Surging oil prices and Europe’s mounting energy demand are encouraging the move to greener offshore productionAn offshore gas rig. Picture: 123RF/IGOR SHKVARA
They are also designed to pump oil for decades, a counterintuitive move that could increase financial risk for the projects as the world pushes for net-zero greenhouse gas emissions by 2050 to slow climate change. Offshore projects generate fewer emissions per barrel than other forms of oil production due to their huge scale, but they would still increase global air pollution. Environmental groups warn that spills far offshore are hard to clean up.
“Those facilities that are producing oil and gas with zero or near-zero production emissions are going to be the last ones standing,” Wilkinson said. Bay du Nord, which could first produce oil by decade’s end, might be the first of several huge Newfoundland offshore projects. OilCo, a Newfoundland government corporation, has identified 20 prospective projects with 1-billion barrels in reserves each, CEO Jim Keating said.
Despite the high upfront construction cost, projects like Bay du Nord interest companies, because the 500-million barrels of recoverable reserves would be enough to last 20 years. Equinor declined to provide a production cost estimate, though it said that major projects coming by the end of 2030 will, on average, break even with oil below $35 a barrel.
The profitability of offshore projects depends on future oil demand, and forecasts vary widely. The International Energy Agency in 2021 advised against new fossil-fuel projects for the world to reach net-zero emissions by 2050. If global transportation is fully supplied by electric vehicles and renewable fuels by mid-century, oil demand would drop 75% to about 25-million barrels per day, IEA said.
After a spill, Equinor would be unlikely to contain oil due to intense wave action and instead use chemicals to disperse it. Such an approach may harm northern bottlenose whales and deep sea corals, she said. “Because it’s so far offshore, it’s hard for people to imagine what the environment is like. But it’s pretty precious and fragile,” Fitzgerald said.
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