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Imperial to proceed with $2.6 billion Aspen oil sands project

09/11/2018
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It’s more great news for Canada’s hydrocarbons industry! Imperial Oil (a subsidiary of ExxonMobil) has announced that it will proceed with its $2.6 billion Aspen oil sands project, which will be the first new oil sands development in Alberta since 2013.
An overview of oil sands operations in Alberta, Canada.
(Overview of oil sands operations in Alberta, Canada. Image via Flickr user Dru Oja Jay).

Located around 45 kilometres northeast of Fort McMurray, the project is expected to produce about 75,000 barrels of bitumen per day, will include the first major commercial application of next-generation oil sands recovery technology designed to lower greenhouse gas emissions intensity and water use, while improving development economics.

The move comes in light of other majors dumping their oil sands assets. Royal Dutch Shell and ConocoPhillips are amongst those to have recently sold their stakes in projects. Local companies such as Cenovus Energy and Canadian Natural Resources have chosen to curtail their oil sands production in order weather low prices.
Imperial's Cold Lake operation which is one of the largest thermal in-situ heavy oil operations in the world.
(Imperial’s Cold Lake operation which is one of the largest thermal in-situ heavy oil operations in the world. Image via Imperial).

Working around Alberta’s pipeline problem

Imperial’s decision to proceed with the development comes as Alberta’s oil producers continue to suffer from the region’s insufficient pipeline capacity. The lack of pipeline capacity is one of the key reasons that the price of Canadian oil has plummeted so sharply in recent months. Imperial believes that it can work around these pipeline issues however; the company is examining the feasibility of processing more heavy crude at its refineries and could place some of the new production from the Aspen project in Enbridge’s Line 3, which is the one export pipeline that’s currently under construction (scheduled for completion late in 2019). Imperial could also potentially utilise their Edmonton terminal to load 210,000 bpd that could be shipped out.

Utilising new oil sands tech

Imperial also believes that their new oil sands extraction technology will provide a competitive advantage that will help make the Aspen project viable. 
“We do not take investment decisions lightly, particularly in these challenging times,” said Rich Kruger, Imperial chairman, president and chief executive officer. “This is the right technology at the right time to make a competitive investment. We have made the decision to proceed now because we believe this advanced technology will further the evolution of Imperial’s oil sands business”.
An overview of Imperial's advanced oil sands recovery technology which will be deployed at the Aspen project.
(An overview of Imperial’s advanced oil sands recovery technology which will be deployed at the Aspen project. Image via Imperial).

The technology itself consists of the application of advanced solvent-assisted, steam-assisted gravity drainage methods. Imperial estimate that this new technology will reduce greenhouse gas emissions intensity and water use intensity by up to 25 percent, compared with traditional steam-assisted technology. Imperial anticipate that Aspen’s emissions intensity will be one of the lowest among in-situ oil sands operations across the industry.

Bringing economic development and jobs to Alberta

The Aspen project is set to be a major boon for both the region’s jobs market and wider economy. For starters, the project is expected to create around 700 jobs during peak construction and more than 200 jobs during operations. Based on preliminary estimates and current tax and royalty rates, more than $4 billion in direct federal and provincial tax revenues are expected to be generated over the 30-year life of the project, as well as deliver more than $10 billion in royalty revenues to the Alberta government. 

Imperial has also consulted with seven local indigenous communities during the regulatory application process to reach collaborative and unique relationship agreements that provide mutual benefits and support long term sustainable development of these communities. The agreements will provide economic benefits, workforce opportunities, strategic business development and potential business contracts that support project construction and operation.
Another shot of Imperial's Cold Lake project which is one of the longest running oil sands projects in northeastern Alberta.
(Another shot of Imperial’s Cold Lake project which is one of the longest running oil sands projects in northeastern Alberta. Image via Imperial).

Countdown to construction…

With decision made to proceed with the Aspen project, all eyes are now on the construction phase and start-up of the project. A company statement from Imperial states that construction will ‘begin in the fourth quarter of 2018 with first production expected in 2022’. There is potential for further development of up to another 75,000 barrels per day of bitumen production with timing dependent on a number of factors, including foundational project performance and overall business and market conditions.

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Imperial to proceed with $2.6 billion Aspen oil sands project - Time to read 5 min
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