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Statoil faces oil sands fines Company faces 16 water-withdrawal-related charges at Alberta facility near Conklin; negotiations under way with state, prosecutors Gary Park For Petroleum News
Norway’s Statoil and its partner Thailand’s PTT Exploration and Production are about to discover that the learning process in Alberta’s oil sands carries some hidden costs.
Statoil, as operator, plans to enter a guilty plea to some of the 16 charges it faces related to contravening its water license and three charges of providing false and misleading information regarding water withdrawals at its facility near Conklin in northeastern Alberta in 2008 and 2009.
It is now scheduled to appear in an Edmonton court on Nov. 21 for sentencing.
The maximum fine faced by Statoil is C$500,000 for each charge, but a Statoil spokesman said his company “expects there will be a substantial reduction in the number of charges,” based on negotiations with the prosecutors and Alberta Environment.
“We’re working on a resolution to the case that will benefit Albertans,” the spokesman said.
“We’re looking at creative sentencing options,” prosecutor Susan McRory told a judge. “That’s a labor-intensive process.”
A year ago, Syncrude Canada was convicted of charges related to the deaths of 1,600 ducks in a toxic tailings pond and was fined C$3 million.
Most of the money went to wildlife and habitat conservation programs in northern Alberta.
Call for high penalty Greenpeace Norway campaigner Truls Gulowsen said the penalty imposed on Statoil must be high enough to prevent future infractions.
“If any fines are going to have preventive effects on oil companies that are making millions of dollars per hour, they need to be really, really high,” he said outside the Edmonton court. “We hope that this is a step in the right direction of tough enforcement.”
Statoil’s Leismer steam-driven oil sands project is designed to produce 18,800 barrels per day in the next two years. A second project, called Corner, is scheduled to come on-stream in 2015 or 2016 at 60,000 bpd.
PTTEP made its first foray into Canada’s petroleum industry last November, agreeing to pay US$2.3 billion for a 40 percent stake in Statoil’s oil sands venture.
Under political and environmental pressure in Norway, Statoil has pledged to cut carbon dioxide emissions from its Canadian oil sands production by 25 percent per barrel by 2020 and 40 percent by 2025.
Statoil reported earlier this year that it achieved initial production from its first bitumen project ahead of schedule and about 8 percent under budget and is now testing 20 technology pilots to improve efficiency in hopes of reducing environmental impact from future investments.
Steep learning curve Lars Christian Bacher, president of Statoil’s Canadian operations, said his company has been on a steep learning curve since investing close to C$4 billion in the oil sands business over the past four years and has recruited a skilled workforce that will help it understand the reservoir and run the plant efficiently.
He noted that Statoil has demonstrated its ability to learn fast at its Norwegian offshore projects, including the injection of more than 1 million metric tons of CO2 per year at one reservoir and developing another field under high pressures and temperature.
Bacher reported that PTTEP “is on the same page as us when it comes to our technology plan,” noting that joint-venture partners tend to challenge each other for the betterment of both.
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