Oil Sands Truth: Shut Down the Tar Sands

Statoil chief discusses priorities in his first Canadian interview

Lars Christian Bacher: Statoil's oil sands pragmatist

Statoil chief discusses priorities in his first Canadian interview

Nathan Vanderklippe

Globe and Mail
Saturday, Dec. 05, 2009

When Statoil ASA brought Lars Christian Bacher to Calgary, the company named him president of its Canadian operations and gave him a mandate to get bitumen out of the oil sands - and, when that's done, think about getting more of the land around Fort McMurray into the portfolio.

After a $2.2-billion buy-in to the oil sands in 2007, the Norwegian company is building its first, 10,000 barrel-a-day Leismer, Alta., demonstration project, which will begin operations next October.

Mr. Bacher led an effort to restructure Statoil's offshore continental shelf operations before starting his three-year mandate in Calgary in September. He spoke to The Globe and Mail yesterday in his first Canadian interview.

Question: What is currently happening on site at Leismer?

Lars Christian Bacher: We are just building the plant. By the end of October [2009] it's 73 per cent complete.

Q: How many barrels will you produce in the next five and 10 years?

LCB: We have regulatory approval for 10,000, and hopefully not many months from now we will have an additional, close to 10,000 barrels in production approved. And we are looking into developing additional resources.

Q: You have two billion barrels in oil sands reserves, about a third of the Statoil portfolio.

LCB: Yes, it's the single-biggest reserves in our portfolio.

Q: Will you add to that?

LCB: Our priority now is to get that plant up and running and demonstrate both to ourselves and different stakeholders that we can do this - make a business of it and do it in an environmentally friendly way. And after that ... Canada has huge resources and, as an OECD country, you have a rather stable fiscal regulatory regime. And that's definitely attractive, looking into further growth.

Q: Do you feel any urgency to pick up more oil sands territory, given the quickly diminishing list of small players?

LCB: No, no rush.

Q: Why not?

LCB: We have to ... demonstrate that we can make a business of it. ... Then we can talk about expanding the business.

Q: Is your interest in steam-assisted gravity drainage (SAGD, which uses regular wells to extract bitumen) alone, or are you also interested in mining?

LCB: Our interest is only on the SAGD side.

Q: Given Statoil's world leadership in carbon capture and storage (CCS) projects, what role do you see CCS playing with regard to SAGD operations in particular?

LCB: Our future projects will be built carbon-capture ready, but we see that kind of technology definitely needs a lot of improvement before it's economically feasible to install.

Q: It's too expensive now?

LCB: Very much so.

Q: You're including some experimental improvements to the SAGD process at Leismer. Are you also looking at SAGD replacement technologies, such as electro-thermal or underground combustion?

LCB: We have also activities in our technology plan for looking at the next generation of in-situ technology.

Q: How high can the price of carbon be before your operations are no longer economic?

LCB: The predictions that the majority of people see for a cap-and-trade and carbon dioxide cost is within our own expectations - so, obviously, it will still be economically viable.


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