More trouble for Statoil, in Canada

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A bad week for Statoil has become even worse, as Canadian authorities confirmed they would be taking action against Norway’s partly state-owned oil and gas enterprise for alleged environmental crimes in connection with Statoil’s controversial oil sands projects in Alberta.

Statoil's oil sands project in Canada is causing more controversy for the Norwegian company. PHOTO: Øyvind Hagen/Statoil

Newspaper Dagbladet reported Friday that the charges levelled by the state of Alberta allege that Statoil has broken its water license and given false or misleading information regarding the withdrawal of water. Statoil’s water use is related to its extractions from the sensitive oil sands (also called tar sands) of the northern region, which have attracted international opposition from environmentalists.

Facing 19 counts of breaking water regulations, the company could be forced to pay a fine of more than NOK 60 million (USD 10 million) if found guilty. A spokeswoman for Alberta Environment told Dagbladet that the authorities have conducted several inspections and have had Statoil under investigation for more than two years.

The Canadian oil sands have become the subject of global concern in recent years because oil extraction from oil sands can be more difficult, and generates higher carbon dioxide emissions, than normal oil production. Multinational campaigners, including Greenpeace and the WWF, have joined forces with some members of local indigenous populations to oppose the projects, although other members of the native groups have participated in extraction.

Statoil needs to defend itself against charges it has illegally diverted water in connection with its oil sands operation in Alberta. PHOTO: Øyvind Hagen/Statoil

Last year, scientist James Hansen, the leader of NASA’s Goddard Institute for Space Studies, publicly called on Norwegian Prime Minister Jens Stoltenberg to pull Statoil out of the oil sands projects. In Norway, Statoil has been harshly criticized as well for getting involved in the Canadian oil sands project and there was an attempt to halt Statoil’s participation at its last shareholder meeting. It failed, though, and despite criticism from some top government politicians like Environment Minister Erik Solheim, Stoltenberg’s government has also refused to interfere with Statoil’s management’s decision to move forward in Alberta. Statoil has steadfastly defended its involvement, saying the world needs oil and that it was using the best extraction methods available.

Many major companies now operate oil sand projects, given that Canada is estimated to be second only to Saudi Arabia in oil reserves. Statoil’s involvement started in 2007 when it bought the North American Oil Sands Corporation, later selling 40 percent of the operation to Thailand’s own partly government-owned company, PTTEP, and logging a gain in the process.

Now Statoil, still lead partner on the project, is alleged to have diverted water from a number of local sources between 2008 and 2009. The claims are linked to its winter drilling program during that period. The company is known to require a large supply of water during the winter in order to build roads of ice for accessing facilities and transporting equipment.

Peter Symons, a Statoil spokesperson, told news agency Reuters that “we will continue to do everything we can in order to comply with the problems” that Alberta authorities have come forward with, claiming that their operations in Canada were within the law. The case, which will be heard in Albert’s state capital of Edmonton, will begin on April 6.

‘Dragging into the dirt’
Truls Gulowsen of Greenpeace Norway reacted strongly to the news, commenting to news agency NTB that “Jens Stoltenberg should take responsibility and pull Statoil out of the tar sands, before Statoil drags itself, Norway as an environmental nation, and the climate even further down in the dirt.”

The news rocked Statoil at the end of a difficult week. Statoil reported an increase in profits on Wednesday but analysts weren’t satisfied, while employees criticized the company for putting profit before safety at their Gullfaks installation in the North Sea – where 50 of 178 wells have already been closed because of leakage and pressure problems.

The company’s stock fell sharply after it released its results and Statoil faces lingering production concerns. Its operations off Norway face an uncertain future because of diminishing North Sea production, and Statoil needs the Canadian projects — along with other international projects — in order to expand.

Views and News from Norway/Aled-Dilwyn Fisher
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