Energy giant won’t build new oil sands refinery
CALGARY— Canada’s largest oil and gas company has decided against building a new upgrader for the first stage of its new oil sands mega- project in northern Alberta, using its existing refineries instead to handle the majority of new production.
Imperial Oil said yesterday it would rather not join the long line of multibillion-dollar upgraders slated for construction in the Fort McMurray region where “ somebody’s going to get hurt” in the future due to rapidly escalating costs and the cyclical nature of energy prices.
“We’re short of people and we’re short of infrastructure, and the result is that we’re getting really, really high inflation and very high costs and that’s not really the best outcome for any of us,” chief executive Tim Hearn said of northern Alberta.
“ As a lot of these investments come on stream over time and there’s surplus capacity, bad things happen,” he said.
“ There’s a lot of pain occurred and I would rather not put our company or our people or our shareholders through that if I can find a different path forward.”
Earlier this year, Imperial and sister company ExxonMobil Canada filed for regulatory approval of its proposed $ 6.5 billion Kearl oil sands mine. The plans call for production of 300,000 barrels per day over three stages.
Speaking to analysts at the company’s annual investors day, Hearn said Imperial’s existing refineries across Canada could handle about two- thirds of production from the first phase. A plan to handle production from phases two and three has yet to be finalized, but could involve expanding the existing refineries in Sarnia and Edmonton or shipping the bitumen to other existing refineries in North America.
Imperial is also talking to a variety of pipeline companies proposing new lines to take Canadian oil sands crude to markets in the United States.