CALGARY, Alberta (Reuters) - Imperial Oil Ltd IMO.TO, Canada's No. 2 oil producer and refiner, is looking at sites for a potential liquefied natural gas export plant on British Columbia's Pacific coast, though the company is far from ready to decide if it will build the facility.
Imperial, which on Thursday reported a 21 percent fall in first-quarter profit due to lower crude prices and increased refinery maintenance, has put in what the company termed “an expression of interest” for a site at Grassy Point, about 30 kilometers (19 miles), north of Prince Rupert, B.C. It is one of a number of sites the company is considering for an LNG plant.
“It’s an expression of interest to look at, with the Crown, what we can do on that potential site, as we do with others,” Richard Kruger, the company’s chief executive, told reporters.
“We’ll look around the coast, at this site as well as others, to see what best meets our needs.”
The company, along with majority owner, Exxon Mobil Corp XOM.N, has been considering whether to build a gas-liquefaction plant for more than a year, as it looks to exploit its massive shale gas holdings in northeastern British Columbia.
It added to those shale reserves earlier this year, when it and Exxon acquired Celtic Resources Ltd for C$2.6 billion ($2.55 billion) to gain its promising shale oil and gas properties in Western Canada.
Chevron Corp CVX.N, Royal Dutch Shell Plc RDSa.L , BG Group Plc BG.L, Malaysia's Petronas PETR.UL and others are already in the early stages of building their own LNG facilities in British Columbia. However Kruger said Imperial is far from being ready to proceed with its own facility.
“With LNG projects it’s hard to put an absolute timeline to it,” he said. “They’re complex and there are a lot of components. But we’re working hard right now on each of those components to see what we can assemble.”
KEARL START IMMINENT
The company said the start-up of the first phase of its Kearl oil sands project in northern Alberta is imminent and the sales of Kearl blend are expected to begin in the third quarter, once it fills storage tanks and the pipeline serving the project.
Imperial, 69.6 percent owned by Exxon Mobil Corp XOM.N, has been struggling to overcome start-up problems at its 110,000 barrel per day Kearl project.
The C$12.9 billion project was originally expected to begin producing by the end of 2012 but was delayed as bitterly cold temperatures slowed work on the facility.
The 79 percent-owned Kearl project will use production technology that allows the oil sands’ tar-like bitumen to flow to market without the need for upgrade.
The project has been plagued by cost overruns that pushed the budget nearly two-thirds above Imperial’s initial 2009 forecast of C$7.9 billion estimate.
Imperial’s net income in the quarter fell to C$798 million ($777 million), or 94 Canadian cents per share, from C$1.02 billion, or C$1.19 per share, a year earlier.
Revenue rose 6 percent to C$8.01 billion.
Imperial’s gross production fell 2 percent to average 284,000 barrels of oil equivalent per day.
Cash flow from operations, a key indicator of the company’s ability to pay for new projects and drilling, fell to C$597 million from C$1.05 billion a year earlier.
Imperial shares were up 34 Canadian cents to C$40.43 by midafternoon on the Toronto Stock Exchange.
($1 = $1.02 Canadian)
Reporting by Scott Haggett and Bhaswati Mukhopadhyay in Bangalore; Editing by Alden Bentley
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