CALGARY, Alberta (Reuters) - Imperial Oil Ltd pronounced on Wednesday it will go forward with an C$8.9 billion ($8.65 billion) devise to double a distance of a Kearl oil sands project, even as it pronounced sum costs for a large mining operation have climbed by scarcely a quarter.
Imperial, infancy owned by U.S. heavyweight Exxon Mobil Corp, gave a go-ahead to a oil sands mining devise while still operative to finish Kearl's first, 110,000 barrel-per-day tranche. The initial C$10.9 billion devise will not start handling until late subsequent year.
Expected to eventually furnish 345,000 barrels per day, a Kearl devise will daub 4.6 billion barrels of reserves. But a cost of producing that apparatus has climbed. Imperial pronounced it approaching Kearl's costs to sum C$6.20 per tub of reserves, or some-more than C$28 billion, adult from a before guess of C$5 per tub or about C$23 billion.
The immature light for a enlargement comes amid a new detonate of activity in Canada's connect sands, a world's third largest wanton oil storehouse, behind Saudi Arabia and Venezuela, though a largest open to private investment.
Companies including Suncor Energy Inc, Total SA, Royal Dutch Shell Plc, Canadian Natural Resources Ltd and others have skeleton to enhance their existent oil sands operations as prolongation from northern Alberta is set to arise to 2.1 million bpd by 2015 from 1.5 million.
Those desirous skeleton have lifted fears that a projects will again start to contest for wanting learned labor and materials, sparking another turn of acceleration identical to what existed before to a recession, when devise costs customarily climbed by half or more.
However Imperial did not hang a cost boost on inflationary pressure. The association pronounced it increased a guess since of skeleton to deposit in new informal pipelines portion a devise and since of amazing costs for determining poisonous cave tailings after a Alberta supervision introduced a regulation, called Directive 74, that army companies to improved conduct tailings ponds.
"The cost rider reflects modifications to a range of a work and a comforts compulsory during Kearl to approve with Directive 74," pronounced Pius Rolheiser, a orator for a company. "That includes changes to a cave plan, a tailings area pattern and also some technology."
Still, a rider is a second time in reduction than a year that a association has upped cost estimates. In May, it pronounced Kearl's initial proviso would cost C$10.9 billion, a third aloft than a strange C$8 billion forecast.
As well, some are doubt a company's matter that a aloft costs are entrance since of a tailings law introduced in 2009.
"We design a marketplace might not buy that explanation," Michael Dunn, an researcher during FirstEnergy Capital, wrote in a note to clients. "The $5 per tub cost guess was reiterated this past May during Imperial's financier day, some-more than dual years after ... Directive 74 was issued."
Kearl's second proviso is approaching to start handling in late 2015. Further teenager expansions and debottlenecking of a mining operation will eventually boost prolongation to 345,000 barrels a day by 2020, partial of Imperial devise to double oil production, to 600,000 bpd by a start of a subsequent decade.
Along with Kearl, Imperial also has a 25 percent seductiveness in a Syncrude Canada oil sands mining project and operates a 140,000 bpd Cold Lake thermal project, where steam is pumped into a belligerent to melt a bitumen so it can be pumped to a surface.
Imperial owns 71 percent of Kearl while Exxon Mobil has a remaining interest.
Imperial shares were adult 28 Canadian cents during C$43.35 by mid-afternoon on a Toronto Stock Exchange.
($1=$1.03 Canadian)
(Additional stating by Aftab Ahmed in Bangalore; modifying by Rob Wilson)
News referensi http://news.yahoo.com/imperial-says-kearl-project-costs-rise-above-28-201937427.html
