Statoil ASA has decided to postpone for a minimum of 3 years the Corner development at the Kai Kos Dehseh (KKD) oil sands project in northern Alberta (OGJ Online, Apr. 8, 2014). A staff reduction of about 70 employees is expected.
“Costs for labor and materials have continued to rise in recent years and are working against the economics of new projects,” said Stale Tungesvik, country manager for Statoil Canada. “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 added, “The decision is in line with Statoil’s strategy to prioritize capital to the most competitive projects in its comprehensive global portfolio and is consistent with our stepwise approach to the oil sands.”
Statoil said the decision has no implications for the company’s Leismer steam-assisted gravity drainage project, which is in production (OGJ Online, Jan. 27, 2011). Well Pad 5 came on stream there in August and work is under way for further infill drilling.
Statoil entered KKD through the acquisition of North American Oil Sands Corp. in 2007. Later, Thailand’s PTT Exploration & Production (PTTEP) farmed into a 40% interest in KKD for $2.2 billion. Earlier this year, Statoil divided its oil sands leases with PTTEP, with Statoil having 100% of Leismer and Corner and PTTEP having 100% of Thornbury, Hangingstone, and South Leismer (OGJ Online, May 29, 2014).