Legal blockades in Montana and Idaho may be playing havoc with the construction schedule in Alberta's Kearl Oil Sands.

But they're not the main culprits in a dramatic $2.9 billion increase in the projected cost in the initial phase of the mining project, Imperial Oil/ExxonMobil says.

The company disclosed to investors last week that the first phase of the massive undertaking is now expected to cost $10.9 billion, up from an original estimate of $8 billion.

A company spokesman said the increase isn't due to cost overruns such as the delays in transporting processing equipment through the Northern Rockies of the United States.

"That's not having a material impact on the timing of the project," said Pius Rolheiser. "Having said that, (the delays are) putting pressure on our execution plan, because we haven't been able to bring the modules that we've needed to this point."

While the ultimate estimate for the decadeslong Kearl project remains at $23 billion, the first phase will be spendier because the design has been reconfigured.

"What we're building there is different than we set out for," Rolheiser said.

When the project was first sanctioned, the company envisioned reaching its licensed capacity of 345,000 barrels per day in three stages, starting with 110,000 per day in the first phase.

Now there'll be just two phases.

"With the technology we're using to extract bitumen, we believe we can increase the recovery capacity of the original development to 170,000 barrels a day within the first several years of the operation. That gets us about halfway to our 345,000," Rolheiser said.

The process of extracting bitumen, a tar-like substance with the consistency of peanut butter, from the ground and separating it from sand and water has come under increasing fire in the Alberta oil sands.

But the fight against the Kearl project in the western U.S. has centered more on the potential environmental and economic damages to scenic waterways and highways 12 and 200 in Idaho and Montana.

A contested hearings officer in Idaho, appointed by the Idaho Transportation Department, is considering arguments made in April for and against issuing oversized load permits to Imperial/Exxon to transport well over 150 "megaloads" from the Port of Lewiston to the Kearl project north of Fort McMurray, Alberta.


In Montana, the Missoula County commissioners and three conservation groups took the Montana Department of Transportation and Imperial/Exxon to court in mid-May to delay the moves through western and central Montana on two-lane highways. The plaintiffs want all work to stop until the impact on the roads, waterways and the economy have been studied more thoroughly.

District Judge Ray Dayton of Anaconda, who sat in when Missoula County judges recused themselves, is expected to decide sometime by mid-June whether to issue a preliminary injunction to stop the transport.

Project manager Ken Johnson testified in District Court in Missoula that the company is readjusting its plans because of the delays in the U.S.

"We're getting to the point where we're going to be doing out-of-sequence work," Johnson said on the second day of a three-day hearing.

Plans are in motion to do some winter construction that hadn't been reckoned with, he added.

It's costing the company up to $500,000 to dissemble and then reassemble each of 33 Korean-made modules stuck at the Port of Lewiston in Idaho. That's so they can be shipped along a different route via interstate highways and fit under interstate overpasses. Idaho hasn't issued permits for that to happen yet.

Meanwhile, Rolheiser said at last report 45 "half-height" modules have arrived at the Kearl work site. They were transported from the Port of Vancouver, Wash., and through Montana on Interstate 90 and I-15. They're among the 207 modules the company shipped out to a company in Seoul, South Korea, for fabrication.

Construction in the northeastern Alberta has been experiencing a different kind of delay lately. Smoke from two lightning-caused wildfires that burned to within a couple of kilometers from one edge of the Kearl project forced the company to close down work Monday and keep everyone back at camp and indoors.

Construction resumed Tuesday, Rolheiser said, and the air quality is being monitored continuously.

Get local news delivered to your inbox!

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.
You must be logged in to react.
Click any reaction to login.