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Imperial Oil Ltd. is pursuing its $ 2.6 billion Aspen oil sands project, while Canadian heavy crude oil has been selling at the lowest prices for at least a decade.
The producer, who is majority-owned by Exxon Mobil Corp., has announced that it has made the final decision to invest in the construction of the gravity-badisted gravity drainage site in northern Alberta and to produce 75 000 barrels a day. bitumen once it starts working. Construction will begin in the current quarter and is expected to be completed in 2022.
Aspen would be one of the largest oil sands projects to be implemented since the collapse of world crude prices in 2014, from over 100 USD a barrel.
This decision comes as bottlenecks in pipelines and delays in the construction of new export lines widen the gap between Canadian heavy crude prices and world reference prices.
"We do not take investment decisions lightly, especially in this difficult time," said Rich Kruger, president of the Imperial, in the statement. "We have made the decision to proceed now because we are confident that this leading-edge technology will contribute to the evolution of Imperial Oil's business."
The project will use a technology that could reduce greenhouse gas emissions intensity and water consumption by 25% compared to traditional steam-badisted technology, said Imperial Oil. The project could be expanded by an additional 75,000 barrels a day "with a schedule dependent on a number of factors, including the fundamental performance of the project and the general conditions of the market and activities," said the company.
The reduction in Western Canada's crude oil reached record levels this year, as Alberta's oil sands production ran into saturated pipelines, resulting in an increase in blocked volumes.
As crude volumes transported by rail increase, reaching a record high of about 230,000 barrels a day in August, they have not yet reached the level required to erase the overabundance.
The situation has led a number of major Canadian producers to say that they will not proceed with any new projects or expansions until the pipeline capacity has been put in place.
But the situation improves. Enbridge Inc. announced last week that it expects its Line 3 project to be in service by the end of 2019, while TransCanada Corp has announced that it is working on the construction of its Keystone XL pipeline next year.
The last major oil sands project to be approved in Alberta was the Fort Hills project led by Suncor Energy Inc. in 2013, which is currently in full swing.
With Reuters files
Bloomberg.com
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