Industry confidence low in Canada's oil sands as Statoil, Koch exit
By Ethan Lou
CALGARY, Alberta (Reuters) - Canada's oil sands prospects were buoyed by recent pipeline approvals, but news of two companies ditching local projects on the same day served as a reminder that industry confidence is still weak.
Investment decisions have been relatively modest in the high-cost environment as the oil patch faces uncertain export routes and a tough emissions cap.
Ottawa last month approved the Kinder Morgan Inc (KMI.N: Quote) Trans Mountain and Enbridge Inc (ENB.TO: Quote) Line 3 pipeline projects, a welcome boost to the industry, which has long pushed to resolve export congestion that kept Canadian crude priced at a discount.
Still, Norwegian oil major Statoil ASA (STL.OL: Quote), which in 2014 cited market access for deferring its Corner oil sands project, said on Dec. 14 it would sell all its assets at a loss and withdraw from Canada's oil sands.
The same day, Koch Industries Inc [KCHIN.UL] announced it wants out of a yet-undeveloped local project. The Alberta Energy Regulator (AER) approved that request this week.
Statoil spokesman Erik Haaland said the sale was made so the company can concentrate on "new competitive assets" elsewhere. Koch did not respond to requests for comment.
In a letter to the AER seen by Reuters, a local executive cited the province's environmental regulations.
Alberta, home to the third-largest crude reserves in the world, has one of the biggest extraction costs and higher emissions levels, on which the left-leaning provincial government has placed a hard cap. Continued...