Imperial takes corrective action on Kearl and charts a path to growth in the oil sands
Imperial Oil provided an update to its investors today, including plans to boost production at Kearl and the next phase of expansion at Cold Lake.
Boosting capacity at Kearl
Although Kearl has a nameplate capacity of 220,000 bbl/day, the company admits bottlenecks on the front end of the plant has led to higher downtime than anticipated. In its third quarter update last week, the company said it was continuing to make progress at the oil sands mine through improvements being made to the mining and ore preparation side of the plant.
Today's update provided investors with more details around what's holding Kearl back, and how the company plans to get to 240,000 bbl/day of production, up from its current average of about 182,000 bbl/day. Imperial says its innovative paraffinic froth treatment (PFT) process is "operating as planned" but challenges persist on the ore preparation side, where the mined oil sands is mixed with hot water and slurried into a pumpable mixture.
The list of reliability improvements at Kearl includes:
- Increasing uptime of the crushing plant through the addition of supplemental capacity and improving the design of crusher teeth and conveyor drive chains
- Improving the life span of the hydrotransport lines by enhancing the durability of the piping
- Installing slurry piping interconnections between the wet side of ore preparation and the extraction plant, minimizing production losses during maintenance outages, and
- Installation of froth interface monitors in the extraction plant.
The improvement initiatives are expected to cost $550 million and take about two years to fully implement. CEO Rich Kruger says management is working towards lowering operating costs to US$20 per barrel, down from the current US$24.
Expanding output from in-situ
Aside from Kearl, Imperial is also working on expanding its in-situ production. The company submitted an application to the Alberta Energy Regulator (AER) in 2013 for approval of its Aspen Project, a 150,000 bbl/day solvent-assisted steam-assisted gravity drainage project (SA-SAGD). Imperial hopes to get the green light from the AER sometime in the next few months and is working towards a final investment decision in the first half of 2018. The project would be built in two phases, likely 75,000 bbl/day for each phase, at an estimated price tag of $2 billion. If all goes according to plan, production could begin as early as 2020.
Aside from Aspen, Imperial is also looking at a 55,000 bbl/day expansion of its Cold Lake facility. Although Cold Lake uses cyclic-steam stimulation (CSS), the expansion plant would also use SA-SAGD, similar to Aspen. An application was filed with the AER in the first quarter of 2016. The company says construction could begin as early as 2019 with first oil expected in 2022.
Cold Lake is presently averaging close to 160,000 bbl/day. Imperial Oil says operating costs at the in-situ facility are less than US$12 a barrel, about one-third representing energy costs.
IMPERIAL OIL BUSINESS UPDATE NOV 1, 2017
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IMPERIAL OIL ANNUAL GENERAL MEETING APR 2017
IMPERIAL OIL INVESTOR PRESENTATION JAN 2017
IMPERIAL OIL COLD LAKE EXPANSION PROJECT MAR 2016
IMPERIAL OIL ASPEN - A SAGD PROJECT JUN 2013