A portion of the Shell Albian Sands oilsands mine is seen from an overlook near Fort McMurray, Alta., on July 9, 2008.Jeff McIntosh/The Canadian Press
Shell Canada Ltd. RYAD-F is exiting the Alberta oil sands, swapping its remaining 10-per-cent interest in the Albian mine in the province’s north for a greater stake in an upgrader and carbon-capture project outside Edmonton.
The deal, announced this week, underscores Shell’s strategy of moving toward assets with lower greenhouse gas emissions. In June last year, for example, the company announced it would proceed with Polaris, a carbon-capture project in Sherwood Park, Alta. It is also partnering with Calgary-based ATCO EnPower ACO-X-T on the Atlas Carbon Storage Hub, which will provide permanent underground storage for the carbon dioxide captured by Polaris.
Shell is swapping its ownership in Albian, which is part of the Athabasca Oil Sands Project, with Canadian Natural Resources Ltd. CNQ-T for an additional 10 per cent of the Scotford upgrader and Quest Carbon Capture and Storage facility.
The Quest project, launched in 2015, has captured and sequestered 7.7 million tonnes of CO2 as of the end of 2022.
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Susannah Pierce, who took the reins as Shell Canada president in 2021, has repeatedly pointed to carbon capture – including the Polaris project – as playing a key role in the company’s goal to hit net-zero emissions by 2050.
In a 2021 interview with The Globe and Mail, she said Shell had an “aggressive goal with respect to carbon capture sequestration, which clearly is something that we need for projects or investments or assets that really can’t eliminate emissions on their own.”
Upon completion of the deal announced this week, Shell will have a 20-per-cent interest in the Scotford upgrader and Quest, and will fully exit Athabasca’s mining operations.
Machteld de Haan, Shell’s executive vice-president of chemicals and products, said in a statement that the deal will allow the company to focus on the Scotford site and to maximize value in its upgrader, carbon capture projects, and refining and chemicals businesses.
The deal also means CNRL will own the Athabasca mines outright, increasing the company’s production by approximately 31,000 barrels a day. It will also own 80 per cent of the Scotford Upgrader and Quest.
However, that new volume won’t be part of the company’s 2025 production guidance, which it said in January it was aiming to boost by 12 per cent over 2024.
The Calgary-based oil giant is targeting average annual production of between 1.51 million and 1.55 million barrels of oil equivalent per day in 2025, which represents production growth of about 170,000 barrels a day compared with 2024.
CNRL said at the time the growth would come in part from its US$6.5-billion acquisition of Chevron Canada Ltd.’s interests in the Athabasca Oil Sands Project and Duvernay shale, which was completed in 2024.
The company also plans to drill 361 crude oil and natural gas wells in the year ahead, and is working on increasing production at Athabasca and its Horizon oil sands site.
The deal with Shell means that CNRL can focus on its own strategy of holding a diverse range of oil sands production assets.
It will also help the company meet its long-term commitment of 169,000 barrels a day on the expanded Trans Mountain pipeline system.