It is going to be incredibly illustrative how Canadian elites treat this-- if it gets a mention in more than stating-the-facts ways such as this announcement below. Silence would be every bit as loud. A major, non-private oil corporation for a 'foreign' country (that is, not the United States or Canada) has purchased Calgary based North American Oil Sands. Will the same level of fear mongering that accompanied Chinese investments be unleashed, along with a 'white peril' thinly veiled reference to base reactions towards Norway?
I seriously doubt it.
--M
Statoil buys North American Oil Sands for $2.2B
Apr 27, 2007 06:24 PM
Dina O'Meara
http://www.thestar.com/Business/article/208144
Canadian press
CALGARY–Norway's state-owned oil company is spending $2.2 billion (U.S.) to acquire major oilsands leases in Northern Alberta, giving the company a beachhead in one of the world's hottest energy regions.
Statoil ASA said early today it is buying North American Oil Sands Corp., a private Calgary company with oilsands prospects in the Athabasca region around Fort McMurray for $20 a share, a deal worth $2.2 billion.
"Oil is going to be getting heavier and more sour in the next 20 years," Statoil senior vice-president Peder Sortland said at a news conference in Calgary.
"So having an element of this in our portfolio is what we need to have to face up to the future."
The transaction continues a trend of global expansion into the oilsands region, which contain huge new sources of oil but can be extracted at higher costs than conventional production.
French, Chinese and South Korean companies have already joined big foreign-owned multinationals such as Imperial Oil (TSX: IMO), Shell Canada (TSX: SHC) and Husky Energy (TSX: HSE) in the oilsands. Canadian oilpatch giants such as Petro-Canada (PCA), Suncor Energy (TSX: SU), Nexen (TSX: NXY) and EnCana (TSX: ECA) already have significant oilsands projects.
In today's deal, North American Oil Sands' board of directors said it has unanimously approved the offer, which is expected to close in June. The company's major shareholders, directors and officers, have agreed to tender their shares.
"Today's acquisition is an important strategic move which supports our global growth ambition and increases our reserve bookings in the long term," Helge Lund, chief executive of Statoil, said in a release.
"We are developing our global heavy oil portfolio and strengthening our marketing position in North America."
North American Oil Sands is a privately traded company founded in 2001. Its major shareholders include Paramount Resources Ltd. (TSX: POU), funds managed by affiliates of ARC Financial Corp. and the Ontario Teachers' Pension Plan, Canada's second biggest pension fund manager with assets of $106 billion.
North American Oil Sands president and CEO Pat Carlson said today he expects costs between $10 billion and $20 billion to complete the project.
"This is a chance for our project to get built with the company that has the resources to do it," he said.
Sortland said Statoil plans to implement contract and execution strategies to deal with the hefty pricetag.
"We will not push the final sanction button before we are convinced that we have these aspects reasonably under control," he said.
Paramount said today it has agreed to tender to the Statoil bid and sell its 30.9 per cent interest for about $682.4 million.
Including Paramount, holders representing a 69 per cent stake entered into lockup agreements to tender.
Projects in the Alberta oilsands have become known for their cost overruns as much as for their massive resources, second only to Saudi Arabia.
Oilpatch companies are expected to face tighter environmental controls after the federal government announced a promise yesterday to reduce greenhouse gas emissions by 20 per cent over 2006 levels by 2020.
The move did not catch Statoil off guard, Sortland said. "When it comes to environmental issues we've seen this coming in Europe," he said.
Despite the additional risk of the new legislation, which promises to hike production costs of the sticky bitumen, the region represents a secure investment in an energy-hungry world, one analyst said.
"You have to go where the resource is," said Mark Friesen of FirstEnergy Capital.
"In many ways, companies are willing to look at the oilsands-specific risks in exchange for lower geologic and political risk."
North American Oil Sands operates 1,110 square kilometres of oilsands leases in the Athabasca region northeast of Edmonton. The company is working on a pilot project to produce extra heavy oil from oilsands deposits in what Statoil described as unconventional sources of crude that are becoming increasingly important.
The Calgary company is developing the Leismer demonstration project, which has a capacity of 10,000 barrels of tar-like bitumen a day, with first production expected by early 2010.
The first phase of the commercial project, Kai Kos Dehseh, is planned to come on stream in 2011, ramping up production to 100,000 barrels a day by 2015 and more than 200,000 barrels a day by 2020.
State-controlled Statoil has experience producing heavy oil from sand in projects in Venezuela. Statoil said North American Oil Sands holds leases with estimated reserves of 2.2 billion barrels of oil, which the Norwegian company hopes will eventually yield 200,000 barrels per day of oil.
In the last two years, energy companies from France, China, The Netherlands, and the United States have all made major acquisitions in the region and there are expectations that companies from India, Italy and elsewhere will also enter the region.
But with more than $100 billion worth of projects slated for construction in the next decade, the overheated economy of northern Alberta is also facing severe upward cost pressures, labour shortages and escalating environmental concerns, which could slow down regulatory approvals for new projects.
Chinese energy companies already have small stakes in oilsands projects, including refiner Sinopec Group's 40 per cent share of the Northern Lights oilsands project, operated by Synenco Energy Inc. (TSX: SYN) and CNOOC's 17 per cent stake in junior oilsands player MEG Energy Corp.
Two years ago, French energy giant Total S.A. acquired junior oilsands company Deer Creek Energy Ltd. and quickly unveiled plans to spend upwards of $9 billion to build an upgrader in Alberta and produce 200,000 barrels per day by 2015.
And last year, California-based Chevron Corp. announced its intention to build a multibillion-dollar oilsands project in northern Alberta, while South Korea's national oil company bought oilsands leases from mining giant Newmont.
In trading today on the Toronto Stock Exchange, Paramount shares rose $2.74 to close at $24.33, a gain of nearly 12.7 per cent.
Shares of Synenco rose 15 cents to close at $13.35, while Opti Canada (TSX: OPC), which owns 50 per cent of the Long Lake project, rose 52 cents to $22.56.
