International oil companies may be on the verge of divesting tar sands/oil sands properties worth C$13.4 billion, according to a new report published earlier this month by Toronto-based Veritas Investment Research.
“We expect Canada’s oilsands asset to be the first to come to market,” said analyst Jeffrey Craig. “A poor reputation for oilsands internationally suggests the only logical buyers would be Canada’s Final Four operators.”
The report lists Canadian Natural Resources Ltd. (CNRL), Suncor Energy, Cenovus Energy, and Imperial Oil as the “Final Four” Canadian fossils most likely to buy up the available holdings, given what the Financial Post calls the “exodus of major international oil players over the years and the consolidation within the industry”.
None of the news reporting so far suggests any reduction in tar sands/oil sands production, or any shift in the industry’s plans to increase output through the next 15 to 20 years. The reporting reinforces recent concerns that rising international pressure on colossal fossils to reduce their carbon footprints will motivate them simply to sell off some of their assets to new owners, rather than cutting actual emissions.
The Post says the rush to dump tar sands/oil sands properties is being driven by “investor heat on oil majors to quickly jettison carbon-intensive assets”. That push came to a head in a single day in May, when upstart hedge fund Engine No. 1 elected three directors to the ExxonMobil board, Chevron shareholders directed the company to take responsibility for its downstream greenhouse gas emissions, and a court in The Hague ordered Royal Dutch Shell to boost its 2030 emissions reduction target from 20 to 45%.
“Given the pressures, analysts expect oil majors to divest assets that are perceived to have high carbon intensity,” the Post writes. “Average CO2 intensity for oilsands is calculated at a staggering 73 kilograms per barrel of oil equivalent,” compared to about 12 kilograms for shale oil in the United States, according to Oslo-based Rystad Energy.
That means Chevron and Shell may have a sudden, compelling interest in selling their shares in the Athabasca Oil Sands Project to CNRL, Suncor may have its eye on a Shell refinery in Sarnia, and Exxon may dump its share in the Kearl Oil Sands Mine on its Canadian subsidiary, Imperial Oil. News reports dating back to August 2020 have had Exxon considering whether to declare Kearl a stranded asset.
The Veritas analysis came on the heels of a Reuters report that Japanese state fossil Japan Petroleum Exploration Co. (Japex) is looking to sell off its 75% share of the Hangingstone tar sands/oil sands operation in Alberta.
The Post has details of what the upcoming round of corporate moves might look like.