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Royal Dutch Shell PLC is looking to sell its refinery in Southern Ontario, adding to a growing slate of oil-refining and marketing assets on the auction block in Canada.

Shell’s Corunna refinery, near Sarnia, produces a wide range of fuel and has a capacity of 75,000 barrels a day. The company said it is also gauging market interest in its sour natural gas operations in Alberta.

“Shell continually looks at all aspects of its portfolio to ensure we are delivering on our investment strategy,” it said in a statement. “These assets have been a cornerstone of Shell Canada for many years, however, they are no longer a fit with Shell’s evolving portfolio. New owners may see a strategic opportunity for their development.”

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Also this week, Husky Energy Inc. said it is considering selling its fuel-retailing network as well as a 12,000-b/d refinery located in Prince George, B.C. It is not known yet whether the assets might be of interest to one buyer or a series of regional players. Analysts’ estimates of value vary widely, but the assets could be worth around $1-billion.

The Shell and Husky plants are small by global standards, which means they have limited economies of scale. This makes it more difficult to make necessary upgrades to modernize operations or meet future environmental standards for fuels, said Michael Ervin, senior vice-president at Kent Group Ltd., a petroleum-marketing consultancy.

“It wouldn’t be surprising to see them looking ahead to divest those assets now before the next round of specification tightenings might occur,” Mr. Ervin said. “Or, for that matter, in the next couple of decades, we’re probably going to see a significant decline in demand for gasoline in particular as more people get into hybrids, potentially, electric vehicles.”

He said he is hard-pressed to speculate on potential buyers for Shell’s refinery, but suggested that a U.S. operator could be drawn by the favourable currency exchange.

Shell has gone through an extensive overhaul of operations in Canada in recent years. In 2017, it sold its oil sands operations to Canadian Natural Resources Ltd. for US$8.5-billion. The company’s major focus currently is proceeding with the $40-billion LNG Canada project at Kitimat on the B.C. coast. It has a 40-per-cent stake in the massive development.

Shell did not give a target price for its refinery, which began operations in 1952, and did not say whether it was in any advanced discussions with interested parties. If it is unable to find a buyer, Shell will keep operating the plant. “There are no plans for closure,” it said.

In the past decade, Shell had planned a multibillion-dollar expansion of its refining operations in the Sarnia region, but cancelled the project in 2008, citing surging cost estimates and poor market conditions.

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Ownership of downstream assets has shifted radically, with regional companies and convenience-store operators snapping up retail sites from major oil companies.

Meanwhile, Shell said it was looking for buyers for its operations that produce and process sour natural gas, which is gas high in sulphur-dioxide content. The assets are located in the Waterton, Jumping Pound and Central Alberta regions. It has produced gas at the first two locations since the 1950s. Canada’s conventional gas industry has been under severe pressure amid weak prices and falling demand from the United States due to that country’s rapid development of shale supplies over the past decade.

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