CALGARY C Imperial Oil Ltd. has revealed plans for a new $2-billion oilsands plant at a time its competitors have cancelled or deferred new projects to outlive the oil price collapse.
Imperial, among the largest oil and gas companies in Canada, announced Friday it had filed a credit card applicatoin using the Alberta Energy Regulator to construct a 50,000 barrel each day oilsands facility, which would extract oil using a new technique the organization says would reduce greenhouse gas emissions by 25 per cent compared with existing projects.
If built, the new project C which Imperial previously dubbed Midzaghe, the Dene word for owl C uses an adaptation of steam-assisted gravity drainage (SAGD) technology that uses less water and less energy to produce oil.
Imperial spokesperson Lisa Schmidt said the company continues to be piloting this “solvent-assisted” SAGD in the field, and recently amended its application for another thermal oilsands project to make use of this solvent-based technology.
Solvents C like butane and propane C reduce the need for pressure and lower the need for high-temperatures in SAGD extraction, allowing more oil and gas to flow towards the surface while using less energy.
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Schmidt said that in October Imperial updated its Aspen oilsands project application, first filed in December 2013, to mirror that the company intended to use its solvent-assisted SAGD process in the first 45,000-bpd phase of that project.
Other major oilsands companies, including Suncor Energy Inc. and Cenovus Energy Corp., happen to be piloting solvent-based extraction approaches for years in order to reduce both emissions and charges.
Oil and gas companies in Alberta are under increasing pressure to lower their emissions as the province prepares to apply new global warming policies, which will charge companies a $30-per tonne carbon tax beginning in 2017.
FirstEnergy Capital Corp. analyst Michael Dunn said inside a research observe that Imperial continues to be using solvents for several years to enhance production in certain of their older wells on its Cold Lake oilsands leases, that is where Midzaghe would be located.
Dunn said Imperial is “the most experienced user of solvents within the bitumen process of recovery.”
To date, no major oilsands player has moved from a pilot project to a full-scale commercial facility using solvents.
If built, the Aspen oilsands project could be the first to use this method on the commercial scale, followed closely thereafter by Midzaghe.
Imperial, whose majority owner is Exxon Mobil Corp., announced when it receives regulatory approvals in time, it might sanction the Midzaghe project in 2019 and also the facility could be producing oil by 2022. Schmidt confirmed the project’s current estimated price is $2 billion.
Earlier now, Imperial announced it had sold its remaining 497 Esso stations for $2.8 billion, leading many analysts to speculate the company had a sizable “war chest” that could be used to buy up struggling oilsands producers.
“This announcement could throw some cold water on market theories regarding any potential oilsands acquisitions that (Imperial) may pursue following its recently announced $2.8-billion retail site transaction,” RBC Capital Markets analyst Greg Pardy said in a research note.
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