Oil sands are attractive at current crude price levels, and Statoil ASA, Norway's biggest energy company, is working on bringing costs down to proceed with its investments in Canada, its Chief Executive Helge Lund said on Thursday in an interview. “We've had a market lately that has made that type of oil attractive,” Lund said. “Of course the problem two, three years ago with Canada was the costs.” Statoil in 2007 bought North American Oil Sands Corp. for about $2 billion to tap an area estimated to hold the largest oil reserves outside Saudi Arabia. The company plans to start production at its 20,000 barrel-a-day Leismer demonstration plant at the turn of the year. The company's planned Corner project will be the next phase. Statoil in 2008 scrapped plans to invest in an upgrader plant due to costs. “The first plant we're building is a small test facility, which is part of a larger development,” Lund said. “So what's important for us is to do this project in a good way, according to schedule, and that we learn for future periods when the outlook is good.” Dwindling reserves in easier-to-access areas and improved prices are making oil sands and shale-gas developments more attractive to producers including BP Plc and Royal Dutch Shell Plc. Oil has slipped 6.8 percent to $73.93 a barrel in New York this year, after rallying 78 percent in 2009. Lund said the industry is “comfortable” with current price levels. “The oil price has remained relatively stable around $70- $80 a barrel lately, and it seems like there's a certain stability around this level,” Lund said. “Actors on both sides of the industry seem to be content with that level.” Senior vice president in Strategy and Commercial Affairs in Canada Robert Skinner said in June he “wouldn't disagree” with an estimated break-even price of $65 to $75 a barrel to produce crude from Canadian oil sands, using the Steam Assisted Gravity Drainage technology that Statoil has adopted. “We're working with a technology plan which we have presented to our shareholders and which addresses costs, CO2 emissions and other issues,” Lund said. “The next investment decision will depend on the progress we've made on this work. The plan is to continue developments, but like all our projects, it needs to compete for our capital.”
