Norway’s Statoil defends its turf in Alberta’s oilsands

Norway’s Statoil ASA (STO-N, STL-O) has long been considered one of the world’s leading offshore operators but lately it has turned its attention to Canada’s oilsands.

The Company landed in Alberta in a big way back in 2007 via its $2 billion acquisition of the privately held North American Oil Sands Corp.

The acquisition paved the way for Statoil’s to become a considerable player in the region as it now controls 1,129 sq. km of leases with production coming from the recently commissioned Leismer facility at a pace of 3,500 barrel per day.

But those barrels haven’t come without obstacles.

Being based in Norway, and having the Norwegian state as its largest shareholder has attracted the ire of Norwegian environmental groups for its participation in the oilsands.

In fact the country’s coalition government is in dispute over the assets as one of its member parties, the Socialist Left (SV) wants Statoil to pull out of the Alberta altogether.

That sentiment is not shared by the coalitions larger parties, such as the Center Party or the dominant Labour Party, as neither wants to get into the business of telling Statoil management how to run the company.

Still, pressure in Norway persists, and has seemingly intensified with the recent announcement of a large oil discovery in the North Sea by Statoil.

On Aug. 24 the company announced the third discovery of the year at its Gullfaks licence and the prospectiveness of the licence had Erik Solheim, a member of the Socialist Left and minister in charge of environmental issues, telling a local paper, The Dagens Naeringsliv, that he hoped the new discovery would reduce the company’s need for new oil sources. The implication being that Statoil could afford to pull out of Alberta thanks to the new resources found closer to home.

As for the company’s position on the oilsands, Statoil argues that the world needs more sources of oil and that the oilsands represent a world class resource that shouldn’t be ignored.

It has touted its environmental record and its use of advanced technologies as the keys to making sure its operations function at the highest standards and make it a “good neighbour” in Canada.

That reputation was somewhat sullied recently, however, after it was hit with 19 charges related to contravening its water licence and giving false and misleading information on its drilling endeavors. The maximum penalty for each count is $500,000.

Rather than fight out the charges in court Statoil chose to enter a guilty plea and will likely wind up paying fines in the millions of dollars. Official sentencing will be handed down on Nov. 21.

The company says the charges were related to tapping various waterways without permission so that it could build ice roads for its winter drilling. It emphasized that the charges were not connected to its Leismer plant.

Statoil was formed in 1972 as the Norwegian State oil company. With the discovery of the Starfjord oil field in the North Sea just two years later, the company had begun its journey into the big time of oil production.

From there Statoil has built up an impressive project pipeline and now has operations in 34 countries.

In 2001 the company began trading shares publicly, but the Norwegian government is still the majority shareholder with a 67% stake in the company.

The company’s shares enjoyed an impressive run from the time of their IPO, when they began trading in the US$6 range up until the crash of 2008, when they reached the low US$40 range.

In New York on Aug. 31 the company’s shares were trading for US$24.09 and have moved between US$18.67 and US$29.67 over the last 52-week period.