October 03, 2006
Great news for Alberta ... SUCK IT Avi Lewis!
From: The Globe and Mail
Statoil hunts for big oil sands deal
Norwegian energy giant says Alberta key to growth; shrugs off cost worries.
By: PATRICK BRETHOUR
CALGARY — Norway's Statoil ASA is on the hunt for an oil sands project, saying it is aiming to strike a deal worth more than a billion dollars to claim a stake in Alberta's bitumen deposits.
The state-owned company — shrugging off concerns about inflationary pressures in the sector — said its strategy centres on building an integrated project, complete with an upgrader. Executing that strategy would eventually cost upward of $10 billion, but Statoil is looking to acquire both a project and at least one partner.
In an interview with The Globe and Mail, the head of Statoil's non-conventional oil unit said he is eager to strike a deal. "We see no reason for hanging around on the street corner," said Peder Sortland, a senior vice-president at Statoil.
Statoil, which is among the top 10 publicly traded oil producers in the world, quietly opened an office in Calgary this spring. Mr. Sortland has made a half-dozen sorties to Canada this year, including his latest trip that winds up today.
The push for a deal in Canada is part of a broader Statoil strategy to boost its production from outside of Norway, and is in line with the global industry's drive to acquire stakes in non-conventional resources. There have been a flurry of oil sands deals in the past 18 months, largely involving large-scale mining efforts, and analysts have suggested the window has closed for deals to acquire that sort of project. That notion does not perturb Statoil, Mr. Sortland said.
He characterizes mining projects as the "first generation" of the oil sands; he is focusing his efforts on in situ projects — the second generation, in his view — that melt bitumen and pump it to the surface rather than excavating millions of tonnes of earth.
Steven Paget, a research analyst at FirstEnergy Capital Corp., agreed with that assessment, saying nine-tenths of Alberta's bitumen deposits have yet to be developed.
"I think there's still more to do," Mr. Paget said.
Statoil is aiming to acquire a stake — a "balanced partnership," Mr. Sortland said — in a project that has not yet entered the regulatory approval phase. Broadly speaking, the price tag for buying into an oil sands project rises as it clears successive hurdles and moves toward production. But the Statoil executive said acquiring a stake in a project at that stage would also allow his company to play a role in determining basic design, including the extraction technologies to be used. He is not ruling out a multiple partnership, but it is clear that Statoil prefers a two-way split. "A partnership of two tends to be balanced," Mr. Sortland said.
Statoil has extensive experience with Venezuela's heavy oil deposits, which pose many of the same production challenges as Alberta's oil sands — particularly in situ projects. At the turn of the decade, Venezuela's Orinoco belt was seen as Alberta's rival for investment capital in non-conventional projects.
But the election of Hugo Chavez in that country, and a subsequent strike and abortive coup, have resulted in increasing pressure against Western oil companies operating in the region, including Statoil.
The Venezuela government is reopening operating agreements to give its state-owned firm, Petroleos de Venezuela SA, a majority stake in upstream operations. The Chavez government has also raised royalty rates, and mused about bringing criminal charges against former officials who crafted the 1990s-era policies that fostered private sector investment.
Last week, Statoil and other Western firms were shut out of the latest preliminary contract round for the Orinoco area. Instead, the government awarded the contracts for estimating reserves to a collection of state oil companies. Mr. Sortland said those contracts do not necessarily mean the same parties will be awarded rights in subsequent rounds.
He said it is not the case that Statoil is fleeing Venezuela for Alberta, but that his company is simply prepared to broaden its portfolio. "We're ready for Canada now."
Statoil hunts for big oil sands deal
Norwegian energy giant says Alberta key to growth; shrugs off cost worries.
By: PATRICK BRETHOUR
CALGARY — Norway's Statoil ASA is on the hunt for an oil sands project, saying it is aiming to strike a deal worth more than a billion dollars to claim a stake in Alberta's bitumen deposits.
The state-owned company — shrugging off concerns about inflationary pressures in the sector — said its strategy centres on building an integrated project, complete with an upgrader. Executing that strategy would eventually cost upward of $10 billion, but Statoil is looking to acquire both a project and at least one partner.
In an interview with The Globe and Mail, the head of Statoil's non-conventional oil unit said he is eager to strike a deal. "We see no reason for hanging around on the street corner," said Peder Sortland, a senior vice-president at Statoil.
Statoil, which is among the top 10 publicly traded oil producers in the world, quietly opened an office in Calgary this spring. Mr. Sortland has made a half-dozen sorties to Canada this year, including his latest trip that winds up today.
The push for a deal in Canada is part of a broader Statoil strategy to boost its production from outside of Norway, and is in line with the global industry's drive to acquire stakes in non-conventional resources. There have been a flurry of oil sands deals in the past 18 months, largely involving large-scale mining efforts, and analysts have suggested the window has closed for deals to acquire that sort of project. That notion does not perturb Statoil, Mr. Sortland said.
He characterizes mining projects as the "first generation" of the oil sands; he is focusing his efforts on in situ projects — the second generation, in his view — that melt bitumen and pump it to the surface rather than excavating millions of tonnes of earth.
Steven Paget, a research analyst at FirstEnergy Capital Corp., agreed with that assessment, saying nine-tenths of Alberta's bitumen deposits have yet to be developed.
"I think there's still more to do," Mr. Paget said.
Statoil is aiming to acquire a stake — a "balanced partnership," Mr. Sortland said — in a project that has not yet entered the regulatory approval phase. Broadly speaking, the price tag for buying into an oil sands project rises as it clears successive hurdles and moves toward production. But the Statoil executive said acquiring a stake in a project at that stage would also allow his company to play a role in determining basic design, including the extraction technologies to be used. He is not ruling out a multiple partnership, but it is clear that Statoil prefers a two-way split. "A partnership of two tends to be balanced," Mr. Sortland said.
Statoil has extensive experience with Venezuela's heavy oil deposits, which pose many of the same production challenges as Alberta's oil sands — particularly in situ projects. At the turn of the decade, Venezuela's Orinoco belt was seen as Alberta's rival for investment capital in non-conventional projects.
But the election of Hugo Chavez in that country, and a subsequent strike and abortive coup, have resulted in increasing pressure against Western oil companies operating in the region, including Statoil.
The Venezuela government is reopening operating agreements to give its state-owned firm, Petroleos de Venezuela SA, a majority stake in upstream operations. The Chavez government has also raised royalty rates, and mused about bringing criminal charges against former officials who crafted the 1990s-era policies that fostered private sector investment.
Last week, Statoil and other Western firms were shut out of the latest preliminary contract round for the Orinoco area. Instead, the government awarded the contracts for estimating reserves to a collection of state oil companies. Mr. Sortland said those contracts do not necessarily mean the same parties will be awarded rights in subsequent rounds.
He said it is not the case that Statoil is fleeing Venezuela for Alberta, but that his company is simply prepared to broaden its portfolio. "We're ready for Canada now."
