Friday, August 8, 2008

Exxon delays Kearl tar sands project

The last we heard from Exxon on the Kearls project was back here, when Rex Tillerson, Chairman and CEO was updating his shareholders at their annual meeting.
"My understanding is that the project … has been given a very high priority by the government of Canada and is moving along at a fairly rapid pace."
Well apparently Rex is now having some second thoughts.
Imperial Oil Ltd. (Canadian arm of Exxon) said Thursday that the start-up of its $8-billion Kearl oil sands project will likely be delayed by a year, to 2012, as it looks for ways to cut the project's costs.
Kearls the planned open-pit, tar sands, mining operation, with trailing ponds expected to be the size of 20,000 football fields overcame a court challenge by the Sierra Club and received a key permit to proceed in June.

Although the price of a barrel of oil has dropped recently, and is expected to drop further next year (as low as $84 by some estimates) it would really not affect the Exxon decision to delay the project.

At an average production cost of $40 per barrel of oil, the tar sands still represent a very profitable venture for Exxon.

That is of course, if our government continues to delay implementation of any environmental controls of greenhouse gas emissions until a future date.

It would appear that Rex might be waiting for the outcome of an expected fall election.

I mean it is one thing to talk about an undeveloped technology (Carbon Capture and Storage) to control green gas emissions in the future and another to be held responsible for creating those emissions in the present.



Reference: Imperial Oil Statement from the Globe and Mail here.

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