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article imageGlobal companies abandon Canada's oil sands for greener pastures

By Karen Graham     Apr 14, 2017 in Business
In the last year, five multinational energy companies have sold off close to $25 billion of their assets in Canada's oil sands holdings to domestic companies, leaving experts to wonder if the exodus will continue.
Since December 2016, Canadian energy companies have paid out more than $31 billion for oil sands acquisitions, leaving almost 70 percent of all oil sands production in the hands of four companies - Imperial Oil, Cenovus, Suncor Energy, and Canadian Natural Resources, reports the Calgary Herald.
In the current international energy environment, one would guess that Canada's oil sands may be bad for business, and with global companies abandoning the rich oil field at a time of low prices and some huge losses, according to Climate Central, it is a pretty good guess that producing one of the world's dirtiest fossil fuels may be behind the exodus.
Global energy companies that have left Canada
In December 2016, Norwegian oil giant Statoil ASA struck a deal with Calgary-based Athabasca worth $435 million in cash plus the issue of 100 million Athabasca shares worth about $147 million, which Statoil said would be treated as an investment. The sale included Statoil's six-year-old Leismer thermal oil sands project plus the proposed Corner oil sands project,
In June of 2016, Canada's leading energy producer, Suncor Energy took controlling interest in the syncrude joint venture owned by Murphy Oil Corporation for $937 million. Syncrude, located just outside Fort McMurray is one of Canada’s largest oil sands production sites. Suncor now owns a 54 percent stake in the site.
This is a picture of Syncrude s base mine. The yellow structures are the bases of pyramids made of s...
This is a picture of Syncrude's base mine. The yellow structures are the bases of pyramids made of sulphur - it is not economical for Syncrude to sell the sulphur so it stockpiles it instead. Behind that is the tailings pond, held in by what is recognized as the largest dam in the world. The extraction plant is just to the right of this photograph and most of the mine is to the left.
A real "blockbuster" of a deal took place on March 7, 2016, when Canadian Natural Resources acquired most of Royal Dutch Shell's oil sands holdings and half of Marathon Oil's minority stake in the Athabasca Oil Sands Project in Alberta. The deal went for C$12.74 billion.
Later the same month, ConocoPhillips signed a $13.3 billion deal to shed itself of its Canadian assets with Cenovus, a Canadian company taking over their oil sands and western Canadian natural gas holdings. ConocoPhillips will still retain a 50 percent interest in the Surmont oil sands project, a joint venture with Total E&P Canada, and its Blueberry-Montney shale assets, according to The Star.
File photo: A pipeline under construction from Fort McMurray  AB to the Scotord Plant in Fort Saskat...
File photo: A pipeline under construction from Fort McMurray, AB to the Scotord Plant in Fort Saskatchewan
In the latest news on American-based energy companies, Chevron is seriously considering selling its 20 percent stake in Canada's Athabasca Oil Sands project, which some experts say could go for about $2.5 billion, According to Reuters, Canadian Natural may be a logical buyer, although Canadian Natural is not making any comments.
While many are expressing concerns over the number of companies pulling out of the oil sands, Alberta's Prime Minister, Rachel Notley told reporters: "What’s going on frankly in the oil sands is you’re seeing a reorganization, you’re not seeing people pull back investment per se."
And there is no doubt that foreign companies are in the process of reorganizing their portfolios and looking closely at their bottom lines. Oil sands are among the most expensive sources of oil and some of the dirtiest of fossil fuels. Extraction of the oil produces more greenhouse gas emissions than most drilling and fracking processes.
The Athabasca Oil Sands  Alberta Canada.
The Athabasca Oil Sands, Alberta Canada.
This is an unfolding story in many respects as Canadian energy companies do their own reorganizing and the price of oil on the world market continues to see-saw. Jennifer Winter, an energy economist at the University of Calgary's School of Public Policy says, "If there are fewer investors in the oil sands, or there's more concentration with the exit of these multinationals, it means that unless the companies operating in the oil sands are able to attract significant amounts of outside capital, it's probably going to be slower growth than if Shell or ConocoPhillips stayed. The oil sands are going to continue to be one of the marginal production areas for the near future."
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