Imperial Cuts Spending on Existing Projects as Costs Drop

  • Spending seen averaging C$2.5 billion in coming years
  • Capital to sustain business lowered to C$1.2 billion a year

Imperial Oil Ltd. has been able to lower the amount of capital reinvestment needed to sustain the business to about C$1.2 billion ($900 million) a year from C$2 billion a year ago, helped by shrinking supplier costs.

Imperial expects overall annual spending on expansion and maintenance to average about C$2.5 billion in the coming years as it reduces costs and slows expansion, Chief Executive Officer Rich Kruger said Wednesday in a webcast of the company’s annual investor day.

The company is basing its operations on the current price for oil, which is helping to create a “challenging” environment for Canadian producers, Kruger said. “If prices rise, so be it,” he said, adding that the company is planning for the “long term.”

Canadian oil-sands producers have cut budgets along with the sinking price for crude this year. Imperial operates bitumen mining at its Kearl site, in addition to its Cold Lake and Nabiye facilities, and owns a stake in Syncrude Canada Ltd.

New Projects

In the meantime, the company is considering options for expanding production on oil-sands leases in Alberta using steam-assisted technology, Kruger said. Imperial has already made applications to the provincial government for new projects, including its Aspen site, he said. No decision has been made to proceed with any of the new projects, he added.

The company is aiming to reduce cash operating costs at Kearl, currently at less than C$30 a barrel, Kruger said.

“We’re not going to bet the farm on oil price growth,” Kruger said.

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