* Rich Kruger to replace Bruce March next month
* March named senior VP at ExxonMobil Chemical Co
* Shuffle comes after oil sands budget woes
* Shares drop 27 Canadian cents in Toronto
By Jeffrey Jones
CALGARY, Alberta, Feb 21 Imperial Oil Ltd
has named Exxon Mobil Corp executive Rich
Kruger to replace Bruce March as CEO of Canada's No. 2 oil
producer and refiner as it readies to start up its C$12.9
billion ($12.7 billion) Kearl oil sands mine against a backdrop
of weak heavy-crude prices.
March, who ran Imperial Oil for five years, will become
senior vice-president at Exxon's chemical unit, Imperial said on
Thursday. Kruger, currently president of ExxonMobil Production
Co, will take over at the Canadian company on March 1. Exxon
Mobil has a 69.6 percent stake in Imperial.
March, 56, laid the groundwork for a big expansion of
Imperial's oil production as he completed construction of the
Kearl project in northern Alberta, which is expected to begin
producing before the end of March. A second phase is scheduled
to start up in 2015.
During his tenure, he took on a more public persona than his
predecessors, often taking center stage in the industry's
campaign to persuade the public it is moving quickly to improve
environmental performance despite growing criticism from green
Kruger, a 53-year-old Minnesota native and hockey fan, said
he did not plan major changes in leadership style or corporate
strategy, central to which is a push to double oil and gas
production over the next decade from such assets as the Kearl
and Cold Lake oil sands holdings in Alberta and shale gas fields
in British Columbia.
Imperial is also known for its four refineries and national
chain of Esso service stations in Canada.
"I think you'll find that Bruce and I are cut from the same
cloth in that regard," he told reporters. "You don't need a
great memory if you always tell the truth and tell it straight.
We've been developed in the same business model."
Kruger and March have known each other for a decade, having
taken Exxon Mobil management training together.
The 110,000 barrel a day Kearl project, a 50-50 joint
venture with Exxon Mobil, is nearing start-up and will use
production technology that allows the oil sands' tar-like
bitumen to flow to market without the need for upgrading.
However, the project has been plagued by cost overruns that
pushed the budget two-thirds above Imperial's original C$7.9
A final, C$2 billion overrun announced earlier this month
was blamed on frigid northern Alberta winter temperatures and a
series of court challenges in the U.S. Pacific Northwest that
delayed the transport of huge foreign-made processing modules to
the Kearl site, forcing a change in construction schedules and
"We wonder whether Mr. March's departure from Imperial Oil
is related to the cost overruns at Kearl," Michael Dunn, an
analyst at FirstEnergy Capital, wrote in a research note.
March said the transition had nothing to do with the cost
hikes, which have plagued oil sands construction projects for
more than a decade. The Kearl start-up represents a good time to
make the change, the executives said.
It does come, however, as Canadian heavy crude prices are
being heavily pressured by tight pipeline capacity to
traditional markets such as the U.S. Midwest, a situation that
has hurt bottom lines and shares across the industry.
March also oversaw a push into unconventional gas that began
when Imperial moved into the Horn River shale gas field in
northeastern British Columbia and will expand when the company
and Exxon Mobil complete the C$2.6 billion purchase of Celtic
Exploration Ltd, a deal that was approved by the
Canadian government on Wednesday.
One long-running initiative that remains unfulfilled is the
C$16.2 billion Mackenzie Gas project, which would move large
volumes of the fuel to southern markets from Canada's Mackenzie
Delta on the Beaufort Sea Coast.
Imperial, which leads a consortium of companies that
proposed the project, has yet to say what its fate will be as
North American gas prices remain low due to the rapid
development of shale supplies much closer to major markets,
squeezing Mackenzie's economics.
March gave no indication that conditions were conducive to
proceeding. According to the 2010 National Energy Board
approval, the partners must give an updated cost estimate and
report on their decision to build by the end of this year.
"There is a set of conditions that we're going to comply
with, if and when it gets developed, and it really needs a
(favorable) gas market, with the tolls for the pipeline, to get
into the market," he said.
"We maintain our aboriginal relations - we still have good
relations with the aboriginal communities along the pipeline
route and up in the Inuit area - and we look forward to having
the market be more amenable to making Mackenzie an operating
Kruger started his career with Exxon in 1981 and has held
positions in Russia, Africa and Malaysia.
Imperial shares fell 27 Canadian cents to C$42.55 on the
Toronto Stock Exchange.