June 17, 2015 / 4:58 PM / in 3 years

Imperial delays target for next Kearl oil sands expansion

CALGARY, Alberta, June 17 (Reuters) - Imperial Oil Ltd said on Wednesday it will delay plans to boost the output of its Kearl oil sands project, backing off its 2020 fixed date for the next expansion phase.

Canada’s No. 2 integrated oil producer and refiner said a day earlier that production had begun at the second, C$9 billion ($7.3 billion) phase at Kearl, doubling capacity to 220,000 barrels per day when it reaches full output in a year.

But Imperial said it will no longer adhere to the 2020 target it initially imposed on Kearl’s next expansion to 345,000 barrels per day. The company did not give a reason for the delay.

“Recently we’ve been telling investment analysts and audiences at conferences that it would likely be sometime after 2020,” said Pius Rolheiser, a spokesman for the company. “Our fundamental growth plan for Kearl hasn’t changed but do we have all the specific steps, specific decisions made at this point? No.”

The expansion plan entails upgrading the existing facility at the site, located 70 kilometers (44 miles) north of Fort McMurray in Alberta.

Despite current low oil prices Imperial, majority owned by Exxon Mobil Corp, continues to boost its production. The Kearl expansion that opened on Tuesday adds 110,000 bpd of new capacity while another 40,000 bpd came as it opened a new phase of its Cold Lake oil sands project.

The company is also in the early days of developing its C$7 billion Aspen oil sands project, which could produce another 135,00 bpd. Production at Aspen, 45 kilometers north of Fort McMurray, is expected to begin by 2020.

Rolheiser said the company intends to reach Kearl’s regulatory limit of 345,000 after the company has had time to assess how the project performs at its current capacity of 220,000 bpd.

“We’re focused on running at 220,000 (bpd),” he said. “That will help us identify what the constraints and what the opportunities are so we can develop the best plan to move forward and grow to out licensed capacity.”

Imperial shares edged up 0.3 percent to C$47.67 shortly after midday on the Toronto Stock Exchange.

$1 = 1.2308 Canadian dollars Reporting by Scott Haggett; Editing by Richard Chang

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