Statoil puts Corner oil sands project on hold, cuts 70 jobs

Norweigan oil company blames concerns about rising costs.

September 26, 2014   by The Canadian Press

CALGARY — Norwegian oil company Statoil has put its Corner oil sands project on hold for at least three years due to concerns about rising costs.

The company said it will cut about 70 jobs as a result of the decision.

In a statement on its website, Statoil said improvements have been made to the project, but it has decided not to go any further at this stage.

“Costs for labour and materials have continued to rise in recent years and are working against the economics of new projects,” said Statoil Canada country manager Stale Tungesvik.

“Market access issues also play a role – including limited pipeline access which weighs on prices for Alberta oil, squeezing margins and making it difficult for sustainable financial returns.

Tungesvik said the decision was part of Statoil’s strategy to prioritize its most competitive projects around the world.

The company said the decision has no implications for its Leismer oil sands project, which is in production. The steam-assisted gravity drainage project has an operating capacity of 20,000 barrels per day.

Last year, Statoil, together with its partner Husky Energy, announced a major oil discovery off the coast of Newfoundland.

The reservoir of light crude, believed to hold between 300 million and 600 million barrels of recoverable oil, is in an area known as the Bay du Nord prospect, about 500 kilometres northeast of St. John’s, NL.

Statoil’s decision to hit the pause button on its Corner project on follows a move earlier this year by Total and Suncor Energy Inc. to put their $11-billion Joslyn North oil sands project on hold indefinitely.

A report by the Canadian Association of Petroleum Producers in June predicted oil sands production would grow at a slower pace than previously expected due to rising costs.

The association forecasted oilsands production hitting 4.8 million barrels a day by 2030 compared with last year’s output of 1.9 million barrels.

However, that figure is down from the 5.2 million barrels of daily oilsands output CAPP predicted last year.

© 2014 The Canadian Press

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