Imperial Oil has raised the expected final cost for the Kearl oil sands initial development to $12.9 billion, up 18% from the 2011 figure of $10.9 billion. Kearl, jointly owned between Imperial Oil (operator) and ExxonMobil Canada, will be one of Canada’s largest open-pit mining operations with regulatory approval for up to 345,000 barrels a day of production.
Imperial expects production of mined diluted bitumen from the first froth treatment train in this quarter. Production will ramp up to 110,000 barrels a day over the next several months.
Together, the initial development and expansion projects will develop 3.2 billion barrels at a unit development cost of approximately $6.80 per barrel. This is up 10% from the prior estimate of $6.20 per barrel driven by the cost to re-sequence work from the module transportation issues and the early onset of winter and harsh weather during start-up of the Kearl initial development.
The Kearl expansion project, sanctioned in 2011 for $8.9 billion, will benefit substantially from the infrastructure provided by the initial development. Start-up of the expansion project is planned in 2015.