Imperial Oil begins production at Kearl oil sands as expansion completed early
Canada’s Imperial Oil (TSX:IMO) said Tuesday it has begun production at its US$7.3 billion Kearl oil sands expansion project in Alberta, ahead of schedule, and with production anticipated to reach 110,000 barrels per day.
The company, 70%-owned by Exxon Mobil Corp. (NYSE:XOM), said the extra output would bring its total production to 220,000 barrels per day.
The expansion project consists of three additional trains that use proprietary paraffinic froth treatment technology to produce bitumen. The process reduces energy requirements and environmental impacts by not requiring an on-site upgrader, which avoided a multi-billion dollar capital investment and associated operating expenses.
Energy needs are further reduced through the installation of energy-saving cogeneration facilities, the company added.
Earlier this year, Imperial revealed it was on the lookout for acquisitions and that was moving forward with the expansions of the Kearl and Cold Lake oil sands projects, despite weak oil prices, which have weakened its earnings.
Imperial took the same approach during the global financial downturn in 2009, when it moved forward with construction of Kearl, located about 75 kilometers northeast of Fort McMurray, while others decided to cut oil sands investment.
The company is also expanding the $2-billion steam-driven Nabiye facility this year.
As oil prices continue to remain low, experts are anticipating an increase in acquisitions. Some producers could see their reserves reduced because of the oil rout, impacting their ability to meet debt obligations, making them targets of stronger companies.