Statoil to proceed on oil sands, despite critics

Reuters Business News
Posted: Mar 18, 2011 2:44 PM
Statoil to proceed on oil sands, despite critics

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Environmental pressure at home is not dissuading Norway's Statoil ASA from moving forward with oil sands investments, the head of the company's Canadian operations said on Thursday.

Instead, Statoil is banking on its technological know-how to improve its performance and meet an ambitious goal of cutting greenhouse gas emissions by 40 percent in the next 14 years, said Lars Christian Bacher, president of Statoil Canada.

"We are doing it in a good way today, and we have plans and see opportunities for how to improve this business going forward. We want to be part of the solution," Bacher told Reuters at the company's Canadian headquarters after a presentation to media.

Statoil recently started production at its Leismer project in northeastern Alberta, a development where it pumps steam into the ground to liquefy the heavy crude in the oil sands so it can be pumped to the surface.

Currently approved for 10,000 barrels a day, Leismer is expected to produce 18,800 bpd in the next two years.

A second development, called Corner, is scheduled to start by 2015 or 2016 and produce 60,000 bpd.

Statoil, partly owned by the Norwegian government, sold 40 percent of its oil sands holdings to Thailand's PTT Exploration and Production last year for $2.3 billion, cutting its investment risk.

There are no current plans to bring in more partners or look for more acquisitions, but Bacher said nothing in the agreement would prevent either.

"We have sort of a plateful for the time being ... but we're not excluding any possibility," he said.

Canada's oil sands represent the largest crude reserves outside Saudi Arabia. That and the country's relative political stability have attracted Statoil and a host of other foreign investors.

But environmentalists are highly critical of the impact of development on air, land, water and local communities.

The Alberta government charged Statoil in February with 19 counts related to contraventions of its water license between 2008 and 2009. The company is due to make its first court appearance on April 6.

Bacher declined to comment on the specific charges pending the hearing. The company has said it is taking all necessary steps to address the issues and ensure it is in compliance.

At Statoil annual meetings in Norway, groups including Greenpeace have twice called for the company to pull out of the oil sands, resolutions that were ultimately voted down. Greenpeace is planning a similar effort again this year.

Meanwhile, the Canadian government and European Union have clashed over draft EU standards for greener fuels, raising fears that the fight could threaten a proposed multibillion-dollar free trade deal. Canada's trade minister has said he does not think the scrap will impact the talks.

Still, with their huge reserves and relative stability Canada and Brazil offer the best hope for meeting surging oil demand around the world, Bacher said.

"If we are able to deliver on our ambitions for environmental improvements, then CO2 emissions will be at a level that will be competitive with other sources of oil. Then the EU-Canada debate, and also the low-carbon fuel standards in California, will not be topics any more," he said.

(Reporting by Jeffrey Jones; editing by Rob Wilson)