Norway’s Statoil postponed the development of the Corner field at the Kai Kos Dehseh (KKD) oil sands project in Alberta Friday, citing rising costs and market access issues that cut into profit margins.
The Corner project is being postponed for a minimum of three years, Statoil said.
The company will reduce its staff on the project by about 70 employees.
“The decision is in line with Statoil’s strategy to prioritize capital to the most competitive projects in its comprehensive global portfolio and is consistent with our stepwise approach to the oil sands,” Statoil Canada country manager Ståle Tungesvik said.
Tungesvik said that limited access to pipelines “weighs on prices for Alberta oil, squeezing margins and making it difficult for sustainable financial returns.”
Statoil entered KKD through the acquisition of Calgary-based North American Oil Sands Corporation in 2007.
In 2011, Thailand-based PTTEP farmed into a 40 percent interest in KKD for $2.28 billion in cash.
Earlier this year Statoil divided its KKD oil sands leases with PTTEP.
Statoil retained 100 percent ownership of the Leismer and Corner projects while PTTEP took 100 percent ownership of the Thornbury, Hangingstone and South Leismer areas.
The postponement of the Corner field’s development will not impact plans for the Leismer project.
Leismer is currently in production and has an operating capacity of 20,000 barrels per day.
The Leismer project is a steam-assisted gravity drainage development of KKD. In August, well pad 5 at the site came on stream and work is ongoing for further infill drilling activity.
Both the Corner and Leismer projects were approved for 40,000 bpd.