Entering the Oil Sands

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Statoil and North American Oil Sands Corporation (NAOSC) have entered into an agreement whereby Statoil will acquire all shares at a price of about USD 2 billion. Statoil will become operator and get access to large recoverable resources that will add to the company's production in about 4 years time.

NAOSC, a Calgary-based company, was formed in 2001 and operates 257,200 acres (1,110 square kilometres, equivalent to approximately two North Sea blocks) of oil sands leases located in the Athabasca region of Alberta (GEO ExPro Nos. 5/6, 2005).

NAOSC has commissioned two studies from two of the industry's leading independent consultants. The low estimate is 1.7 billion barrels of recoverable bitumen, while the high is 4.1 billion barrels of recoverable bitumen. Based on this NAOSC expects that the resources will be sufficient to sustain ultimate production of more than 160,000 bopd for more than 25 years. According to Statoil, however, it is estimated that the leases hold approximately 2.2 billion barrels in recoverable reserves. Access cost is thus roughly USD 1 per barrel.  

The resources will be developed using steam assisted gravity drainage ("SAGD") technology. SAGD involves the injection of steam into the oil-bearing formation, the top of which on North American's lands is approximately 450 metres below the surface. Steam is generated at the surface and injected into the reservoir through two parallel horizontal wells for a period of approximately three months. Thereafter, once the "steam chamber" has been established between the two well bores, steam continues to be injected through the upper well, and bitumen, which has been heated to the point that it will flow into the lower well bore through gravity, is then pumped to the surface and recovered  

"We are excited to have secured this agreement and look forward to creating value by leveraging on our key competences such as improved oil recovery (IOR) and large project execution skills," says Mr Lund, chief executive of Statoil. Statoil believes that by applying its broad technological competence developed through 30 years of experience on the Norwegian continental shelf, there is a potential for increasing the recoverable reserve base.  

A pilot production scheme, the Leismer demonstration project, is currently in its final phase of obtaining regulatory approvals. It will have a capacity of 10,000 barrels of produced bitumen per day and first production is expected late 2009/early 2010. The first phase of the commercial project, Kai Kos Dehseh, is planned to come on stream in 2011, ramping up production to around 100,000 barrels per day in the middle of the next decade. The portfolio is expected to yield more than 200,000 barrels per day towards 2020, according to Statoil.