ExxonMobil starts output from Kearl expansion

OREANDA-NEWS. June 19, 2015. ExxonMobil started output at its Kearl oil sands expansion in Canada ahead of schedule, which will eventually raise the project's total output to 220,000 b/d.

The steep fall in oil prices has raised questions about the viability of expensive projects in the Canadian oil sands and the deepwater Gulf of Mexico (GoM). But projects that were funded before the price drop or with construction underway have advanced because they have lower breakeven costs once they start. That has helped producers like ExxonMobil and ConocoPhillips generate steady cash flow.

Output from the expanded phase that was just started will reach 110,000 b/d, it said. Kearl has about 4.6bn bl of reserves, which will be extracted over more than 40 years. The expansion includes adding three additional trains that will use the company's proprietary paraffinic froth treatment technology to produce bitumen.

ExxonMobil is targeting a 2pc output growth to 4.1mn b/d of oil equivalent (boe/d), driven by 7pc growth in liquids. The increase will be driven by the ramp up of projects completed in 2014 and the expected startup of seven more in 2015, which include the Kearl expansion, Hadrian South in the GoM, Banyu Urip in Indonesia and deepwater projects in Nigeria and Angola. The company last month started output from its \\$2bn expansion of the Cold Lake Nabiye oil sands project, also in Alberta.

ConocoPhillips' Surmont II oil sands project in Canada began generating steam on 29 May, taking it a step closer to starting output on schedule by the third quarter.