Canada in deepwater: behind the Trudeau government’s approval of the Bay du Nord offshore oil development

Canada’s Environment Minister Steven Guilbeault has approved a major deepwater production project. 

Guilbeault, who has a long history of environmental activism, had twice put off either approving or rejecting the Bay du Nord project off the coast of Newfoundland and Labrador. In a decision released Wednesday, April 6, he concluded Bay du Nord is “not likely to cause significant adverse environmental effects,” and will, therefore, move ahead.

“The project has undergone a robust federal environmental assessment and scrutiny through every part of Canada’s legislated review process. As the demand for oil and gas falls throughout the coming decades, it will be more important than ever that Canadian projects are running at the best-in-class, low-emissions performance to play a competitive role,” Guilbeault said in a media release on the announcement.

The province describes it as the first deepwater project of its kind in Newfoundland’s offshore.

The Bay du Nord project proposes to extract up to one billion barrels of crude oil from the seabed about 500 kilometres northeast of St. John’s. There, in depths ranging from 300 metres to 1,200 metres, owners Equinor, of Norway, and Husky Energy (now owned by Cenovus), of Canada, hope to operate for up to 30 years.

The federal decision also said that the owners would be expected to comply with 137 conditions during all operations.

Several environmental and Indigenous groups wanted the project rejected. In mid-March, Amy Norman of Labrador Land Protectors told a media briefing hosted by Sierra Club, that approving Bay du Nord would put the country on the wrong trajectory.

“The world is changing and climate change is already here … Already we’re seeing impacts here in Labrador and in Newfoundland: unreliable sea ice, warming temperatures, more frequent storms, unpredictable weather,” Norman said. “It’s already impacting our ways of life and it’s already changing how we live on these lands.”

But industry advocates, along with Newfoundland Premier Andrew Furey, urged the government to give the project the green light, calling it essential to the province’s economy. “​​We remain optimistic that the Government of Canada recognizes the value of the Bay du Nord project. As premier, I have been in contact with the prime minister and he understands the importance of this project to our province,” Furey said in a press release shortly after the latest decision delay.

The attention on Canadian oil and gas has heightened over the last month as Russia’s attack on Ukraine has left much of Europe scrambling for energy sources. Several politicians have used the opportunity to promote homegrown resources as the answer and Bay du Nord, like Alberta’s oilsands projects, has been a focus of the promotion. Furey has, on multiple occasions, stated that the province’s oil supply can play a role in replacing Russian imports.

We have the product the world needs now more than ever before. Bay du Nord is a valuable project that will play a key role in helping our province meet global demand for responsible oil while reaching Net Zero by 2050.

We continue to work with Equinor and our federal partners. pic.twitter.com/m47SZNUIJu

— Andrew Furey (@FureyAndrew) March 4, 2022

When asked about Bay du Nord by reporters at a Toronto event in early March, Guilbeault said that, when considering a project, the environmental impact, social implications and economic issues are considered. “What’s happening internationally, we’re not impervious to it, and it would be factored into the analysis,” he said. 

Guilbeault pointed out that even if the project is approved, it won’t produce oil until 2028. “So again, you know, in terms of the short term energy needs of Europe, that’s not a solution.”

Inside the Trudeau government’s decision to weaken oversight of Newfoundland oil and gas exploration

When asked how new oil and gas development projects, including Bay du Nord, line up with the government’s emissions reduction plan — which was released in late March, though a cap on oil and gas development is still in the works — Guilbeault responded that it’s not about a blanket yes or no to development.

“I think it’s a mistake to look at one project and use that project to define the entire policy of the government because it doesn’t boil down to one project. Would the project fit under the oil and gas cap? Would it fit under the emissions reduction plan? That’s how I would suggest people look at it.”

Furey sees Bay du Nord as a critical part of the province’s path to net-zero, calling it “the most carbon efficient development of its scale.” Emissions from the project have been estimated by Equinor at eight kilograms per barrel, which is about half of the international average — though neither of those figures factor in emissions from burning that oil, as many critics have pointed out.

Will Bay du Nord cause significant environmental effects?

Late in the day on March 4, Guilbeault extended the deadline for his decision on Bay du Nord by an additional 40 days to determine the potential environmental impacts of the project, according to the extension announcement. At the time, the government also said that the decision would be informed by the Impact Assessment Agency’s environmental assessment report of the project from August 2021. The agency had concluded that, with mitigation measures in place, Bay du Nord is unlikely to cause significant adverse environmental effects.

“The federal government concurs with the recommendation of the Impact Assessment Agency of Canada,” Guilbeault said in the media release announcing his decision. “As a result, the Bay du Nord Development Project may proceed, subject to some of the strongest environmental conditions ever, including the historic requirement for an oil and gas project to reach net-zero emissions by 2050.”

Prior to its approval, Gretchen Fitzgerald, national programs director with Sierra Club Canada, noted that there are a number of red flags she sees with the project. For example, she said that the production estimates have grown from 300,000 barrels to one billion since the project was first pitched and that there are also questions about whether the government’s decision is based on sound scientific advice.

The deep-sea drilling project falls east of Newfoundland and Labrador where four offshore oil and gas projects currently operate. Bay du Nord has been the subject of controversy, as has a 2020 regional assessment on offshore exploration drilling in the area: that led to the exclusion of exploration projects — during which companies drill wells to determine the feasibility and value of long-term projects — in the area from requiring the sort of seal of approval Bay du Nord is waiting on from Guilbeault. 

Both the regional assessment and Bay du Nord have been mired in concerns around whether science — specifically scientific evidence from Fisheries and Oceans Canada — is being outflanked by the province’s push for oil and gas.

In late January, CBC reported on a leaked letter from the union representing Fisheries and Oceans scientists in Newfoundland and Labrador, which outlined its members’ concerns about how politicians and oil and gas industry lobbyists were allegedly interfering with the advice from scientists and scientific practices at the department. It noted several instances of interference, including in a report on mitigating the impacts of oil and gas exploration on corals and sponges. 

Also in January, a critical report from Fisheries and Oceans Canada was released publicly a full two years after it was written. The report is a review of Equinor’s draft environmental impact statement for Bay du Nord, and states that Fisheries Department scientists found several cases where information was mischaracterized and relevant research was left out. Baseline information, it said, was incomplete and outdated for nearly all chapters reviewed.

It continued that this led to an unreliable assessment and “inappropriate conclusions.”

“In its current form, and until the problems identified in this report are addressed, the [environmental impact statement] is not considered a reliable source of information for decision-making processes,” the report stated.

Equinor told The Narwhal in an email that as part of the project’s technical review process, the company had thoroughly responded to questions from federal departments and agencies. It also said that it had revised its environmental impact statement in response to feedback. 

Jaclyn Sauvé, spokesperson for the Impact Assessment Agency, also noted in an email to The Narwhal, prior to the decision, that the Fisheries and Oceans report reflected the findings of department scientists in 2019 and did shape the department’s advice to the agency. While the report itself was not submitted to the agency or Equinor, Sauvé said that the information was shared through workshops, conversations, discussions and in-depth technical reviews. 

Equinor submitted its final environmental impact statement in July 2020. According to the Impact Assessment Agency, the final statement included an additional round of reviews by federal departments, the Canada-Newfoundland and Labrador Offshore Petroleum Board.

The agency also said that the final statement was informed by input from Indigenous groups and the public. But notes from a meeting between the agency and various Indigenous groups in August 2020, after the final statement was submitted, includes a participant question on why Indigenous groups were consulted after Equinor had already received significant input from the government. The questioner stated that this made the assessment process for Bay du Nord different from other similar projects. “This was a missed opportunity especially given the agency’s commitment to early engagement of Indigenous groups,” the question reads.

The agency responded that the technical review of the draft by federal authorities meant that Equinor developed a final statement that was “sufficient for public and Indigenous comment.” It continued that additional requirements could still be given to Equinor following any comments provided by Indigenous groups and the public, with the final statement not yet approved.

At that August meeting, the agency also suggested that a tight timeline was part of the reason the assessment process was different than in the past, telling the questioner that it “committed to a shorter than usual assessment period” of 300 days rather than 365 days, which would kick off once the final environmental impact statement was accepted.

That confirmation that its final statement had been accepted came in late 2020, Equinor spokesperson Alex Collins wrote in an email response to The Narwhal. That was followed by the Impact Assessment Agency’s environmental assessment report for Bay du Nord in August 2021, which laid out the process so far in reviewing the project, including concerns brought up by Indigenous groups, environmental organizations and federal agencies, such as Fisheries and Oceans.

Scientists’ concerns over Bay du Nord remain unaddressed 

The release of the 2019 Fisheries and Oceans report in early 2022, shortly before Guilbeault was due to make a decision, seemingly stirred up tension.

Collins said Equinor was disappointed to see the report published without the full context of the review process, noting that between the time the report was finished and when it was published, Equinor fully responded to all questions and information requests from the government in order to complete its final environmental impact statement.

Soon after the report was released, Fisheries and Oceans Canada regional director for Newfoundland and Labrador, Tony Blanchard wrote to the Impact Assessment Agency to clarify the statements in the report, noting that it was published “after some internal delays.” 

“While the report was published in January 2022, it reflects information available in 2019 and does not provide comments on subsequent information provided during the environmental assessment process,” he wrote on Feb. 2.

He continued that the department’s outstanding concerns have been addressed.

However, the environmental organization Stand.earth commissioned environmental lawyer Shelley Kath to dig into the Fisheries and Oceans report, comparing the recommendations in it to Equinor’s final environmental impact statement. In the vast majority of cases, she found that concerns raised by scientists were not addressed.

An obvious one, she points out, is that the largest oil spill in Newfoundland and Labrador’s history wasn’t mentioned in a discussion of historical spills: a 250,000-litre spill in 2018 from the SeaRose Floating, Production, Storage and Offloading vessel. That’s the same type of vessel proposed for use on Bay du Nord, and it was operated by Husky Energy (now Cenovus) — Equinor’s partner on the Bay du Nord project. Despite this omission being raised by Fisheries scientists, the SeaRose spill is not mentioned in Equinor’s final statement.

“If we’re not even learning from massive mistakes like that, and information of what those impacts were at the time is not incorporated going forward, what does that say?” Fitzgerald, of Sierra Club, said. “It’s actually actively ignored, what does that say?”

The final statement also failed to address a concern brought forward by Fisheries scientists on the lack of modeling around the release of hydrocarbon gas, such as methane, in the case of a spill. 

“This huge lacuna was not rectified in the final [environmental impact statement] and this means that Equinor has ignored a key lesson of Deepwater Horizon,” Kath wrote in her analysis, referring to the 2010 disaster in the Gulf of Mexico. The explosion of that BP rig illustrated that, along with oil, underwater blowouts release methane that reduces oxygen levels in the water — exacerbating a process already underway due to climate change.

Kath said that it was hard for her to discern whether the final environmental impact statement was amended to follow advice from the Fisheries report, since the draft statement was never publicly released. She could only compare the Fisheries and Oceans report with Equinor’s final environmental impact statement, and note what was left out.

But from that exercise, she said, “I didn’t notice any places where the recommendations were followed. I did notice, sadly, one instance where a statement actually was changed … but changed for the worse.”

In a section involving ship strikes with marine mammals, the Fisheries report quoted the draft environmental impact statement as suggesting that given the low speed of vessels, “the potential for ship strikes is considered low.” Fisheries scientists responded that it had received several reports of vessels striking whales in transit to or from offshore facilities, as well as reports of a number of dead whales sighted with no evidence of fishing net entanglement, suggesting that being struck was likely also their cause of death. The fisheries report suggested mitigation measures such as onboard observers and communication between vessels about any marine mammal sightings.

Kath found that Equinor’s statement on vessel strikes in the final mostly reads the same, word for word as what Fisheries objected to — up until the end, when it’s amended from the risk being “considered low” to say “the potential for ship strikes is considered very low and not considered an effect.”

“Whether it’s DFO upper management or the Impact Assessment Agency of Canada, someone needs to show their work,” Kath told The Narwhal about Equinor’s impact statement passing an environmental assessment. “They need to show us how these many, many, many issues have been addressed, if they indeed have been addressed.”

When asked for a paper trail or any evidence of how various concerns were addressed, Fisheries and Oceans Canada declined to comment and referred all questions on Bay du Nord to the Impact Assessment Agency. 

For its part, the Impact Assessment Agency covers some technical recommendations under the project conditions it sets out in its environmental assessment, rather than requiring changes to Equinor’s environmental impact statement.

The agency stated in its assessment that Equinor had decided there was no need for dedicated onboard observers, a mitigation measure suggested by Fisheries scientists as well as Miawpukek First Nation in southern Newfoundland. Instead, vessels would use dedicated shipping lanes where available, and slow down if a sea turtle or marine mammal was detected. This was enough mitigation, the agency wrote, to ensure that Bay du Nord was unlikely to cause significant adverse effects to marine mammals or sea turtles. Its proposed conditions mirror the mitigations proposed by Equinor.

A common thread throughout the agency’s report is that, while concerns were raised by various groups, there is limited information available. A lack of baseline information was brought up both by Fisheries and Oceans scientists and Indigenous groups that participated in the project review. 

It’s a major problem for Newfoundland’s offshore industry in general, said Susanna Fuller, vice-president of operations and projects for marine conservation organization Oceans North. She told The Narwhal that a 2016 literature review examining impacts of oil and gas operations on marine environments didn’t even mention the offshore industry in Newfoundland and Labrador or Nova Scotia, simply because there is virtually no peer-reviewed literature available. 

“There are two papers that were done a long time ago by a scientist who now works at (the provincial offshore petroleum board), but there is no ongoing look at actual impacts,” Fuller said.

And even the scarce scientific evidence available isn’t necessarily being listened to, said Fitzgerald, who grew up in Newfoundland and has a background in marine biology. “There has been a long history here of both the community’s concerns being ignored, fishery concerns being ignored and of course, impact on whales and other species being downplayed or ignored,” she said. 

Economic stability and environmental sustainability can exist in tandem, Fuller said, through following good scientific advice rather than prioritizing industry. It’s a lesson she said should have been learned, considering that Newfoundland’s cod industry collapsed as a result of overfishing.

“I keep thinking it’s just the colony of unrequited dreams,” she said. “You see these things happen again every few decades in Newfoundland, where there’s so much fear of losing economic benefit, that they lose the full economic benefits: mining went that way, cod went that way.”

— With files from Emma McIntosh

Updated on Apr. 6 at 7:14 p.m. ET: This story has been updated to clarify that Husky Energy was acquired by Cenovus Energy, meaning Cenovus is now Equinor’s partner in the Bay du Nord project.