Imperial Oil delays Kearl oil sands project
Imperial Oil Ltd. is delaying a decision to proceed with its $8-billion Kearl oil sands proposal, a move which could push the start date for the plant north of Fort McMurray, Alta., back by one year, the company said Thursday.
A successful environmental challenge and design revisions to the project have increased costs for the proposal, Imperial Oil said.
Now, Imperial Oil is targeting the first quarter of next year to make a final decision whether to go ahead, company officials noted.
Imperial is looking to build the 300,000 barrel per day Kearl project in phases, with the first expected to produce 100,000 barrels a day. The company had previously estimated a 2011 start for the project's initial phase.
Global oil prices. however, have fallen substantially from their July peak of $147 US a barrel. On Thursday, a barrel of sweet crude was going for $120.02.
Some analysts wondered whether the slumping oil market is giving oil sands investors second thoughts about proceeding with plans to lift the expensive commodity.
Three-month stock chart for Imperial Oil"Will investors begin to get cold feet about whether the oil sands will provide enough of a return?" wondered Chris Felton, vice-president of Tristone Capital Inc. in Calgary.
Imperial Oil owns 70 per cent of the proposed Kearl facility project while a subsidiary of Exxon Mobil Corp. holds the remaining interest.
Imperial Oil shares closed the trading day down 26 cents at $48.74.
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