CALGARY — Imperial Oil Ltd.’s Kearl oilsands project is on schedule, even as huge loads of equipment from overseas remain stalled on their journey to northern Alberta, the chief executive of the energy company said Thursday.
Work is about 60 per cent complete on the $8-billion project, and it’s still on target to come into service in late 2012. While most of the equipment for Kearl is being built in Canada, some 200 modules have been ordered from a company in South Korea.
About 33 of those pieces have travelled across the Pacific, through the port at Vancouver, Wash., and along the Columbia and Snake Rivers. They are now stuck at the inland port of Lewiston, Idaho, waiting to make the rest of the journey by truck to Alberta via Montana.
“We still have plenty of time to get those 33 in Lewiston as well as the modules that haven’t come from Korea yet in time to maintain overall schedule,” Imperial CEO Bruce March told reporters after the company’s annual general meeting.
The megaloads are so big that changes have to be made to secondary highways to accommodate them. Environmentalists are concerned about erosion and other ecological damage the loads may cause, as well as the prospect of the scenic roads becoming busy industrial corridors. Residents have expressed worries about traffic delays and safety.
State government decisions to allow the loads have been the subject of legal challenges. A hearing in Idaho is underway, and another one in Montana is set to begin next month.
In the meantime, Imperial is looking to break down the modules into smaller parts. It’s not clear how much that may add to the project’s pricetag.
“This has got a lot of moving arms and legs when you think about legal challenges and making them smaller to go through a different route in the U.S. interstate system,” March said.
“We don’t have that nailed down yet, but you wouldn’t expect that it would be lower costs, certainly.”
The first phase of Kearl is slated to produce 110,000 barrels of oil per day. Imperial initially planned on adding two more 100,000 barrel per day phases. Now it aims to develop the mine in just one more phase, bringing capacity up to 345,000 barrels per day by unlocking spare capacity already in the system.
Earlier Thursday, Imperial (TSX:IMO) said its profits jumped by nearly two thirds on improved oilsands production, higher refining margins and a falloff in maintenance activities.
The Calgary-based company said its performance was driven primarily by production of 310,000 barrels a day during the period, eclipsing the year-earlier’s 291,000 barrels.
Profits were $781 million, or 91 cents per share, compared with net earnings of $476 million, or 56 cents per share, in the same period of 2010. Revenue rose to $6.87 billion from $6.17 billion.
Analysts polled by Thomson-Reuters were, on average, expecting Imperial to earn 96 cents per share and post revenues of about $6.7 billion.
“Our operations were strong in every segment. Our company’s performing very well,” March said, calling the production growth a “big, big highlight” for the quarter.
Most of the growth came from Imperial’s vast steam-driven operations at Cold Lake and its 25 per cent interest in the Syncrude mine, the world’s largest oilsands project.
Imperial is the lead partner on the long-stalled Mackenzie Gas Project, which would bring natural gas from the Northwest Territories to southern markets via a 1,220-kilometre pipeline.
A formal regulatory process finally wrapped in March after several years of delay. Imperial needs to secure some 6,000 other permits from local boards and agencies before construction can begin and has said the absolute soonest gas could start flowing through pipeline would be 2018.
The federal election has put discussions over a possible federal fiscal package on hold for now, March said.
“There’s nobody to talk to in Ottawa, first of all. But secondly, until we find out which government’s in place and whether or not there’s a minister reshuffle we’re just holding pat until that gets cleared up.”
Imperial, controlled by Texas-based ExxonMobil Corp. (NYSE:XOM), also runs a chain of Esso-branded fuel stations across the country and refineries in Alberta and Ontario. In addition, it has land in British Columbia’s Horn River Basin, and exploration opportunities in the Arctic.
Shares in Imperial were down 42 cents at $49.85 in Thursday trading on the Toronto Stock Exchange.
In its own financial statement earlier Thursday, ExxonMobil reported net income of US$10.7 billion, or $2.14 per share, in the first three months of the year. That compares with US$6.3 billion, or 1.33 per share.
Revenue increased 26 per cent to US$114 billion.