Canadian Manufacturing

Keystone XL: Delays haven’t soured Imperial Oil on project

Company has committed to send its crude to market on variety of proposed pipelines

April 25, 2014  by Lauren Krugel, The Canadian Press

CALGARY—One of Canada’s largest oilsands producers isn’t soured on the proposed Keystone XL pipeline, despite news that the US$5.4-billion project has been delayed yet again.

“We think it’s as important today as it was the day it was proposed. We think it’s good for parties north of the border and parties south of the border,” Imperial Oil Ltd. CEO Rich Kruger said following the company’s annual general meeting.

Last week, the United States State Department said it needed more time to decide on the TransCanada Corp. project while a court case in Nebraska is worked out.

The U.S. regulatory process is now in its sixth year.

TransCanada has said its customers remain “100 per cent” committed to Keystone XL and that there’s even a waiting list to ship crude on it.

But to cope with uncertainty over regulatory approvals, Imperial has committed to send its crude to market on a variety of proposed pipelines, such as Kinder Morgan, Inc.’s Trans Mountain expansion to the British Columbia Lower Mainland and TransCanada’s Energy East line to the East Coast.

It has not, however, signed on to Enbridge Inc.’s highly contentious Northern Gateway pipeline proposal to the west coast port of Kitimat, B.C.

“There’s a lot of reasons why we do things and don’t do things. It’s business. Is it needed? Is it valuable to us? That was one that we just chose not to,” Kruger said.

Imperial has also partnered with Kinder Morgan to build a rail terminal near Edmonton that aims to ship 100,000 barrels a day of crude on unit trains by next year, with the potential to expand to 250,000 barrels.

Kruger told reporters that rail acts as both a bridge to tide the company over during pipeline delays and an “insurance policy” should those projects never be built.

He says it’s too soon to say what effect Ottawa’s three-year phase-out of older DOT-111 tank cars—those involved in last summer’s disaster in Lac-Megantic, Que.—will have on its crude-by-rail strategy.

All along, Imperial had intended to use newer cars at the Edmonton facility, Kruger said.

Kruger also reiterated that Imperial and its U.S. parent, ExxonMobil Corp., are in no hurry to decide on building a liquefied natural gas (LNG) facility on the West Coast as a means to export the resource to booming Asian economies.

“If you were waiting to wake up one morning with a major announcement, those projects are not like that,” he said. “They take time.”