Equinor receives licence for discovery off Newfoundland

The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) has issued a license to Equinor for the Cappahayden K-67 discovery in the province's waters. The board estimates that it holds about 385mn barrels of recoverable oil. It is C-NLOPB’s first such licence in two years.

The field, in the Flemish Pass region about 500 km east of St John’s, Newfoundland, was discovered in 2020. It is owned 60% by Equinor and 40% by BP. Equinor told Reuters that it is currently gauging how much of the discovery’s oil is economically and technically recoverable.

Cappahayden would use a subsea tie-back to Equinor’s high-profile Bay du Nord project, which will in turn use a floating production, storage and offloading (FPSO) unit because of Cappahayden’s 1,000-metre waters.

Bay du Nord is notably remote, located 500 km off the coast. It is in international waters and Canada would have to pay the United Nations royalties if it is developed, a first globally and proof of how attractive offshore prospects have become.

The new estimate for Cappahayden, near Equinor’s and BP’s Bay du Nord field, means that the region may contain almost 1bn barrels. An estimated 407mn is estimated for Bay du Nord itself, and three other linked projects also in the Flemish Pass – Mizzen, Baccalieu and Harpoon – total 186mn.

That is, the total estimate if oil reserves at the projects linked to Bay du Nord so far is 979mn barrels.

Equinor majority-owns Mizzen, Harpoon and Baccalieu. Equinor so far has eight ‘significant discovery licenses’ off Canada.

Bay du Nord, for which Equinor says final investment decision (FID) will be taken later this year or in 2024, would become Canada’s first deepwater offshore oil site. The water is 1,200m deep.

First oil is anticipated in the late 2020s, if a FID is issued. In April 2022, the Ottawa Ministry of Environment approved the project’s environmental assessment, with Newfoundland and Labrador having lobbied for a positive result.