[Vision2020] Imperial Oil to Reconsider South Korea Module Purchases

[Tom Hansen]

Courtesy of the Edmonton Journal (Edmonton, Alberta, Canada) at:

http://www.edmontonjournal.com/business/Imperial+revisit+foreign+input/4533728/story.html

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Imperial to 'revisit' foreign input

Kearl project hit by logistical problems and protests over shipments of
upgrader modules by road to Fort McMurray
By Dave Cooper, Edmonton Journal March 31, 2011

Imperial Oil will "revisit" its decision to buy massive modules from South
Korea when it comes time to order material for the future expansion of its
Kearl oilsands project, its chief executive said Wednesday.

After speaking at the National Buyer/Seller Forum in Edmonton, Bruce March
said "we will this revisit this for the expansion," but added that his
firm's focus right now is getting the modules -stalled at the inland port
of Lewiston, Idaho, amid protests from residents -on the road to Fort
McMurray as soon as possible.

Currently, the $8-billion Kearl mine and bitumen production project is on
schedule to open late next year. Some of the modules made in Edmonton -80
per cent of the fabrication work -are ready to ship.

"We made the decision to order these units (from Korea) in the 2007-08
period when we couldn't get any space in the time frame we needed in
Edmonton shops. We made that decision and we are standing by it," March
said, adding that the cost of the units "wasn't an an enormous factor" in
the original decision.

The modules are up to 260 tonnes in weight, 64 metres long and nine metres
high. Thirty-three of them are now being broken apart in Idaho -at an
estimated additional cost of $500,000 per unit -so they can move as 60
smaller shipments on the Interstate highway.

The Korean firm building the 207 mega-sized units has supplied specialized
ore-processing equipment to all oilsands plants in the past.

But in those cases the equipment has always been shipped in pieces and
assembled in Edmonton.

March said Imperial could have done that with the modules, "but we opted
to have it built in Korea. We could have gone either way."

March said Imperial did its homework with the module transportation. "We
spent two years with Idaho and Montana departments of transportation
working with these wide loads, how to conform to their statutes, raise the
power lines ... we did our homework and got pretty good assurance from the
state gov-ernments that they would allow it."

But then came the protests, much of it from people opposed to the oilsands
in general, rather than residents worried about the rural scenery.
National advocacy groups have been sending out news releases for months
denouncing the mega-loads.

March says his firm is facing new tactics from non-governmental groups
(NGOs) with an agenda and hefty legal help from Washington lawyers.

"Recall the summer of 2008, when all the oilsands plants got penetrated by
NGOs. We are now seeing (protests) in the supply chain for the oilsands,
in the pipeline projects like Keystone," he said, adding "but of course
these groups have the right to express themselves."

On Wednesday, commissioners in Missoula County, Montana, voted to file a
lawsuit in state courts to stop oversized loads. The National Wildlife
Federation, the Sierra Club and the Montana Environmental Information
Center have reportedly joined the county as plaintiffs.

Earlier at the forum, Jayson Myers, president of the Canadian
Manufacturers and Exporters group, predicted the Japanese earthquake will
add a new risk to all major projects.

"You simply can't have hundreds of billions of dollars of reconstruction
in Japan without it affecting the financial markets," he said.

"For projects that are out there right now, that will significantly
increase demand for labour, equipment and materials."

Myers also said firms across Canada are aware of an impending shortage of
skilled labour. "I was just in Newfoundland and there is a lot of concern
about whether or not they are going to have enough people to carry out
their projects."

Newfoundland has been a traditional supplier of workers to the oilsands.

"In Canada we have to do a better job of aligning our education system,
our regulatory system and labour markets and our immigration system to
ensure we have enough people for these major projects."

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Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho

"The Pessimist complains about the wind, the Optimist expects it to change
and the Realist adjusts his sails."

- Unknown