Imperial said today it has slowed the pace of development of its Aspen
in situ oil sands project given market uncertainty stemming from Alberta
government intervention and other industry competitiveness challenges.
Imperial’s view remains that free markets work and intervention sends a
negative message to investors about doing business in Alberta and
Canada. The company remains concerned about the unintended consequences
of the government’s decision to manipulate prices, including the
negative impact on rail economics.
“This was a difficult choice in light of our final investment decision
on Aspen announced last November,” said Rich Kruger, chairman, president
and chief executive officer of Imperial. “However, we cannot invest
billions of dollars on behalf of our shareholders given the uncertainty
in the current business environment. That said, our goal is to ensure
the work we do this year will enable us to effectively and efficiently
resume planned activity levels when the time is right.”
The slowdown in project execution, given the limited winter drilling and
site preparation season, will likely result in a delay of at least one
year.
“The decision to return to planned project activity levels will depend
on factors such as any subsequent government actions related to
curtailment and our confidence in general market conditions,” Kruger
added.
Imperial sanctioned the C$2.6 billion project in November 2018, prior to
the curtailment policy’s announcement and implementation. Aspen is
projected to employ 700 people during construction, create more than 200
permanent jobs and produce 75,000 barrels of oil per day. Based on
preliminary estimates and current tax and royalty rates, more than C$4
billion in direct federal and provincial tax revenues and C$10 billion
in royalties for Alberta are expected to be generated over the life of
the project.
Cautionary Statement: Statements of future events or conditions
in this release, including projections, targets, and estimates are
forward-looking statements. Forward-looking statements can be identified
by words such as intend, project, expect, estimate, goal, believe,
anticipate, likely, will and similar references to future periods.
Disclosure related to the project pace, length of delay and resumption
of planned activity levels; expected production volumes, construction
and first production timing; estimated cost and job creation during
development and operations; and tax revenues and royalties generated
from the project constitute forward-looking statements. Actual future
financial and operating results, including expectations and assumptions
concerning applicable laws and government policies; commodity prices and
interest and foreign exchange rates; project plans, dates, costs and
capacities; production rates; production life and resource recoveries;
capital and environmental expenditures; and demand growth and energy
source mix could differ materially depending on a number of factors.
These factors include changes in the supply of and demand for crude oil;
transportation for accessing markets; political or regulatory events,
including changes in law or government policy, applicable royalty rates
and tax laws; environmental risks inherent in oil and gas exploration
and production activities; environmental regulation, including climate
change and greenhouse gas restrictions; currency exchange rates;
availability and allocation of capital; availability and performance of
third party service providers; unanticipated operational disruptions;
management effectiveness; project management and schedules; response to
technological developments; operational hazards and risks; and other
factors described in Item 1A of Imperial’s most recent Form 10-K.
Forward-looking statements are not guarantees of future performance and
involve a number of risks and uncertainties, some that are similar to
other oil and gas companies and some that are unique to Imperial Oil
Limited. Imperial Oil Limited’s actual results may differ materially
from those expressed or implied by its forward-looking statements and
readers are cautioned not to place undue reliance on them. Imperial Oil
Limited undertakes no obligation to update any forward-looking
statements contained herein, except as required by applicable law.
After more than a century, Imperial continues to be an industry
leader in applying technology and innovation to responsibly develop
Canada’s energy resources. As Canada’s largest petroleum refiner, a
major producer of crude oil, a key petrochemical producer and a leading
fuels marketer from coast to coast, our company remains committed to
high standards across all areas of our business.
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