A Thai oil and gas company has made a major foray into Canada's oil sands with a $2.28-billion (U.S.) deal for an interest in lands owned by Norwegian energy giant Statoil.
PTT Exploration and Production has agreed to buy a 40 per cent stake in Statoil's oil sands holdings, which it calls its Kai Kos Dehseh Project and which holds two-billion barrels in crude reserves. Statoil purchased that land for $1.96-billion in 2007 from North American Oil Sands Corporation.
Since then, Statoil has advanced the project to the point where it began operating a 10,000 barrel per day plant in September. The company is also awaiting provincial regulatory approval for a 30,000 barrel per day expansion.
This is the first Canadian acquisition for PTTEP, Thailand's only oil and gas exploration and production company, and the deal serves as a considerable new vote of confidence in the oil sands, which stumbled in the past few years but are now mid-way through a revival sustained by strong crude prices.
The deal brings Thailand into a group of foreign oil sands investors that includes U.S., Korean, Japanese and Chinese companies.
Statoil and PTTEP "are on the same page when it comes to driving the technology development, to improve the business both from an economical point of view but also to reduce the environmental footprint," said Statoil Canada President Lars Christian Bacher. "So I'm glad for having PPTEP as a partner."
Statoil has faced substantial criticism at home for its oil sands holdings from environmental groups who oppose the source of "dirty oil." Mr. Bacher has also said in the past that Canada's substantial crude reserves could make it an attractive place to expand. Before this deal, the oil sands formed fully one-third of Statoil's reserves.
However, in an interview Monday night Mr. Bacher said the company had long intended to sell down part of its interest.
"We are here to stay and develop the business. But we have also said since we made the acquisition that we don't have a goal of owning 100 per cent stake in this asset," he said.
"This price reflects the fact that [the asset]has matured and also that both parties see a high potential compared to the acquisition case."
On Sept. 3, Statoil began steaming its first 10,000 barrel-per-day oil sands operation. The company does not mine the oil sands, but instead uses a technique called steam assisted gravity drainage, which relies on high pressure, high temperature injections of steam to melt the bitumen from deep below ground before piping it to surface.