Subscribe to download Archive

Shell, CNRL announce Canadian asset swap

Shell and Canadian Natural Resources Ltd. (CNRL) announced on January 29 that they had agreed to engage in an asset swap relating to the Athabasca Oil Sands Project (AOSP) in Alberta, Canada. The cashless swap came about as a provision of a 2017 transaction, in which Shell had reduced its 60% interest in AOSP to 10%, following certain conditions being met.
Under the newly announced transaction, CNRL will swap 10% of its working interest in the Scotford upgrader and the Quest carbon capture and storage (CCS) facility for Shell’s remaining 10% stake in the AOSP mines, associated reserves and various additional interests in non-producing oil sands leases. Once the swap is completed, which is anticipated by the end of this quarter, CNRL’s interest in the AOSP mines will increase to 100%, while its stake in the Scotford upgrader and Quest will be reduced to 80%. Shell, for its part, will see its interest in Scotford and Quest increase to 20% while fully exiting the mining operations associated with AOSP.
“Today’s announcement allows Shell to focus on the Scotford site and to maximise value in our upgrader, CCS projects and refining and chemicals businesses,” stated Shell’s executive vice-president for chemicals and products, Machteld de Haan.
The supermajor will continue to operate the Scotford upgrader and Quest CCS facility, which are located next to its wholly owned Scotford refinery and chemicals plants near Edmonton.
The transaction represents the latest step in a years-long process of consolidation in the oil sands, as international majors moved out while four domestic companies bought up assets. The oil sands are now overwhelmingly concentrated in the hands of these four Canadian companies – CNRL, Suncor Energy, Cenovus Energy and ExxonMobil subsidiary Imperial Oil.
CNRL said that one of its advantages was the size and strength of its “long life, no decline oil sands mining and upgrading assets” combined with “top tier operating cost driven through effective and efficient operations that generates significant and sustainable free cash flow for decades”.
The asset swap will increase CNRL’s production by around 31,000 barrels per day (bpd). This has not been factored into the production guidance that the company issued earlier in January. As a result, its guidance for 2025 will be revised once the transaction closes.