Due to a variety of factors, Royal Dutch Shell is set to effectively move on from production in the Canadian oil sands. The company agreed on March 9 to sell the vast majority of their interests to Canadian Natural Resources for what was reported to be a price of $7.25 billion.

Shell canadian oil sands

The only portion of that sector that Shell will be holding onto is part of the Athabasca mining project. The company will maintain operation of equipment that’s able to reduce the viscosity of heavy oil for use as a lighter liquid. In addition, Shell’s continued focus on non-oil projects will have them operating what’s known as the Quest project, which zeroes in on carbon-capture and storage projects.

The revenue that Shell receives from the sale accounts for one-quarter of the company’s $30 billion divestment program that now has acquired two-thirds of that total amount. The divestments began after they purchased BG Group last year, with that price for BG estimated at over $50 billion.

Another important reason stems from the oil price slide that’s now nearly three years old and shows no indication of changing anytime soon. The deposits in the oils sands were already costly to extract because the product that emerged had to be converted to a synthetic form of crude, efforts which obviously reduced the profit margin.

Finally, the environmental toll that such work required put Shell in the crosshairs of critics and helped aggravate their own renewed commitment to reducing the level of carbon dioxide released.

The signs were evident two years ago that Shell’s days in the oil sands were numbered. That’s when they put an end to what was the Carmon Creek development, a move that came in the early portion of the oil price dip.