Exxon's Reluctance to Join Canada's Gas Boom Highlights Tar Sands Focus

Strategic Insights -

Canada's major oil and gas players are abuzz about the recent upturn in the gas sector, but Exxon Corp.'s Canadian affiliate, Imperial Oil Ltd., seems hesitant to join the party. While Imperial Oil is starting to target gas prospects off Canada's East Coast, its true enthusiasm lies in tar sands. Imperial Oil boasts top-notch expertise in Alberta's extra-heavy oil sands, churning out untreated bitumen from its own operations in Cold Lake and holding a 25% stake in the Syncrude Canada consortium. The company's plans to expand this sector have garnered significant attention, with Imperial Vice President for Operations Howard Dingle highlighting the potential of bitumen production at Cold Lake. The company aims to increase output to 150,000 b/d by 2003, with a further phase of development planned for 175,000 b/d by 2006.

Key Takeaways:

  • Imperial Oil is focusing on tar sands, with plans to increase bitumen production at Cold Lake to 150,000 b/d by 2003 and 175,000 b/d by 2006, at a cost of C$650 million (US$445 million).
  • The company holds a 25% stake in the Syncrude Canada consortium, which will see its share of synthetic oil output soar from 56,000 b/d this year to 106,000 b/d by 2007.
  • Imperial's total liquids production, before the deduction of royalties, remained stable at around 280,000 b/d over the past decade.
  • The company's gas production has fallen to 439 MMcfd from 542 MMcfd in the past four years, but will be partially offset by 45 MMcfd from Imperial's 9% share in the Sable Island gas development.
  • Imperial has extensive downstream and chemicals interests, operating as Canada's largest integrated oil company, with a 70% stake owned by Exxon.

Statistics:

  • Imperial Oil aims to increase bitumen production at Cold Lake to 150,000 b/d by 2003, with a further phase of development planned for 175,000 b/d by 2006.
  • The company's share of synthetic oil output from the Syncrude Canada consortium is expected to soar from 56,000 b/d this year to 106,000 b/d by 2007.
  • Imperial's total liquids production, before the deduction of royalties, has remained stable at around 280,000 b/d over the past decade.
  • The company's gas production has fallen to 439 MMcfd from 542 MMcfd in the past four years.
  • Imperial holds 4.8 Tcf of gas reserves in the Mackenzie Delta in Canada's far north.

Sources:

  • Imperial Oil's presentation to investment analysts in Calgary, as reported by David Pike.
  • Syncrude Canada consortium's operations and development plans.
  • Imperial Oil's operations and investment plans in the tar sands.
  • Exxon Corp.'s ownership stake in Imperial Oil.