​And then there were three: Canadian ownership sweeps across oilsands mining

Image: Joey Podlubny/JWN

Suncor Energy, Canadian Natural Resources and Imperial Oil.

These three companies alone are now going to be the big show north of Fort McMurray, painting a Canadian flag across the oilsands mining region in a way not seen for a decade as ownership in the region shifts.

Canadian Natural’s $12.74 billion acquisition of the majority stake in the Athabasca Oil Sands Project (AOSP) from Royal Dutch Shell announced this week will result in all five oilsands mining operations—about 1.1 million bbls/d—being operated and majority-owned by Canadian companies.

In 2007 Royal Dutch Shell shifted that landscape by acquiring its Canadian subsidiary, Shell Canada.

The deal with Canadian Natural leaves Shell with just a 10 percent non-operated stake in an industry it championed for more than two decades (the operating company Shell Albian Sands was incorporated in 1997).

Combined with Suncor’s asset deals in the last 18 months years, there are major changes underway in terms of ownership but perhaps more importantly operatorship of oilsands mining projects.

Here’s a look at the whole picture.

Suncor Energy base operations—Q4/2016 synthetic crude oil production 324,500 bbls/d

The original oilsands mining and upgrading facility, which opened up in 1967 and has since been expanded to synthetic crude oil production capacity of 350,000 bbls/d.

Initiated by Pennsylvania-based Sun Oil in the 1950s, Canada’s Suncor was incorporated in 1979 through the amalgamation of the Canadian operations of Sun Company of Canada with the oilsands mining operations, Great Canadian Oil Sands.

Suncor has been the 100 percent owner and operator of these assets ever since.

Syncrude—Q4/2016 synthetic crude oil production 347,972 bbls/d

The Syncrude joint venture, which started operating in 1978, has a complex history involving different group structures over the years, with the exception of one steadfast owner—Imperial Oil.

Syncrude stakeholders in the past have included the governments of both Alberta and Canada (through Petro-Canada), U.S.-based producers such as Gulf/ConocoPhillips and more recently Chinese firms Sinopec and CNOOC, through Nexen.

In 2015 Suncor made its move to realize majority ownership of its long-time neighbor through the acquisition of Canadian Oil Sands. In 2016 the company followed that up with purchase of the stake of Murphy Oil, leaving it with 53.74 percent ownership and an increasing level of influence over operations.

The operator of Syncrude is technically Syncrude itself, but effectively it has been Imperial Oil through a management services agreement announced in 2006.

Suncor CEO Steve Williams hinted in early February that a structural change is on the way.

“We have a great opportunity to integrate some of our services and governance, and you will see Syncrude move in the direction of an operating business rather than a completely stand-alone corporate entity, which was wholly appropriate in the past, probably is less appropriate as we go forward,” he said.

AOSP (Albian Sands)—Q4/2016 synthetic crude oil production 235,000 bbls/d

When the AOSP went into operations in 2002, it was operated by Shell Canada on behalf of a joint venture including 20 percent ownership by Chevron and 20 percent ownership by Canadian junior Western Oil Sands.

Western was purchased by Marathon in 2007, the same year that Shell went back into the fold of its European parent company.

Upon the close of this week’s deal, which is anticipated in the second quarter, Canadian Natural Resources will be the 70 percent owner and operator of the AOSP.

The transaction also removes Houston-based Marathon Oil Corporation from the equation but keeps Chevron’s stake.

Horizon—Q4/2016 synthetic crude oil production 178,063 bbls/d

Born out of the shallow gas basin of southern Alberta in 1989, Canadian Natural started producing primary heavy crude oil and thermal oilsands in the 1990s.

The company announced plans for its 100 percent-owned and operated integrated oilsands mining project in 2001.

Horizon achieved its first production in 2008 and is currently undergoing an expansion to take capacity to 255,000 bbls/d.

Kearl—Q4/2016 mined bitumen production 120,000 bbls/d

Imperial Oil, which is a Canadian company but is majority owned by ExxonMobil, eventually added its own operated oilsands mine to the neighbourhood.

Exxon also owns 29 percent of Kearl, which started operating in 2013.

The project is the only oilsands mining operation that does not include an integrated upgrader. Imperial and Exxon invested to expand Kearl shortly after opening the project, increasing production capacity to 220,000 bbls/d in 2015.

In all, considering both mining, upgrading and thermal oilsands production, together Imperial Oil, Canadian Natural and Suncor produced over 1.6 million bbls/d in the fourth quarter of 2016.

According to the Alberta Energy Regulator, total oilsands production averaged 2.4 million bbls/d in 2016.

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