Imperial Oil Ltd. expects “double-digit returns” on its $720 million funding to construct what will likely be Canada’s largest renewable diesel manufacturing facility at its Strathcona refinery, the oil large mentioned Tuesday.
The Calgary-based firm final week introduced plans to maneuver ahead with the mission on the outskirts of Edmonton that was first introduced in August 2021 and is anticipated to supply 20,000 barrels per day of renewable diesel as soon as accomplished in 2025 .
The mission, which is able to use domestically sourced vegetable oils and low-carbon hydrogen to supply a biomass-based gas, will assist place Imperial for the vitality transition by diversifying its petroleum-based portfolio, in accordance with the corporate.
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However executives advised analysts on the corporate’s fourth-quarter earnings name Tuesday that the mission may even be a moneymaker in its personal proper.
“There may be nothing about the truth that this can be a renewable diesel mission, or pushed by regulatory compliance, that in any means means that its price of return is beneath our portfolio,” mentioned Jon Wetmore, Imperial’s vp for downstream.
“It is rather, very aggressive and on the prime of our portfolio.”
Imperial indicated in March 2022 that it anticipated its proposed renewable diesel plant to value round $500 million. Prices have risen since then, partly resulting from inflationary pressures on labor and supplies, but in addition as a result of Imperial added rail logistics to the mission’s scope.
Brad Corson, Imperial’s chairman, mentioned that whereas this elevated the mission’s complete value, it might additionally allow Imperial to achieve extra markets.
“I can guarantee you, it is a very sturdy return,” he mentioned.
“It is a double-digit return and it competes very effectively with different initiatives in our portfolio competing for capital and due to this fact the rationale why we took it (a last funding choice).
The feedback come as Imperial celebrated a fourth-quarter revenue that greater than doubled in comparison with a 12 months earlier, helped by a powerful working efficiency throughout its enterprise.
The corporate mentioned it earned $1.73 billion, or $2.86 per diluted share, for the quarter, up from $813 million, or $1.18 per diluted share, a 12 months earlier.
Whole income and different earnings for the three-month interval was $14.45 billion, up from $12.31 billion within the fourth quarter of 2021.
Due to sturdy commodity costs in 2022, Imperial reported full-year earnings of $7.34 billion, the best in firm historical past. It additionally delivered file shareholder returns, pushed by a 63 p.c enhance in its dividend and greater than $6 billion in share buybacks.
“We’re closing the books on what was the very best 12 months within the firm’s historical past, a stark distinction to the challenges we confronted simply two years in the past within the depths of COVID,” Corson mentioned.
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Imperial’s upstream manufacturing within the fourth quarter averaged 441,000 gross oil equal barrels per day, in contrast with 445,000 in the identical interval of 2021. Refinery throughput averaged 433,000 barrels per day for the quarter, in contrast with 416,000 barrels per day a 12 months earlier.
On Tuesday, Imperial additionally introduced a company-wide objective to realize net-zero greenhouse emissions by 2050 throughout all of its working belongings, not simply oil sands.
The corporate mentioned it goals to realize this via “collaboration with the federal government and different trade companions, profitable expertise improvement and deployment and supportive fiscal and regulatory frameworks.”
As a part of the Pathways Alliance, a consortium of Canada’s largest oil sands firms, Imperial has already dedicated to decreasing its greenhouse gasoline emissions from oil sands manufacturing to internet zero by 2050.
The Pathways group has proposed constructing an enormous carbon seize and storage community in northern Alberta, which may see member firms make investments $16.5 billion earlier than 2030.
Corson mentioned Pathways can not make a last funding choice on that mission till the federal authorities commits to a stage of monetary assist that will put Canadian carbon seize initiatives on par with these within the U.S., the place they profit from authorities incentives in that nation s Inflation Discount Act.
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Whereas the federal authorities has already introduced an funding tax credit score for carbon seize initiatives, the trade additionally desires to see ongoing monetary assist on the trade aspect.
Nevertheless, Corson mentioned each the federal authorities and the Alberta provincial authorities perceive the problems and are dedicated to seeing the proposed mission proceed.
“So I am optimistic that if it is not within the price range speech, it will likely be quickly after that that we’ll not solely get readability, however choice — so we will transfer ahead with these initiatives,” Corson mentioned.
Alberta’s oil and gasoline sector is the nation’s largest polluter, and whereas oil sands firms have managed to scale back their emissions per barrel, complete emissions from the oil sands have greater than doubled since 2005 resulting from elevated manufacturing.
© 2023 The Canadian Press
