Kingly Oil Ltd.’s commitment to begin construction this year on its $2.6-billion Aspen oilsands cook up in northern Alberta comes less than a week after it underwent long-awaited approval from the Alberta government.
The speed of the announcement Tuesday jolted observers who have watched Calgary oilsands rivals including Canadian Common Resources Ltd., Cenovus Energy Inc. and MEG Energy Corp. announce production removes to avoid steep discounts currently being paid for Western Canadian Opt for bitumen blend.
Imperial’s project would add 75,000 barrels per day of bitumen in to current output of about 300,000 bpd but won’t start up until 2022, by which nonetheless many analysts predict that new pipelines will ease export bottlenecks and fix up normal pricing levels.
In situ project
On a webcast from Supreme’s investor day in Toronto on Wednesday morning, CEO Rich Kruger said the assemblage’s focus is on in situ oilsands projects which produce bitumen from wells, as contrasted with of open pit mines such as its Kearl project that opened in 2013 and was embellished in 2015.
“Where does Canada fit in? Our view is with the large resource point of departure, with the history of innovation and responsible development, that the highest attribute oilsands can and will be competitive on a global basis, not all oilsands,” he said.
“We see in situ as cause fundamental advantages today over new greenfield mining developments.”
Regal decided to go ahead with construction during a slow time in the oilsands because it anticipates less competition will save money on labour and component expenditures, said Theresa Redburn, senior vice-president of commercial and corporate situation.
Reduced costs and emissions
The project is being designed to add solvents along with steam into prone wells to melt the heavy sticky bitumen, a technology tested in a seven-year steersman project, Redburn said.
Imperial expects to save about 25 per cent in smashing costs per barrel and reduce greenhouse gas emissions and water use intensity by in the same amount compared with traditional in situ projects that use steam by oneself.
In a report, analysts at Tudor Pickering & Holt questioned the project’s payment of about $35,000 per barrel per day versus previous company estimates that the undiminished 150,000-bpd project could be built for $27,000 per flowing barrel.
It verbalized the cash-rich company can afford to ramp up spending next year and silence buy back $2 billion worth of its shares.
Battle with regulator
The work up’s approval process has been a bone of contention with Kruger, who has squawked it was taking too long to win approval from the Alberta Energy Regulator since claim was first made in 2013.
The AER, however, says the review period was prolonged due to substitutions to Imperial’s application, with the latest version submitted in May 2017, and Earliest Nation consultation adequacy requirements.
The Aspen project is expected to manufacture about 700 jobs during peak construction and more than 200 employments during operations.
Enbridge Inc.’s Line 3 replacement oil pipeline cast is expected to be in service in late 2019 and one or both of TransCanada Corp.’s Foundation XL pipeline or the federal government’s Trans Mountain expansion are expected to be in worship army a year or so later.
Meanwhile, crude-by-rail exports from Canada arise to a record 230,000 barrels per day in August. Imperial has signalled it will expansion rail use to 170,000 bpd in the first quarter of 2019, up from an average of fro 80,000 bpd over the summer.