FORM 10-K IMPERIAL OIL LIMITED

Capital and exploration expenditures
Total capital and exploration expenditures were $1,445 million in 2004, down slightly from $1,559 million
in 2003 (2002 – $1,612 million).
The funds were used mainly to invest in growth opportunities in the oil sands and the Mackenzie gas
project, to upgrade refineries to meet low sulphur diesel requirements and to enhance the Company’s retail
network. About $150 million was spent on projects related to reducing the environmental impact of its
operations and improving safety including about $90 million on the $500 million capital project to produce
low sulphur diesel.
The following table shows the Company’s capital and exploration expenditures for natural resources
during the five years ending December 31, 2004:
2004 2003 2002 2001 2000
(millions)
Exploration........................................................ $ 60 $ 57 $ 39 $ 49 $ 56
Production......................................................... 234 181 143 109 110
Heavy oil........................................................... 819 769 804 588 268
Total................................................................. $1,113 $1,007 $986 $746 $434
For the natural resources segment, about 90 percent of the capital and exploration expenditures in 2004
was focused on growth opportunities. The single largest investment during the year was the Company’s
share of the Syncrude expansion. Construction on the upgrader expansion made good progress since the
first quarter of 2004 when cost estimates were substantially increased and the construction schedule was
extended. At year end, the project was tracking to the revised cost and construction schedule. The
remainder of 2004 investment was directed to advancing the Mackenzie gas project and drilling at Cold
Lake and in conventional fields in Eastern and Western Canada.
For the Mackenzie gas project, in October 2004, the main regulatory applications and environmental
impact statement were filed with the National Energy Board and other boards, panels and agencies
responsible for assessing and regulating energy developments in the Northwest Territories. The regulatory
review process is expected to take up to 24 months. A decision to proceed with the project will be made by
the co-venturers of the project after approvals are received and any conditions attached to the approvals are
assessed.
Planned capital and exploration expenditures in natural resources are expected to be about $1 billion in
2005, with nearly 90 percent of the total focused on growth opportunities. Much of the expenditure will be
directed to the expansion now underway at Syncrude. Investments are also planned for the ongoing
development drilling at Cold Lake, the Mackenzie gas project and further development drilling in Western
Canada. Planned expenditures for exploration and development drilling, as well as capacity additions in
conventional oil and gas operations, are expected to be about $355 million.
The following table shows the Company’s capital expenditures in the petroleum products segment during
the five years ending December 31, 2004:
2004 2003 2002 2001 2000
(millions)
Marketing.......................................................... $ 85 $ 91 $133 $171 $121
Refining and supply............................................. 178 369 399 118 100
Other (a)........................................................... 20 18 57 50 11
Total................................................................. $283 $478 $589 $339 $232
(a) Consists primarily of purchases of real estate.
For the petroleum products segment, capital expenditures decreased to $283 million in 2004, compared
with $478 million in 2003 (2002 – $589 million), primarily because of the completion of the project to
significantly reduce sulphur content in gasoline, which began in 2001. New investments in 2004 included
about $90 million spent on the initial phases of a three year project to reduce sulphur content in diesel. In
addition, $24 million was spent on other refinery projects to improve energy efficiency and increase yield.
Major investments were also made to upgrade the network of Esso service stations during the year.
Capital expenditures for the petroleum products segment in 2005 are expected to be about $550 million.
Major items include additional investment in refining facilities to reduce the sulphur content in diesel to meet
regulatory requirements and continued enhancements to the Company’s retail network.
The following table shows the Company’s capital expenditures for the chemicals operations during the
five years ending December 31, 2004.
2004 2003 2002 2001 2000
(millions)
Chemicals.......................................................... $15 $41 $25 $30 $13
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