CALGARY — Imperial Oil is seeking approval for a new, $2-billion oilsands project on its Cold Lake lease area in northeastern Alberta.
The company says it has filed the regulatory paperwork with the Alberta Energy Regulator for the Cold Lake Expansion project, but Imperial spokeswoman Lisa Schmidt said development is not guaranteed.
“This is a preliminary and very important step in the regulatory process,” Schmidt said Friday.
“Overall, we take a long-term approach to resource development and an ultimate investment decision will be based on a variety of factors including regulatory approvals, market conditions and economic competitiveness,” she said.
Imperial (TSX:IMO), majority owned by U.S. energy giant ExxonMobil Corp, is taking the next step in the process as other oilsands developers delay or even shelve expansion projects in the face of low oil prices.
The news comes only days after Imperial announced it was selling close to 500 Canadian Esso stations for $2.8 billion to several fuel distributors.
RBC Capital Markets analyst Greg Pardy said in a note that the Cold Lake project could throw cold water on speculation that Imperial would spend that money on new acquisitions, because the application represents another organic growth avenue.
The steam-assisted gravity drainage project would tap into the Grand Rapids formation, which Imperial says has roughly 550 million barrels of potential resources.
It would use solvent to ease the flow of the thick bitumen, a process that the company says will reduce greenhouse gas emissions and water use per barrel by around 25 per cent compared with conventional steam-assisted extraction.
Imperial says the technology has been used in pilot projects at its current Cold Lake operation since 2010.
Construction could start as early as 2019 assuming Imperial gets timely regulatory approvals.
If developed, the new oilsands project would produce about 50,000 barrels per day of bitumen starting in about 2022.
Cold Lake Mayor Craig Copeland welcomed the news that Imperial was taking the next step in the process.
“For us, it’s very exciting news for our community. We desperately need good news right now, so I’m really happy to hear that Imperial Oil’s going to move forward,” Copeland said.
Imperial says the Cold Lake project is one of several in-situ opportunities it’s considering. Other potential developments in northeast Alberta include the Aspen project, on which it has also filed a regulatory application, as well as its Corner and Clyden leases.