StatoilHydro sees oil sands decision in H2 2009

By Joergen Frich

OSLO, Aug 11 (Reuters) - Norwegian energy group StatoilHydro (STL.OL) expects to decide on an investment in a full-scale refinery for its Canadian oil sands project in the second half of 2009, company executives said on Monday.

Last year StatoilHydro bought 257,000 acres of oil sands leases near Edmonton in Alberta for $2 billion in a bid to diversify away from ageing North Sea oilfields.

In May this year, the company said it would postpone the start-up of a full-scale refinery, known as an "upgrader", for the venture by two years to 2016.

"We are postponing the decision on upgrading capacity," StatoilHydro's Canada chief Geir Joessang said in a briefing for journalists on the oil sands project.

"We are going according to plan with the upstream and transport, but upgrading, which had been planned for 2014 is being postponed to 2016," he said. "That means that we will not make a final decision before the end of 2009."

The postponement stems from uncertainties around the regulatory framework for producing oil from oil sands, including rules on carbon dioxide emissions in Canada and the United States, and an overheated local supplier market, he said.

"If we face an uncertain regulatory framework and an overheated market next year in Alberta, no one can force us to make an investment decision," Joessang said.

StatoilHydro has begun to develop the first phase of the oil sands project, with a start-up scheduled for 2010 at daily production of 20,000 barrels.

"After that, we will continue to develop the production capacity to around 200,000 barrels per day by the end of the next decade," Joessang said.

StatoilHydro estimates its recoverable reserves in Canada at 2.2 billion barrels. (Reporting by Joergen Frich: editing by James Jukwey)