MOU talks with governments could run past deadline, Imperial Oil CEO says

Talks between Ottawa, Alberta and oil sands companies aimed at delivering new policies to increase production may drag on past a Nov. 15 deadline, Imperial Oil Ltd. IMO-T boss John Whelan said Friday.

But the chief executive of the Calgary-based oil company said he’s “optimistic and encouraged” by the progress made so far.

The discussions ultimately stem from a memorandum of understanding signed by the provincial and federal governments in November, 2025. It tied the construction of a new oil pipeline from Alberta to the West Coast to lowering emissions through a massive oil sands carbon-capture project called Pathways.

In July, the governments signed a non-binding MOU with five major oil sands companies to signal their support for new financial and regulatory frameworks that would “enable sustained and substantial oil sands development and production growth.”

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On Friday, Imperial was the first of the five companies to report third-quarter earnings. The others are Suncor Energy Inc. SU-T, Cenovus Energy Inc. CVE-T, ConocoPhillips Co. COP-N and Canadian Natural Resources Ltd. CNQ-T They comprise an industry group called the Oil Sands Alliance.

“Myself and my counterparts in the Oil Sands Alliance, we continue to meet every single week on this topic, and we have people on our teams working with both the federal and provincial government every day to progress what we put together in the non-binding MOU,” Mr. Whelan told analysts during a conference call.

“There’s no lack of energy or desire to get to definitive agreements.”

While they’re all targeting Nov. 15, he said, “there’s still a lot of work left to do” before the looming deadline.

Mr. Whelan said the key is balancing the costs of implementing Pathways with other policies that will benefit industry.

“That’s pretty complex,” he said, but the group is “working really well together to try to get that, you know, marriage of all those things in place that works for everybody.”

Part of that work includes the details on royalty incentives from the Alberta government. But other items sought by industry have already been delivered, including Ottawa’s recent changes to the regulatory process that aim to speed up project assessments, Mr. Whelan said.

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The discussions are happening amid marked energy-sector unrest, with markets roiled by the war in the Middle East, shipping risks through the Strait of Hormuz and Ukraine’s escalating attacks on Russian refineries. The conflicts and resulting supply chain woes have pushed benchmark oil prices to consistent highs.

Prolonged supply disruptions have also placed significant strain on the global flow of diesel, which helped prop up Imperial’s bottom line in the third quarter and enabled it to beat profit estimates.

Its third-quarter downstream earnings climbed to $1.56-billion from $444-million year-over-year. In all, Imperial reported a third-quarter profit of $2.45-billion, up from $539-million in the same quarter last year.

The company, which is majority-owned by U.S. oil major ExxonMobil, refined an average of 381,000 barrels of crude each day in the three months ending Sept. 30, roughly 50,000 more than in the second quarter of the year.

Canadian heavy oil discounts deepen on supply glut

Scott Maloney, Imperial’s vice-president of downstream operations, said the company is currently running its refineries to make enough gasoline to meet the needs of Canadian consumers, then adjusting to make additional diesel and jet fuel, which are “more profitable in the market right now.”

Imperial’s petroleum product sales were 474,000 barrels a day, up 28,000 barrels a day compared with the second quarter of 2026, “primarily driven by opportunistic domestic sales and higher exports,” Mr. Whelan said.

While predicting the persistence of disruptions to the global refining market is difficult, Mr. Whelan said he expects them to drag on for months.

“The pace of recovery will be an important factor, but there’s a lot of things that have to recover to see the margins go back to where they were before, so we feel very good about the business,” he said.

The return of Venezuelan oil to the U.S. market and surging production from the Alberta oil sands have put increasing pressure on Canadian heavy oil prices. Mr. Whelan also expects that the gap between Western Canadian Select heavy crude and North American benchmark West Texas Intermediate will continue to creep wider.

However, the high price of WCS remains “very constructive,” he said.