Imperial Oil ups costs of Kearl oil sands initial development 18% to $12.9B
03 February 2013
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.
At $6.80/barrel, it is still very low initial cost (about 7% of average sale value) to produce more of that stuff for Canada, our friendly southern neighbor and (soon) for Asia.
The Golf of St-Lawrence may soon see as many drilling platforms as the Golf of Mexico when the Feds and the four Eastern Provinces can agree on adequate safety measures and Royalties. That may take another 10+ years?
Meanwhile, limited 'on-ground' drilling will take place on adjacent islands and near on-shore areas to test the potential sources.
Posted by: HarveyD | 04 February 2013 at 09:40 AM