Statoil may choose between Alberta, N.L. oil projects

Statoil might have to choose between developing properties in the Alberta oilsands and an offshore find off Newfoundland because of rising costs in the industry.

As oil development costs rise, Norwegian parent may not have capital for both

Statoil's Leismer project began producing in 2011 and the Norwegian company has plans to expand it, but may have to prioritize Canadian projects. (YouTube)

Statoil might have to choose between developing properties in the Alberta oilsands and an offshore find off Newfoundland because of rising costs in the industry.

Stale Tungesvik, president of Statoil Canada, says its Norwegian parent company will decide in February which of the Canadian projects will go ahead.

"We invest more than ever, but we see that it's much more costly to develop one barrel of oil today than it was earlier," Tungesvik said in a briefing with reporters Monday.

He said Statoil has to prioritize which projects to develop, because the oil available is more difficult to extract.

Crude oil prices are sitting at about $100 US a barrel, but that’s the equivalent to $30 several years ago, he said.

"Today, $100 a barrel is the same as $30," he said, adding “the easy barrels” are gone.

Tungesvik said he would prefer to go ahead with projects in both Alberta’s oilsands and off the coast of Newfoundland and Labrador, but that may not happen.

"When that will hit us some place in Canada, I'm not sure yet. I'm still fighting for doing both, so that's my kind of position.But there is the bigger picture. There has to be some changes," he said.

 In August, Statoil and partner Husky Energy Inc. announced a huge offshore oil discovery about 500 kilometres northeast of St. John's.

It's the company's third find in the Flemish Pass Basin in the North Atlantic and promises between 300 million and 600 million barrels of recoverable oil.

It also has plans to develop the Corner oilsands in Alberta and is mulling an expansion to its Leismer property, which began production in January 2011. Both Corner and Leismer have regulatory approval to produce up to 40,000 barrels per day.

With files from the Canadian Press

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