Imperial Oil Ltd. is taking on a new chief executive from parent company Exxon Mobil Corp.’s headquarters in Houston just a month after massive cost overruns were announced at the Canadian oil giant’s Kearl oil sands mine.
But both outgoing chief executive officer Bruce March, 56, and the incoming Rich Kruger, who is leaving his job as president of Exxon Mobil Production Co. to start in Calgary on March 1, say the change has nothing to do with delays and escalating cost at its marquee oil sands project.
Mr. Kruger said that while the first phase of Kearl‘s startup is “imminent,” it’s a timely transition. “We plan succession well in advance,” Mr. Kruger, 53, told reporters in Calgary. “It is a very natural, logical time.”
At the beginning of this month, Imperial announced the price tag of its Kearl mine had jumped by $2-billion, the second major increase for the project. Imperial said Kearl’s first development phase will cost $12.9-billion, up from $10.9-billion previously estimated. And the latest cost estimate is 61 per cent higher than the original calculation of $8-billion.
Fierce resident opposition to the company’s scheme for transporting massive, South Korean-made modules of equipment through Idaho and Montana, and the subsequent delays pushing construction into the harsh Alberta winter, ramped up costs in the first development phase of Kearl. On Thursday, Mr. March said the company expects phase one to be up and running by the end of next month.
That hasn’t quelled speculation about why Mr. March is leaving now.
“We wonder whether Mr. March’s departure from Imperial Oil is related to the cost overruns at Kearl,” Michael Dunn, an analyst with FirstEnergy Capital, said in a research note.
However, other analysts said Mr. March has already served a steady five years in Calgary for Imperial, and the corporate culture of Exxon sees executives rotated in and out of various positions around the world. Mr. March, they note, will stay in the family as senior vice-president of global operations for Exxon Mobil Chemical Co.
Dirk Lever, a managing director at AltaCorp Capital Inc., said the change in leadership is not a judgment of Mr. March’s performance. “Any time you get a president for Imperial Oil, he or she has probably spent a lot of time working within various divisions within Exxon, so that’s not any surprise at all,” Mr. Lever said. “That’s just how they groom people.”
Former Syncrude Canada Ltd. chief executive officer Eric Newell, who spent many years cutting his teeth at Imperial, said he gives Mr. March credit for making the “risky” decision to go forward with building the Kearl project in 2008, a time when economic uncertainty halted other energy projects.
“Imperial didn’t slow down. They kept going,” Mr. Newell said. “That’s wise … costs are lower.”
Imperial is Canada’s largest petroleum refiner and one of the country’s largest producers of crude oil and natural gas. Along with its oil sands projects at Kearl Lake and Cold Lake, it is a 25-per-cent owner of Syncrude.
Asked to reflect on his own performance Thursday, Mr. March joked, “I try real hard not to be too reflective,” but added, “I’m most proud and pleased with the safety performance of Imperial Oil.”
Although Mr. Kruger said Thursday it was too early for him to comment on issues relating to pipeline access and congestion, transportation headaches and access to markets will be a paramount concern for the company as production from the Kearl mine ramps up to a projected 345,000 barrels of bitumen a day by 2020.