StatoilHydro Withdraws Application for Oil Sands Upgrader Project

StatoilHydro has withdrawn its regulatory application for the development and construction of a bitumen upgrader in Alberta's Industrial Heartland in Canada.

"This decision does not impact the progress of StatoilHydro’s upstream oil sands activities. StatoilHydro's long term view of the Canadian oil sands development remains unchanged. The construction of our Leismer SAGD project is progressing according to plan with startup late 2010," confirmed StatoilHydro Canada President, Geir Jossang.

In May 2008, StatoilHydro decided to postpone the planned upgrader by two years to 2016. Since then, various alternatives for the project have been evaluated.

In line with several other players in the Canadian oil sands industry, StatoilHydro has decided to discontinue the upgrader project at this time, but will continue to monitor the cost and price environment and reassess downstream options going forward. The upgrader was intended to process the bitumen from oil sands into a synthetic crude oil.

This decision does not impact the upstream part of the company's oil sands venture. The production from the project will be marketed as unprocessed bitumen.

The planning of the next phases following the Leismer 20,000 barrels per day demonstration plant continues. As the sole owner of the project, StatoilHydro retains both flexibility and optionality with regards to timing and investments in future phases.