Imperial Oil Ltd. received a Witch Night Treatment with the long-awaited approval of provincial regulators on the new Aspen oilsands project.
Now he has to build it.
Almost five years after applying for a project approval from Alberta Energi Regulator, an integrated oil producer announced on Wednesday that it will build a 2.6 billion dollar development in northern Alberta.
For the province and the sector, publication is significant.
This is one of the first major greenfield oilsand projects to continue as crude prices collapsed almost four years ago.
Starting from the great development of mining and expansion, the work is largely completed, it will create around 700 jobs when cities are built and more than 200 jobs are built once.
Consumption will be realized in the period 2019-21. Years at about $ 700 million a year, which requires an incentive, as capital spending fell four years in a row.
Construction will begin this quarter, while Aspen will add around 75,000 barrels of bitumen per day by 2022.
He sends a positive signal when the main player like Imperial, with majority shareholders Ekkon Mobil Corp., is ready to invest in more bitumen production, even because of the ruin and darkness surrounding Canada's challenges.
Moreover, the project shows that oil producers can reduce costs and reduce greenhouse gas emissions per barrel, which is a prerequisite if the largest sector in Alberta expects a sharp increase in production in the world limited to carbon.
"We have an extremely large resource in oilsands – Canada works and, of course, our company. Not everyone will be competitive globally," said Rich Kruger CEO Wednesday.
"But projects that have the highest quality resource, which can develop and apply tempo or new technologies … we think there is a place for those selected projects to compete in the global energy world."
Unlike other commercial thermal products, Imperial will inject solvents underground with steam to increase the production of bitumen.
Imperial says technology will reduce emissions and water consumption by barrel by 25 percent compared to typical SAGDs using steam.
For those who have fired oilsands like hitting the wall – or have become uncompetitive by American oil slag – this proves that future investments can go under the right circumstances.
"This is a sign of hope, that the global economy … is located in a place that can support future (project) sanctions, even if the local environment can not," said analyst Kevin Birn, director of IHS Markit's Canadian Oil Company.
"It's a breakthrough in terms of sanctioning the greenfield project, the promise of technology and the reduction of the emission intensity. They can break many stereotypes in this project, which is very good for the industry."
The decision also shows that companies did not sit in the hands of the crisis, using time to re-engineer development, clean up places to reduce costs and improve efficiency.
Birn pointed out that the cost of adding new Aspen production is about 30 to 40 percent lower than the industry average during the boom period in 2014. year.
For Imperial, the company follows a countercyclical strategy that should allow it access to skilled labor and materials at lower costs, preventing some of the budget shootings over the past few years.
The news comes in a non-zero weather for the heavily affected sector, given the mutual mood of investors, the exodus of several multinational players from oilsands and current problems around the pipeline.
Since 2014, capital spending has fallen from nearly $ 34 billion to an estimated $ 12.3 billion this year.
Last week, projected Canadian oil production would increase by 58 percent to almost seven million barrels per day (bpd) by 2040.
But it is assumed that export markets can be found, and Canadian oil can be transported to these places, which is not ensured in light of today's struggles on gas pipelines.
Kruger noted that Imperial has the ability to increase oil supplies through its railroad equipment and companies analyzed Aspen under a number of transport options.
One of the country's largest producers and the largest refinery, Imperial also increases production at Kearl oilsands, with around 200,000 barrels a day this year to 240,000 barrels in 2020, in which he spent $ 550 million in the process.
Now, one project is not a sure sign that the money will be returned to oilsands.
Access to the market remains a major problem, and oil prices in Canada will need to increase for significantly more investments to enter the Fort McMurray region.
The CEO of ARC Energi Research, Peter Tertzakian, pointed out that smaller equality projects would probably lead to future growth in oilsands, not the development of large maps.
Only a few companies have existing infrastructure and purification tools – and transportation options – that Imperial seems to continue with such investments.
"We should take it as a positive signal that a global multinational company recognizes that we can do better, and that is a worthwhile investment place," Tertzakian said.
"Few players have the right combination of things to grow. Not everyone has that."
And the deeper questions about the growing oilsand show will not disappear. Albert's government has already adopted a 100 megaton limit for emissions from the sector.
"Industry must do more to reduce carbon emissions in the sector as a whole, both on an absolute basis and on the basis of intensity," said Benjamin Israel, senior analyst at the Pembina Institute.
An investment will not change the dynamics for the entire oil sector.
But it will help.
And after a long five-year wait, it's finally a treatment – not a trick – for the Imperial Aspen project.
Chris Varcoe is a columnist Calgary Herald.