Canada oil sands threatened by departure of oil majors
10 March 2017
The departure of international players from Canada's oil sands is raising fresh doubt over future development prospects for the world's third-largest crude reserves as the region struggles to compete with cheap US shale plays. Royal Dutch Shell and Marathon Oil sold off billions of dollars in oil sands assets on March 9, the latest sign that global oil majors are abandoning the region.
Shell Canada President Michael Crothers said the company was selling a large chunk of its oil sands assets to Calgary-based Canadian Natural Resources Ltd because they no longer fitted within Shell's international portfolio.
Marathon chief executive Lee Tillman said: "Historically, our interest in the Canadian oil sands has represented about a third of our company's other operating and production expenses, yet only about 12 percent of our production volumes."
As well as selling off a 20% stake in the Athabasca Oil Sands project, now majority-owned by CNRL, Marathon is buying 70,000 acres in the Permian shale basin in Texas as it streamlines its portfolio to concentrate on higher margin, lower cost US assets.
Canada's oil sands have some of the world's highest full cycle breakeven costs and were badly affected by the global crude price crash that started in 2014. Capital investment in the Canadian energy sector tumbled 62% in two years, according to the Canadian Association of Petroleum Producers, and shows few signs of recovering.
The energy sector currently makes up one sixth of Canada's economy.
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