Exxon Supports $ 1.9 Billion Project | Rigzone

(Bloomberg) – Exxon Mobil Corp. delays by one year at least one Canadian $ 2.6 billion ($ 1.9 billion) oil sands project in Canada, as the country's energy sector is facing a shortage of pipelines and production cuts imposed by the government.

Exxon's Canadian subsidiary, Imperial Oil Ltd., originally planned to commission the 75,000-barrel-per-day Aspen project in 2022, but is currently slowing the development of the northern Alberta site. . Any decision to resume normal operations will depend on future government actions and general market conditions, Imperial said Friday.

This delay is another blow for Canada's oil sands industry, which suffered from last year's record low prices after the new wave of production overloaded the region's pipeline capacity. This prompted the Alberta government, where most of the oil sands projects are located, to impose production cuts in order to drain an overabundance of stored crude and boost prices.

This decision also reflects Exxon's increased interest in projects off the coast of Guyana and in the Permian Basin in Texas. Last week, the company had raised its Permian production target to 1 million barrels a day by 2024 and raised to 5.5 billion barrels estimating the size of its discovery in French Guiana.

New risks

Imperial Oil, which has refineries with cheaper raw materials, has been one of the most vocal critics of the emissions reduction policy and once again discussed the plan in explaining the delay. Aspen.

"We can not invest billions of dollars on behalf of our shareholders because of the uncertainty that prevails in the current business environment," said Rich Kruger, chief executive officer of Imperial, in a statement. communicated. "That being said, our goal is to ensure that the work we do this year enables us to effectively resume the right activities at the right time."

Imperial has spoken of a possible slowdown in Aspen last month, saying it is reassessing the project after forced production cuts have introduced new risks. The company also said earlier that the reduction policy, by raising Canadian oil prices too high, made the transportation of crude oil unprofitable, forcing Imperial to reduce deliveries by rail last month. .

Imperial Oil approved the Aspen project in November. The operation would use an extraction method called steam assisted gravity drainage, in which the steam is pumped underground to heat the muddy bitumen bitumen, allowing it to flow to the surface through another pipe.

It was expected that Imperial would devote approximately C $ 700 million to the project this year, and additional free cash flow from the delay could be used to repurchase more shares, which would be a benefit to the company. title, Dennis Fong, an analyst at Cannaccord Genuity, said in a note.

Imperial Oil rose 0.5% to C $ 36.95 at 10:20 am in Toronto. Exxon fell 0.3% to $ 80.21 in New York.

To contact the reporter for this story: Kevin Orland in Calgary at [email protected] To contact the editors responsible for this story: Simon Casey at [email protected] Joe Carroll

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