Arctic, oil sands, East Coast offshore dominate Imperial’s growth prospects

Gary Park

Petroleum News Calgary correspondent

Imperial Oil underscored the importance of frontier plays such as the oil sands, Arctic and East Coast offshore to the future of Canada’s largest producers as it reported further evaporation of its conventional assets in 2003.

In a filing with the U.S. Securities and Exchange Commission, the largest integrated oil company in Canada reported that since 1999 its net oil and natural gas liquids reserves, including bitumen interests at its huge Cold Lake operation, but excluding its oil sands mining assets, have shrunk by 19 percent or 219 million barrels, while its gas holdings are down 40 percent or 669 billion cubic feet.

An internal evaluation showed that proven gas reserves fell 16 percent last year and crude dropped 6 percent, after subtracting production.

When its oil sands mining reserves are factored in, Imperial’s net proved reserves entered 2004 at 1.67 billion barrels of oil and liquids and 1.023 trillion cubic feet of gas, a drop of 5.7 percent in 2003.

Waiting in the wings are Imperial’s major stake in the Mackenzie Gas Project (3 tcf from its 100 percent control of the Taglu field) and stages 14 to 16 of its Cold Lake operation (375 million barrels), both of which will be booked once the company puts money into the developments.

Imperial’s current assets include a gross interest in 6,367 conventional oil and gas wells and 3,524 wells in the Cold Lake heavy oil region.

The Toronto-based company had cash flow in 2003 of C$2.35 billion and spent C$1.53 billion on capital projects, including C$769 million at the Cold Lake and Syncrude operations.

It has budgeted about C$1 billion for its natural resources division in 2004, the bulk tagged for the Syncrude Canada expansion, which has soared over budget.

Other spending includes planning on the Mackenzie project, development drilling at Cold Lake and offshore Nova Scotia gas ventures.