Canada’s energy producers are almost out of patience, Imperial Oil Limited (TSX:IMO) CEO said on Tuesday.
“I think the industry has largely gotten to the point where we’ll believe it when we see it,” Rick Kruger, Imperial CEO told Bloomberg in an interview, adding that he was not willing to bet on when the oil pipeline would go into service.
Kruger is retiring from serving as Imperial’s CEO at the end of this year.
Canada’s federal government approved the much-awaited, much-delayed pipeline in June after purchasing it from Kinder Morgan in 2018 after KM grew weary of the prolonged battle in getting the pipeline project up and running. But reactions were reserved, and with good cause.
In September, Canada’s Federal Court of Appeal ruled that it would allow indigenous challengers to the pipeline. The groups argued that they were not consulted adequately. The ruling was just the latest in a long string of delays.
The pipeline caused Alberta to institute mandatory oil production cuts in order to staunch the bleeding in price of its Western Canadian Select benchmark, which was trading at a record discount to WTI in late 2018. These production cuts, Kruger claims, prevented Imperial from committing to large-scale investments this year.
These production cuts were eased last week for new exploration wells, but oil producers are likely to find minimal comfort after putting their businesses on effective hold for all of 2019. And according to Kruger, this is just one of the issues plaguing Canada’s oil industry.
“The timeframes it takes, the cost, and, when you get approvals: Are they enforceable? Do they allow you to advance projects? We have an issue with that across our country.”
By Julianne Geiger for Oilprice.com
