Statoil gets out of oilsands, looks to Nfld’s offshore

A week after Statoil sold off all its assets in Alberta’s oilsands, it looked eastward

CALGARY — A week after Statoil sold off all its assets in Alberta’s oilsands, it looked eastward, to Newfoundland’s offshore.

There, the Norwegian energy giant saw opportunity in the North Atlantic, announcing this week plans to drill two offshore exploratory wells this summer in the Flemish Pass Basin, roughly 500 kilometres east of St. John’s, N.L.

It is a gamble — pulling out of one area with vast pools of proven oil reserves, while simultaneously launching a drilling program in the open ocean, where discovering commercially viable reservoirs is not certain.

But analysts say there is logic behind Statoil’s decision. While companies shifting their investments to offshore exploration are taking on more risk, there is upside.

The crude found beneath the ocean floor is generally lighter and more valuable than oilsands bitumen. Offshore oil can also be shipped anywhere in the world by tanker, whereas Alberta’s landlocked oil requires pipelines to access markets abroad — pipelines that still need to be built.

“You fill up a tanker from your platform and you send it to whoever is willing to pay the best price for it,” said Kevin Birn, senior director for IHS Markit.

“Whereas in Western Canada, the history has been you put it in a pipeline and it goes south. Those prices are subject to transportation costs down to the Gulf Coast and you have a lower price as a result.”

Statoil Canada president Paul Fulton said the decision to invest in the offshore is in line with the parent company’s strategy of funding “safe, high-volume projects (with) low-carbon” emissions.

He said Statoil’s exit from the oilsands was a “commercial” decision that had nothing to do with criticism from environmentalists in Norway, as has been suggested by some.

“The upstream emissions from potential projects out there (on the East Coast) are very good, so we see that as a good fit and it fits into the competitive portfolio of Statoil globally,” Fulton.

Analysts, however, say criticism in Norway had to have been a factor in the sale of oilsands assets.

“Statoil in particular was facing some political pushback from Norway as a state-owned company operating in the oilsands,” said Nathan Nemeth, an upstream research associate at Wood Mackenzie.

Nemeth said oilsands and offshore projects both face long planning phases, high upfront costs and complicated construction issues, but the payback of capital for offshore comes much more quickly because of flush production from freshly drilled wells. Oilsands production, on the other hand, is steady and predictable for decades.

Statoil’s offshore investment comes as Calgary-based Husky Energy (TSX:HSE) confirmed earlier this week it had shipped its first oil to an unnamed customer in China from the White Rose project, about 350 km east of Newfoundland.

“The pieces of the puzzle fell together for the sale,” company spokesman Mel Duvall said in an email. “Favourable freight rates made it economically attractive.”

Statoil is a major player in Newfoundland’s offshore oil sector with a nine per cent stake in the Hebron project, a five per cent share in Hibernia and a 15 per cent stake in Terra Nova.

Just Posted

Man killed in collision near Markerville

A 55-year-old man is dead after a collision near Markerville Friday night.… Continue reading

La Loche school shooter carried out plan with ‘stark efficiency:’ Crown

MEADOW LAKE, Sask. — A Saskatchewan judge is weighing whether a teenager… Continue reading

Castor triple-murder trial resumes on Monday

Trial was delayed two weeks for two men accused of killing Castor-area family

Red Deer Royals are sending 1,000 letters to Trudeau

The band must pay for the last 20 per cent of fieldhouse costs

Central Alberta real estate market reflects Alberta’s slow recovery

Real estate markets will bounce back but incoming mortgage changes don’t help, say realtor groups

WATCH: A magical Harry Potter weekend in downtown Red Deer

Wizards, witches and muggles are flocking to downtown Red Deer to celebrate… Continue reading

B.C. ice rink where 3 people died remains closed due to safety concerns

FERNIE, B.C. — Residents who were forced from their homes because of… Continue reading

Trudeau condemns appointment of Mugabe as WHO ambassador

EDMONTON — Prime Minister Justin Trudeau called the appointment of Zimbabwe President… Continue reading

Friday Oct. 21: Winning Lotto Numbers

Friday, October 20, 2017 LOTTO MAX Winning Numbers 1 4 12 27… Continue reading

New northbound Hwy 2 lanes at Gaetz Avenue to open this Sunday

Drivers heading north through Red Deer on Hwy 2 will have a… Continue reading

Sockey Night at Saturday’s Rebels game

United Way Central Alberta is determined to provide warm feet for all… Continue reading

Canadian planet hunter seeking alien life

‘The shifting line of what is crazy’ says Toronto-born astrophysicist

All three victims identified in Fernie arena ammonia leak

Wayne Hornquist and Lloyd Smith were from Fernie and Jason Podloski from Turner Valley, Alta

4 B.C. prisons install body scanners to combat drug smuggling

The scanners are aimed to combat the smuggling of contraband including weapons and drugs

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month