Imperial Oil breaking production records as industry awaits TMX pipeline completion

As Canada's energy sector ramps up for the anticipated startup of the Trans Mountain pipeline expansion, Imperial Oil Ltd. reported its highest production levels in over 30 years in the fourth quarter of 2023.

The Calgary-based company — which is majority-owned by U.S. giant Exxon Mobil — said its output for the three months ended Dec. 31 averaged 452,000 gross oil-equivalent barrels per day, up from 441,000 in the same period a year earlier. It marks the firm's highest quarterly production in three decades, when adjusted for the sale of its stake in XTO Energy Canada in 2022, the company said Friday.

Imperial also smashed production records at its Kearl oilsands mine, where total quarterly production averaged an all-time high of 308,000 barrels per day and full-year production hit an all-time record of 270,000 barrels per day.

On a conference call with analysts, Imperial president and CEO Brad Corson said the company aims to continue setting new records.

"We just delivered our highest annual volumes at Kearl with (270,000). Now we've got to get to 280. And then we'll get to 300. It's kind of one step at a time," Corson said. "We are progressing steps to get us to 300,000 barrels a day."

Imperial has been working for some time to improve productivity and lower costs at Kearl, which is located north of Fort McMurray, Alta.

Fleet conversion to fully autonomous

A major piece of that work was Imperial's multi-year effort to convert its entire fleet of heavy haul mining trucks at Kearl to fully autonomous operation. The company announced the completion of the initiative last fall.

Corson said Friday that the autonomous trucks are safer and more efficient than a human-operated fleet.

"There is no doubt that having that autonomous haul fleet has contributed materially to our ability to achieve these record volumes as well as a significant improvement in operating costs," he said.

"And we're still, I think, realizing the full potential of that because it's only been in the last quarter or so that we've completed that full conversion."

Imperial's record production in the fourth quarter spurred the company to raise its quarterly dividend by 20 per cent even as lower oil prices meant Imperial's fourth-quarter profit declined to $1.37 billion, down from $1.73 billion a year earlier.

The company said Friday that shareholders will now receive a quarterly dividend payment of 60 cents per share, up from 50 cents per share.

Imperial reported revenue and other income for the fourth quarter totalled $13.11 billion, down from $14.45 billion in the last three months of 2022.

The company, like many Canadian oil companies, is feeling good about the expected completion this spring of the Trans Mountain pipeline expansion, which will give Canada's oil industry an additional 590,000 barrels per day of export capacity.

Corson said while the volumes Imperial has contracted to ship on Trans Mountain are comparatively small compared to some other oil companies, the entire Canadian industry will benefit. In particular, the additional market access for Canadian producers is expected to reduce the discount Canadian producers typically take on their oil in part due to a lack of export capacity.

"So the biggest benefit (of Trans Mountain) for us is not the individual barrels we ship, but our view of the impact it will have on our true value," Corson said.

Earlier this week, the company building the Trans Mountain pipeline expansion announced it had run into fresh construction-related hurdles that could push the pipeline's expected startup from what had been a first-quarter target date to sometime in the second quarter.

But an increase in production by Canadian oil producers in anticipation of the project has already begun. Alberta oil production hit an all-time record in November 2023, according to data from the Alberta Energy Regulator. Crude oil production in the province rose by 8.8 per cent that month to a new historic high of 4.2 million barrels per day.

Alberta averaged 3.8 million barrels per day of oil production in the first eleven months of 2023, up 1.6 per cent from 2022 and five per cent higher than the same period in 2021.