CALGARY (CP) -- Imperial Oil Ltd.'s [TSX:IMO; AMEX:IMO] incoming chief executive says the company will focus on improving its refining operations and that problems at its Strathcona refinery near Edmonton are just days away from being fixed.
Bruce March, who takes over from Tim Hearn as CEO of the major integrated oil and gas company at the end of the month, said he would rather expand capacity at Imperial's four refineries than build a fifth one.
"The future of refining is to expand the capacity that we have. That's much more economically done over time than building new grass-roots refining capacity," March told reporters Wednesday.
Imperial, which is 70% owned by U.S. energy giant ExxonMobil, does not intend to build an upgrader to process bitumen from its planned 300,000-barrel-a-day Kearl oilsands project in Northern Alberta. Instead the feedstock from the site will be processed at other Canadian refineries and any upgraders that have spare capacity.
"I think we're in an excellent position to look at our internal system and look at what's the most effective way to upgrade, whereas other people didn't have that choice and they had to make those investments," said Hearn.
He said the low margins and high infrastructure costs have always made him weary of building brand new refineries in the Fort McMurray, Alta., area.
"I wouldn't want to start a new refinery in this environment from scratch. I think that's going to be for the brave."
Earlier this month a shut down at Imperial's 187,000-barrel-a-day Strathcona refinery near Edmonton caused gasoline shortages at Esso stations throughout Western Canada.
But, one of the gasoline producing units that was brought down is working again and the other should be back up in a few days.
"By this time next week we should be back to normal operations," March said.
Meanwhile, March expressed confidence that Imperial's proposed Kearl oilsands project will go ahead, despite a federal judge's decision earlier this month to send its approval back to a review panel.
Lawyers for Ecojustice argued the project, which would eventually strip-mine 200 square kilometres of boreal forest, should never have been approved by the Department of Fisheries and Oceans and that they want to see the development quashed altogether.
"We've got what we think is a very environmentally sound project. It was developed and approved by a joint review panel last year, fully compliant with all the regulations both provincial and federal," March said.
March also said he is optimistic the long-stymied Mackenzie Gas Project, whose cost has swelled to more than C$16.2 billion from its previous estimate of C$7.5 billion, will come to fruition eventually.
"We're anxious, our partners are anxious, the aboriginal groups involved are prepared and encouraged. So we're very hopeful that we can reach agreement with all the stakeholders involved and move forward some time in the future."
While there has been talk of Imperial ceding control of the project to pipeline operator TransCanada Corp. [TSX:TRP] and the Aboriginal Pipeline Group, Hearn said he still envisions a strong role for Imperial in the project.
"I think one way or another we're going to be involved ... We've got 40% of the gas up there so we have a fairly large stake. How this thing gets constructed and put together and ultimately financed, I think that will sort itself out over time," Hearn said.
March, who will take over as CEO on March 31, is a native of Middleport, N.Y., and a graduate of the Rochester Institute of Technology. He joined Mobil Oil as a project engineer in 1980 and advanced through various management jobs.
In early 2007, March was named director of refining in Europe, Africa and the Middle East, for ExxonMobil Petroleum & Chemical BVBA in Brussels.
Regina-born Hearn, who spent more than four decades with Imperial, said he looks forward spending his retirement teaching at the University of Calgary, chairing the Calgary homeless foundation and participating in church-related activities.
Shares in Imperial were up C$1.16 to C$53.95 on the Toronto Stock Exchange Wednesday.
(c) The Canadian Press 2008