Oil sands

In 2007, we acquired 100% of the shares in North American Oil Sands Corporation (NAOSC). At the time of acquisition, NAOSC owned interests in 275,213 net acres of oil sands leases located in the Athabasca region of Alberta. In its raw state, bitumen is a heavy viscous oil that we will produce using the steam assisted gravity drainage method (SAGD) from a depth of approximately 430 metres with an average producing zone thickness ranging from 15 to 30 metres.

StatoilHydro is the operator of the Kai Kos Dehseh oil sands leases, and the first phase of the development is the Leismer SAGD Demonstration Project, which will be developed with a capacity of 20,000 boe per day with initial production scheduled for late 2010. In 2007, we submitted an application to the Alberta regulatory authorities for the full 220,000 boe per day commercial SAGD project.

In 2007, we also submitted an application to the Alberta regulatory authorities for the construction of an upgrader to process bitumen into lighter synthetic crude. We withdrew this application in December 2008. Prohibitive construction costs, the state of the global economy, an uncertain oil price outlook and lack of legislative clarity are the main reasons for this decision. Oil sands are a long-term investment for the company with a high degree of optionality in the timing of investments.

Offshore

Discoveries under appraisal

The Hebron field was discovered in 1981. Operatorship was transferred from Chevron to ExxonMobil in 2008. A fiscal agreement was signed in August 2008 with the Government of Newfoundland and Labrador, which entails the provincial government purchasing a 4.9% equity share of the project. This reduces StatoilHydro's share in the project to 9.7% effective as of signing. The field is planned to be developed with a gravity-based structure.

The Hibernia Southern Extension project operated by ExxonMobil comprises the development of resources in several fault blocks south of the existing Hibernia Main Field. Fiscal negotiations with the provincial government began in 2008 and are still ongoing. The field is planned to be developed via drilling from the Hibernia GBS platform. We have a 10% interest in this field. 

Fields in production

Hibernia was developed with a GBS and is operated by ExxonMobil. Production started in 1997 and the field is currently producing from 55 wells.

Terra Nova is producing from a floating production, storage and offloading vessel (FPSO), operated by Petro-Canada. Fifteen subsea producing wells are tied back to the FPSO. Terra Nova's production efficiency continues to be low due to a number of technical issues on the FPSO. Several initiatives are underway to improve production efficiency.