Nfld. & Labrador

Oil projects after Bay du Nord will be even harder to approve, says environment minister

Federal Environment Minister Steven Guilbeault isn’t closing the door on future offshore oil development in Newfoundland and Labrador, but he says it will become increasingly difficult for companies to gain approval for new projects as environmental regulations ramp up.

Steven Guilbeault says environmental assessment, carbon pricing making new projects unattractive

Environment and Climate Change Minister Steven Guilbeault, seen in the House of Commons in November, says it's unlikely that more oil projects will be approved. (Patrick Doyle/The Canadian Press)

Federal Environment Minister Steven Guilbeault says it will become increasingly difficult for companies to gain approval for new oil projects as environmental regulations ramp up, but he isn't closing the door on future offshore development in Newfoundland and Labrador.

Speaking in French with Radio-Canada, Guilbeault said it's up to the Impact Assessment Agency, not the federal environment minister, to make decisions on future offshore oil projects — and that approval process has become more stringent.

"It would be very difficult for a new project to pass the bar," he said.

Earlier this month, Guibeault controversially approved the massive Bay du Nord oil project, which Norwegian oil company Equinor is proposing to build about 500 kilometres east of St. John's. In his decision, Guilbeault said he had determined the project wouldn't cause "significant adverse environmental effects" with the implementation measures.

The decision to approve the project was celebrated by Newfoundland and Labrador's government and oil industry advocates but panned by environmental advocates who have been campaigning for a halt to new fossil fuel emissions.

Equinor, which hasn't yet sanctioned Bay du Nord, says the project would generate thousands of jobs and $3.5 billion in revenue for the provincial government. 

Proponents say extraction will produce relatively low emissions compared with other oil projects, but extraction accounts for only about 15 per cent of total emissions. Recent estimates suggest Bay du Nord could produce between 300 million to one billion barrels of oil over its lifetime, which in turn would generate 400 million tonnes of carbon. If sanctioned, Bay du Nord would begin production in 2028.

New environmental assessment process more strict: Guilbeault

Guilbeault said the environmental approval process used for Bay du Nord, which was established by Stephen Harper's former Conservative government, was less rigorous than the new process put in place in 2019. He said no offshore or oilsands projects are currently undergoing environmental assessment.

With water depths of some 1,200 metres, Equinor's Bay du Nord project will use a floating production, storage and offloading vessel, better known as an FPSO, like the one illustrated here. Officials with Equinor say a final investment decision is expected within two years, with first oil before the end of the decade. (Equinor)

"There is nothing at present that prevents a company from continuing to explore and develop a project," he said. "Before such a project can be approved or not by the federal government, there are four or even five years ahead of us, and the more time passes, the more unfavourable conditions will be for oil projects."

Speaking later with CBC's Here & Now, Guilbeault pointed out that the Impact Assessment Agency is requiring Bay du Nord to reach net-zero emissions by 2050, among other conditions. He said the world needs to shift toward renewable energy but there will still be a need for fossil fuels. 

"In an ideal world we could stop using fossil fuels tomorrow morning. That would be the best-case scenario," he said.

"The reality is that we can't."

Guilbeault said he believes new offshore oil projects will become less attractive for companies as the federal government ratchets up emissions pricing, with the goal of reducing oil emissions by 31 per cent by 2030 compared with 2005 levels. 

"Clearly, we are heading towards a world where there will be less and less fossil fuels in our energy portfolio and more and more renewable energies, clean technologies such as hydrogen, wind power, offshore wind power," he said.

Read more from CBC Newfoundland and Labrador

With files from Patrick Butler and Peter Cowan

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