Nine Mi'kmaq communities and several environmental groups are attempting to stop oil giant Equinor’s Bay du Nord deep sea oil project off the coast of Newfoundland and Labrador. Hearings in their legal challenge at the federal court began on March 1. Protests have also been happening on the ground since last year, including at Equinor’s offices in St John’s.
Environmental legal non-profit Ecojustice filed the suit on behalf of Mi'gmawe'l Tplu'taqnn, which represents the Mi’kmaq communities, and environmental groups Equiterre and the Sierra Club Canada Foundation. Their lawyers are attempting to convince a judge that the Canadian government’s environmental review process for the massive project was severely flawed.
Ecojustice argues that the approval granted by Environment Minister Steven Guilbeault last April was both “unreasonable and unconstitutional” because its environmental assessment did not account for total greenhouse gas emissions from consumption and use of the oil produced by the project. They also charge that the assessment failed to properly consult the Mi’kmaq about the project, a violation of informed consent, and ignored concerns from Mi'gmawe'l Tplu'taqnn about oil spills, leaks, and habitat destruction from drilling and from tankers in the North Atlantic.
The project and lawsuit
Bay du Nord, a project of Norwegian oil giant Equinor and its partner, BP Canada, would be the first deep water oil project in the Canadian state context. It would be sited 500 kilometers off the shores of Newfoundland and Labrador and would involve a massive new complex of oilfields with drilling at a depth of 1200 metres. Current offshore operations in the area drill at 100 metres or less. It is estimated that Bay Du Nord has about 400 million barrels of oil. Bay du Nord was given the go ahead from the federal government last year, following an environmental review process that critics say was limited and flawed.
Opponents of the project point out that its site — off the east coast of Newfoundland and Labrador — is one of the world’s most important marine ecosystems. Humpback whales, endangered cod populations, corals, and sponges, make up some of the ocean life there. Equinor has admitted that a blowout at the wellhead would take up to 36 days to cap.
Ecojustice has argued to the court that the Impact Assessment Agency should have considered oil emissions that result from the Bay du Nord oil being burned, not only the emissions that come from its production. Submissions from the World Wildlife Fund claimed that 90% of the total emissions would come from combustion rather than production.
Ecojustice has also stressed that concerns of the Mi’kmaq were not considered in the Canadian government’s assessment. These include threats to their physical and cultural survival, which are inextricably connected with ocean life.
A dangerous precedent
The challenge to Bay du Nord could have significant ramifications, with potentially disastrous ecological outcomes beyond the current project if the company wins. Jim Keating, CEO of the Newfoundland and Labrador oil and gas corporation, better known as OilCo, boasted that if Bay du Nord goes ahead, three or four more such producing oilfields could be developed in offshore Newfoundland and Labrador over the next few years. “We've already heard about the tremendous benefit of Bay du Nord," he said. "Just imagine three or four more of those in the span of the next decade.”
The Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) recently announced that it had issued a discovery licence for Cappahayden K-67, one of two additional oil discoveries in the area near the original Bay du Nord find. It estimated the amount of recoverable oil at Cappahayden to be 385 million barrels.
When this is added to the three other major discoveries connected with the project — Mizzen at 102 million barrels, Baccalieu at 45 million, and Harpoon at 40 million — and Bay du Nord's 407 million barrels, the total estimate is a massive 979 million barrels.
The ecological impacts of developments of this magnitude could be horrendous. This is especially relevant when one considers the disastrous history of offshore drilling in Newfoundland and Labrador. The largest such disaster came as recently as 2018, when Husky Energy’s SeaRose project spilled 250,000 litres of oil into the Atlantic.
Social costs for profit (and imperialism)
Opponents of the project criticised the state’s role in funding and expanding oil and gas developments — while companies pull in massive profits. This includes millions of dollars in funding, tax breaks, and royalty adjustments as well as incentives for companies to reduce their greenhouse gas emissions. These adds social costs to the ecological ones, as funding that could be used to benefit working-class people and communities are handed out to multinational capital bent on extracting value at the expense of nature and local communities. They also point to the threats of capital strike that may have contributed to the funding decisions.
The Newfoundland and Labrador government gave CA$284.5 million to offshore oil and gas companies over the past several years. This money came from a $320 million transfer from Ottawa intended to promote the sector under the rationale of covering a drop in prices during COVID.
But these companies recorded massive profits over the past year without giving the money back. Opponents of the developments called on governments to end the fossil fuel subsidies and incentives. They point out the enormous profitability of the projects and the social needs that should be addressed with such funding.
The numbers are indeed stunning. Oil and gas company Cenovus reported 2022 revenue of $11.4 billion. Yet it received $41.5 million to extend the life of its White Rose oilfield. It had threatened to stop production. Suncor received $205 million in direct cash and had its royalty reduced by $300 million, after its also threatened to end production. Suncor reported a net profit of $9.1 billion for 2022.
Similarly, ExxonMobil, the largest shareholder of the Hibernia oilfield, reported $55.7 billion in profit in 2022. The government gave Hibernia $38 million in 2020.
Equinor’s net profit for 2022 was $28.7 billion.
Imperialist militarisation is also playing a part in the oil drive in the seas off Newfoundland and Labrador. The war in Ukraine is propelling oil prices to unimagined new heights while simultaneously giving a reason for some countries to turn away from Russian oil and gas. The Canadian oil and gas companies are taking advantage of this to move on investments, while papering it over with false claims of contributing to a transition to a net-zero future — a claim opportunistically echoed by the Canadian government.