Statoil decision to shelve oilsands project is concerning, Prentice says

Alberta Premier Jim Prentice says it's concerning that Norway's Statoil has put its oilsands project on hold.

The company announced earlier Thursday it will postpone a multi-billion-dollar project near Fort McMurray for at least three years, citing rising labour costs and a lack of pipeline access to markets. That announcement followed a similar decision six months ago by Total, and Prentice says it's crucial Alberta solves the pipeline problem quickly.

"Underlying the kinds of capital investment that are being made in the oilsands is the needed assurance that we can access global prices," said Prentice. "If we cannot and people do not have a line of sight on infrastructure and tidewater access, it's going to start to affect our prosperity as a province."

Last year, Statoil president Stale Tungesvik said the company might have to choose between developing projects in the Alberta oilsands and the offshore sites near Newfoundland due to the industry's rising cost.

The costs of oilsands projects are rising because of construction and labour costs, while the price of oil is 20 per cent lower than it was six months ago, making large investments less viable.

The uncertainty over pipeline projects also discourages investment, with the Keystone pipeline to the U.S. stalled in the White House and the Northern Gateway pipeline facing multiple hurdles.

Statoil also announced earlier this summer it would work with the government of Newfoundland and Labrador to help advance contentious oil and gas development in harsh environments, including the Arctic.

Newfoundland is trying to position itself as a centre for Arctic and harsh environment expertise.

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