The Kearl oil sands project is finally producing bitumen, Imperial Oil Ltd. announced Saturday.
The project uses a froth-treatment technology to produce pipeline-quality diluted bitumen without an upgrader, which the company says reduces greenhouse gas emissions. Located about 75 kilometres northeast of Fort McMurray, the mine is expected to produce approximately 4.6 billion barrels of bitumen over an estimated project life of more than four decades.
“Kearl is the largest project we’ve ever undertaken and the beginning of a period of substantial growth for the company,” chief executive Rich Kruger said in a news release.
Although workers at the Kearl site have began processing bitumen in late March, the company hadn’t been able to say it reached the final stage of producing mined diluted bitumen until Saturday. A news release said the start-up of additional froth-treatment processes will proceed in sequence as planned, bringing production from the initial development to an expected 110,000 barrels per day later in 2013.
Imperial said Kearl is key step in the company’s plan to double its total production to about 600,000 barrels per day by 2020. Production at Kearl alone is expected to hit 345,000 barrels of bitumen a day by 2020.
But the Kearl project has already faced a number of delays and cost escalations, in part due to the complications of trucking enormous, South Korean-made plant modules across the U.S. in 2011 and 2012, and the opposition to the oversized loads from residents in Idaho and Montana. Originally, Imperial said the project would be up and running by December but cold weather pushed the start date into the spring.
Like other Canadian heavy oil producers, Imperial also faces the challenge of getting its product to U.S. markets – especially in the long term – due to increasing crude production and pipeline congestion.
However, while releasing the company’s first quarter results last week, Mr. Kruger said those issues will be dealt with over time.
“We certainly think additional pipelines are needed. But we’re not waiting on that,” Mr. Kruger said. “We’re looking at incremental rail options at our facilities, getting our crudes into our own refineries.”