The phrase is most commonly used in response to an anecdote which fails to convey any sort of interesting message. That is, the content of the anecdote is lackluster, boring or just plain irrelevant.
It is imperative to mimic the tone of Derek Zoolander when using the phrase as to give greater emphasis, it will also be more noticeable by your peer(s) as a sarcastic remark and not be misconstrued as a compliment.
Elongation of vowels is preferred but not essential, moreover Scandanavian accents or impersonations bring about best results when using this phrase.
Reponse: "Cool story Hansel"
The only way to redeem one's self after having been on the receiving end of this remark is to sarcastically reply "Thanks Olaf"
"Cool Story Hansel!"