CALGARY — Nine months after dissolving a thermal oilsands joint venture in northern Alberta, Norway's Statoil ASA has put a 44,000-barrel-a-day expansion project on hold for at least three years, citing high costs.





The company said Thursday it has decided to postpone the Corner project in its Kai Kos Dehseh oilsands development, a decision that will result in the loss of 70 jobs mainly at its Canadian headquarters in Calgary.





In an interview, Statoil Canada country manager Stale Tungesvik said the project's ability to compete with other Statoil investments has been hurt by rising costs for materials and labour. The company is also concerned about pipeline access issues that have reduced realized prices for western Canadian crude.





"In oilsands, and actually globally, too, we are facing a new business reality," he said. "We need to make our assets and operations more profitable and cost-efficient. The Corner decision is more based upon that perspective."





He said Statoil remains committed to investing in Canada, however, pointing out that it is participating with Calgary-based partner Husky Energy Inc. to develop a major oilfield discovered off the coast of Newfoundland last year.





Drilling in the Bay du Nord area is expected to commence next month.





"Within the company, every project has its own merits," he said. "What happens on East Coast has a totally different timeline so it's not connected at all (to the Corner decision)."





He also denied that the decision was made because of the poor environmental reputation of the oilsands. Statoil, two-thirds owned by the government of Norway, has been roundly criticized at home for its oilsands investments.





Statoil has not released a capital cost estimate but oilsands analyst Michael Dunn of FirstEnergy Capital said Corner would probably cost about $2 billion, based on an industry average cost of $50,000 per flowing barrel.





He said the project likely would face higher costs because it is a greenfield development located on a separate lease to the northeast of Statoil's producing Leismer project.





"I think the challenges for them are more than if they were someone like Cenovus (Energy Inc.) or MEG (Energy Corp.), where you've got all these expansions, moving from one to another and continuously expanding," he said.





"That all makes this kind of project much more costly than a brownfield expansion at an existing site."





Tungesvik said the company will use the three-year delay to rethink its oilsands strategy.





"I believe I need to revisit myself about a bigger greenfield project — maybe I should look more into smaller building blocks that are more flexible and add production more by little steps than bigger steps," he said.





He wouldn't say if he will recommend going ahead with a planned 40,000-bpd expansion at Leismer, noting only that an assessment of the project is due by the end of the year.





Statoil entered Kai Kos Dehseh by buying North American Oil Sands Corp. in 2007.





In 2011, Thailand's national oil company PTTEP bought a 40 per cent interest for $2.28 billion US.