It’s a made-in-Alberta success story.
One of the world’s largest oil producers, Calgary-based Canadian Natural Resources Limited (CNRL), on Thursday further solidified its dominance in the oil sands sector as Shell finalized its exit from mining operations in Alberta.
Under the terms of a 2017 Athabasca Oil Sands Project (AOSP) agreement, Shell has agreed to trade its remaining 10% stake in the Albian oil sands mines for an additional 10% interest in the Scotford upgrader and Quest Carbon Capture and Storage (CCS) facility.
Once the deal is complete, Shell will hold a 20% stake in both the Scotford upgrader and Quest CCS facility, while CNRL will maintain its 80% ownership of AOSP’s mining operations, further cementing its position as a dominant force in Canada’s energy landscape.
CNRL, already a key player in global oil production, took control of the Athabasca Oil Sands Project in 2017, when Shell divested its majority stake. Since then, the company has continued to expand its influence in the region, operating Albian’s vast open-pit mines that extract and process bitumen into synthetic crude oil.
For Shell, the swap represents a ”strategic pivot” away from the capital-intensive oil sands mining sector and toward what it says are low-carbon energy investments and refining operations. The company will remain the operator of the Scotford upgrader and Quest CCS facility, both located near Shell’s fully owned Scotford refinery and chemicals plant outside Edmonton, it said in a statement.
“Today’s announcement allows Shell to focus on the Scotford site and to maximize value in our upgrader, CCS projects, and refining and chemicals businesses,” said Machteld de Haan, Shell’s executive vice-president of chemicals and products.
The transaction, subject to regulatory approval, is expected to close in the first quarter of this year. Once finalized, it will result in the de-booking of approximately 741 million barrels of proved reserves, half of which had been previously attributed to Shell’s non-controlling interest.
Shell’s remaining Canadian assets include a 40% stake in LNG Canada, upstream natural gas production in northeast British Columbia and northwest Alberta along with a network of 1,400 Shell-branded fuel stations across the country.
Meanwhile, CNRL continues to expand its oil sands footprint, reinforcing its status as one of the world’s most powerful — and prolific — oil producers at a time when demand for Canadian crude remains high despite what observers call ‘global energy transition pressures’.