The province could have used existing regulatory practices and procedures to drive environmental improvements, Rich Kruger told reporters after the annual meeting of shareholders.
“We didn’t think the cap was necessary,” said Kruger, whose company is 70 per cent owned by Exxon Mobil Corp. “The climate leadership plan in Alberta, it has many aspects, many of which we think are really good aspects. The cap is not one of those.”
Alberta capped greenhouse gas emissions from the unconventional deposits at 100 megatonnes a year, up from about 70 megatonnes today, when it announced the plan last November.
The plan also involves a $30-per tonne carbon tax, phasing out coal plants to produce electricity, and reducing methane emissions from oil and gas operations.
The oilsands cap was a compromise proposed to the government by a group of oilsands and environmental leaders after a year of talks to reduce opposition to proposed pipelines. Imperial Oil didn’t participate in those talks.
Kruger said much has yet to be determined about the cap, such as who gets to use the remaining space and how projects that have already received regulatory approval will be treated.
“We are working together with the government and with industry to ensure that we can maximize value, whatever the objectives are under that cap,” he said.
Imperial is one of Canada’s top oilsands’ producers. Canada’s longest established integrated oil company, which sells gasoline under the Esso brand, completed the expansion of the Kearl mining project last year and owns the Cold Lake thermal project.
It has proposed an expansion of Cold Lake that will use solvent assisted technology to reduce greenhouse gases below steam assisted gravity drainage facilities.
Imperial faced challenging conditions in 2015, including decade-low oil prices, no progress in the construction of new pipelines, increased international focus on climate change, Kruger told shareholders in its new headquarters in Calgary’s Quarry Park suburban community.
The company focused on what it could control and reduced costs by $1.5 billion without laying off a single employee, Kruger said. Operating costs were reduced by 25 per cent to less than $30 a barrel.
Imperial said it lost $101 million in the first quarter, compared to a profit of $421 million in the same period last year. Bitumen prices averaged $11.93 a barrel in the period and at times sank below $10 a barrel.
Production averaged 421,000 barrels of oil equivalent a day (boe/d) in the first quarter, up from 333,000 boe/d in the same year-ago period.
Imperial is also a 25 per cent owner of the Syncrude oilsands project that is run by Exxon Mobil under a management contract. Suncor will be the majority owner as a result of the takeover of Canadian Oil Sands Ltd. and of Murphy Oil Corp.’s interest.
Kruger said Imperial and Suncor have shared objectives to improve Syncrude’s performance, but management will stay the same.
“I like the idea that now the biggest two players around the table are experienced oil sands operators and we look forward to whatever expertise Suncor can bring,” Kruger said.