Statoil '13 Oil Sands Report - Analyst Blog

Norwegian giant Statoil ASA's STO 2013 Oil Sands Report disclosed a slight decrease in its oil sands production because of a planned multi-week plant shutdown for facility maintenance and the integration of new scientific research and experimental development measures.

In 2013, production decreased to 15,000 barrels of oil per day from 16,000 barrels of oil per day in 2012. CO2 intensity increased to 69.7 kg CO2 per barrel from 55.6 kg CO2 per barrel in 2012 but was lower than 72.7 kg CO2 per barrel in 2011.

In the long run, these measures are expected to boost production and lower CO2 intensity.

The report also presents performance indicators for production, energy usage, intensity of emissions and resource consumption at the Leismer Demonstration Project and in the Kai Kos Dehseh KKD leases in northern Alberta.

Over the next 5–10 years, Statoil plans to test and deploy up to 14 new technologies intended to cut down energy and water use while producing a barrel of bitumen from its Canadian oil sands operations. Per the report, the new technology is likely to augment or replace elements of its current SAGD (steam-assisted gravity drainage).

In the Alberta Corner Project, where the company intends to deploy the new technologies, 10–15% reduction in volumes of steam used to produce a barrel of bitumen is targeted. Statoil has regulatory approval to yield 40,000 barrels per day from its Corner lease area.

The increased carbon dioxide intensity was expected because of two operational factors. First, more steam was consumed in 2013 when a fourth steam generator was added to support new well pads as well as current production wells. Second, the firm experienced an imbalance in the reservoir after a planned maintenance period.

Statoil's long-term CO2 targets for reduced intensity in the production process remains 25% by 2020 and 40% by 2025.

Statoil carries a Zacks Rank #4 (Sell). However, not all stocks in the oil and gas industry look as bad as Statoil. Better-ranked stocks include Range Resources Corporation RRC, Unit Corporation UNT and Helmerich & Payne, Inc. HP, all with a Zacks Rank #1 (Strong Buy).