Imperial Oil slows development of Aspen project, cites Alberta production cuts [UPDATED]
The slowdown will likely result in a delay of at least one year
CALGARY—Imperial Oil Ltd. has slowed the development of a $2.6-billion oilsands project because of uncertainty due to the Alberta government’s oil production curtailment program and other challenges.
First production from the Aspen in-situ project had been expected in 2022 but will now likely be delayed by at least one year, Imperial said Friday.
The project was previously projected to add 75,000 barrels per day of bitumen production to Imperial’s output of about 300,000 bpd.
The Calgary-based company—an integrated producer and refiner—sanctioned the project in November, after receiving provincial approval but before the Alberta government announced a production curtailment program effective Jan. 1.
The province mandated the production cuts in an effort to reduce a price discount on oil produced in Western Canada.
Rich Kruger, Imperial’s chairman, president and chief executive, said in a statement that the decision to delay the Aspen project was a difficult choice, given that it had received a green light to proceed only in November.
“However, we cannot invest billions of dollars on behalf of our shareholders given the uncertainty in the current business environment,” he said.
“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.”
He added that 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.”
The Alberta government initially ordered production of raw crude oil and bitumen to be cut by 325,000 barrels per day to deal with low prices.
Since then, the province has eased the mandatory production cuts as the discount for Western Canadian Select bitumen-blend oil compared with New York-traded West Texas Intermediate has fallen.