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Imperial’s Kearl oil sands mine hit by production delays

A giant piece of Imperial’s Kearl oil sands project. The delay in transporting such equipment resulted from a battle Imperial Oil lost in Idaho and Montana, where residents urged local officials to reject the company’s plans to move enormous, South Korean-made pieces of the Kearl project on their highways.

Barry Kough/ASSOCIATED PRESS

Imperial Oil Ltd. planned to have a full processing system up and running at its Kearl oil sands mine by Easter Sunday, but the oil giant says the project has continued to encounter challenges, including what it said was unseasonably cold weather in Fort McMurray last month.

Imperial had said full production would begin by March 31. However, Imperial spokesman Pius Rolheiser said Monday that although workers have begun processing bitumen at the Kearl site – the first oil sands ore went into the crusher last week – the company has produced only bitumen froth so far.

Imperial is now in the process of preparing equipment for the key step of producing diluted bitumen, which can be transported by pipeline.

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Mr. Rolheiser said he expects the whole system to be in place this week, and the company is not going to worry about being off its mark by a few days.

"We've been working on Kearl for more than 10 years. It will operate for more than 40 years," Mr. Rolheiser said. "A couple of calendar days to us is less important than making sure that we do this absolutely right."

The first phase of the Kearl project is expected to hit its target of 110,000 barrels a day later this year. Production is scheduled to ramp up to 345,000 barrels of bitumen a day by 2020, when the Kearl mine project – which Imperial owns jointly with ExxonMobil Canada – is running at full capacity.

But the Kearl project has already faced numerous delays and cost escalations, in part due to the complications of trucking enormous, South Korean-made plant modules across the U.S. in 2011 and 2012, and the opposition to the oversized loads from residents in Idaho and Montana.

Like other Canadian heavy oil producers, Imperial also faces the challenge of getting its product to U.S. markets – especially in the long term – due to increasing crude production and pipeline congestion.

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