Imperial Oil Limited’s decision on whether to build a British Columbia LNG export plant is still several years away, top executives said April 3.
“We believe it will take several more years before we will find ourselves in a position to determine whether an LNG opportunity on the West Coast of Canada can, or would, be an attractive opportunity we would pursue,” Paul Masschelin, senior vice-president of finance, told the company’s investor conference in New York.
Although Imperial and its parent Exxon Mobil Corporation have received a natural gas export permit for such a venture, the companies are in the “very early evaluation stages of a potential LNG project,” Masschelin said.
“By nature, LNG projects are very complex,” he said, noting the companies are pursuing all the elements “in parallel” – including the gas resource, a fiscal and regulatory regime, pipelines, liquefaction facilities, seagoing tankers, re-gas facilities and markets.
Speaking to reporters on a conference call afterwards, Rich Kruger, Imperial’s chairman, president and CEO, drove home the same point.
Pundits have warned that if Canadian exports don’t start quickly, their potential Asian customers will be supplied by non-Canadian projects.
Asked why Imperial believes the export opportunity will still exist in several years, Kruger said, “More than anything, we look at and want to ensure the quality and the value of a project. And we won’t rush aspects of it [because] we’re afraid we might miss out. It has to be a quality project.”
All aspects have to fit together, he said, “not the least of which is a fiscal and regulatory regime.”
“Whatever time it happens to take is what it will take,” he said. “And if there’s value and a place in the market, then it’ll be a project. And if there’s not, it won’t go.”
In October 2012, Imperial and ExxonMobil announced they were acquiring Montney producer and Duvernay acreage holder Celtic Exploration Ltd. for $3.1 billion.
Asked whether Imperial plans to acquire more reserves to feed a potential LNG project, Kruger said the companies continue to evaluate the former Celtic lands.
“[For] an LNG project, literally you can’t have enough high-quality resource. So we’ll look at what we have, and if it’s something that we think we need more [of], then we’d consider that as well,” he said. “But right now we’re evaluating what we have.”
In the meantime, Kruger said Imperial is “selectively drilling” and “spending time with our proprietary reservoir engineering modelling” to better evaluate the former Celtic reserves. He said the goal is to “understand where the highest-quality, best portions of the acreage … are, and [where] we’ll get the highest profitability.”
