Imperial Oil Sees Output Gains from Oil-Sands
September 23 2015 - 6:50PM
Dow Jones News
The top executive at Exxon Mobil Corp.'s Canadian subsidiary on
Wednesday said new technology has the potential to more than double
production from a series of proposed oil-sands projects, a bullish
signal for Canada's high-cost heavy oil operations even as it faces
a slump in crude oil prices and falling investment.
Exxon subsidiary Imperial Oil Ltd. said pilot tests show a
nearly 30% increase in production using a modified version of its
steam-assisted gravity drainage, or SAGD, technology, which
recovers deposits of heavy oil embedded in sand with injections of
steam deep underground. The new techniques include adding a solvent
to improve the flow of oil to surface, known as SA-SAGD, and
generators that burn less natural gas to supply steam, Chief
Executive Rich Krü ger said.
Those innovations could boost output from each of at least seven
proposed oil-sands well projects to 55,000 to 75,000 barrels a day
in crude production, up from 30,000 to 40,000 barrels a day at
current-generation well sites, Mr. Krü ger said.
"This is bigger on a per phase basis than we've talked about in
the past," Mr. Krü ger told investors at a conference in Toronto,
adding he sees the initiative as "a very large, long-term growth
opportunity."
Aspen, the first of those planned projects, could start as soon
as 2020. But Mr. Krü ger said the company has yet to approve Aspen
as it evaluates the business case for it and the others, each of
which would cost about 2 billion Canadian dollars to develop.
The decision will come even as Imperial plans to cut its total
investment budget in half over the next five years to about C$2.5
billion annually after splurging on two major oil-sands projects
that recently began production. Those two operations—its Kearl
surface mine and Nabiye well site—will boost the company's output
by a combined 120,000 barrels of oil a day to a total of more than
400,000 barrels a day.
"We think we're commercially ready to go on SA-SAGD" technology,
Mr. Krü ger said, but he added the company is in no rush to make a
decision on whether to move ahead. Imperial is currently assessing
their cost, possible changes in Alberta's regulatory policies and
the outlook for oil prices, he said.
Most new oil-sands well plants require benchmark U.S. crude
prices above $67 a barrel to break even, which is well below
current levels of around $45 a barrel, according to RBC Dominion
Securities. Oil from Canada's oil sands is among the most expensive
forms of crude to produce because it is difficult to extract, lower
in quality than lighter grades and located in a remote area of
northern Alberta.
Write to Chester Dawson at chester.dawson@wsj.com
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(END) Dow Jones Newswires
September 23, 2015 18:35 ET (22:35 GMT)
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