Imperial Oil expects ‘double digit’ returns from renewable diesel facility

Imperial also announced Tuesday a companywide goal to achieve net-zero greenhouse emissions by 2050 across all of its operated assets, not just oilsands.

Imperial Oil Ltd. expects “double-digit returns” from its $720-million investment to build what will be Canada’s largest renewable diesel manufacturing facility at its Strathcona refinery, the oil giant said Tuesday.

The Calgary-based company announced last week its plans to go ahead with the project on the outskirts of Edmonton that was first announced in August 2021, is expected to produce 20,000 barrels per day of renewable diesel once complete in 2025.

The project, which will use locally sourced vegetable oils and low-carbon hydrogen to produce a biomass-based fuel, will help to set Imperial up for the energy transition by diversifying its petroleum-based portfolio, according to the company.

But executives told analysts on the company’s fourth-quarter earnings call Tuesday that the project will also be a money-maker in its own right.

“There’s nothing about the fact that it’s a renewable diesel project, or driven by regulatory compliance, that in any way suggests that its rate of return is below our portfolio,” said Jon Wetmore, Imperial’s vice-president for downstream.

“It’s very, very competitive and at the top of our portfolio.”

Imperial had indicated in March 2022 that it expected its proposed renewable diesel facility to cost approximately $500 million. Costs have risen since then, in part due to inflationary pressures on labour and materials, but also because Imperial added rail logistics to the project’s scope.

Imperial’s chairman Brad Corson said while that did increase the project’s total cost, it will also enable Imperial to reach more markets.