Exxon Mobil Corp., the world’s largest company by market value, began production at its Kearl oil sands project in Alberta, which is projected to produce 4.6 billion barrels of recoverable oil in the next 40 years.
The project will produce 110,000 barrels per day later this year and that’s expected to double by late 2015, the company said in a statement. The Kearl site is 46 miles (75 km) northeast of Fort McMurray, Alberta, and is operated by Imperial Oil Ltd., which is 70 percent owned by Exxon Mobil.
“Kearl is a historic development for Imperial,” Richard Kruger, Imperial Oil’s chief executive officer, said in a statement. “Kearl is the largest project we’ve ever undertaken and the beginning of a period of substantial growth for the company that will see us double production to more than 600,000 barrels per day by about 2020.”
The C$12.9 billion Kearl project has been beset by equipment transport and weather delays, along with rising costs. In February, Imperial raised its estimate for initial costs due to “harsh weather” and issues delivering equipment to the site near the Saskatchewan border. Montana residents protested the truck traffic that made its way through the state en route to Alberta.
Imperial started production yesterday, said Pius Rolheiser, a spokesman for the company, in a telephone interview from Calgary today.
The news comes the same week the two companies reported earnings.
First-quarter profit at Irving, Texas-based Exxon Mobil was $9.5 billion, or $2.12 a share, on sales of $108.8 billion. Per-share results were 7 cents higher than the average of 19 analysts’ estimates compiled by Bloomberg.
Net income at Calgary-based Imperial dropped to C$798 million, or C$0.94 cents, on revenue of C$8.01 billion. Earnings per share fell 1 cent short of the C$0.95-cent average from 12 analysts.
Imperial plans to avoid the impact of selling Kearl’s output at lower prices for oil-sands crude relative to the U.S. benchmark by transporting it to refineries owned by Imperial and Exxon, Kruger said April 25. Imperial also is looking to secure rail cars for transporting some of the crude, to avoid a pipeline shortage from western Canada that’s depressing prices.