Clarity Wanted
Posted by mhudema on July 4, 2008
Statoil, Nexen Demand Regulatory Clarity for Canada Projects
By Eduard Gismatullin and Marianne Stigset
July 2 (Bloomberg) — StatoilHydro ASA, Norway’s largest oil producer, and Nexen Inc. called for “clarity” in Canadian regulation governing Alberta’s tar-sand projects before they proceed with investment in refineries.
Nexen, based in Calgary, has put on hold expansion of an upgrader at its C$6.1 billion ($6 billion) Long Lake refining project in Alberta, Chairman Francis Saville said today in Madrid, where he’s attending the World Petroleum Congress. StatoilHydro in May postponed the start of an upgrader, a crude-processing unit, at its Canadian oil-sands project by two years to 2016.
“Making an upgrader investment decision is a huge undertaking and the fact that there is uncertainty related to the future of the regulatory regime, including the cost of CO2,” delays the expenditure, StatoilHydro Chief Executive Officer Helge Lund said today in Madrid. “We need more clarity on that before we can make the final decision.”
Increased government regulatory scrutiny, disagreements over oil-sands royalties and federal rules on capturing carbon dioxide are slowing development of Alberta’s tar sands, the largest reserves outside the Middle East, the Canadian Association of Petroleum Producers said June 18.
“We have the same problem,” Saville said today. “Nexen is bringing online phase one of the Long Lake project” and holding off on a decision to expand “because of the same uncertainties.”
Nexen and partner Opti Canada Inc. have started production of bitumen, a heavy oil extracted from Alberta’s tar-like deposits. Upgraders turn bitumen into synthetic crude for sale to refiners to make gasoline, diesel and other fuels.
StatoilHydro’s pilot tar-sands project, Leismer, remains on schedule to begin producing oil in 2010, Lund said.
To contact the reporters on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net; Eduard Gismatullin in Madrid at egismatullin@bloomberg.net
