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Shell’s oil sands retreat sparks debate over Alberta’s carbon tax

Shell’s Albian mine in Alberta.

Dieter Blum

As soon as it was announced, Royal Dutch Shell PLC's $8.5-billion (U.S.) sale of oil sands assets to Canadian Natural Resources Ltd. became a volley in Alberta's political debate about the role of carbon pricing.

The ruling New Democrats emphasized that Canadian Natural is doubling down in the oil sands – even with the province's decision to enact across-the-board carbon tax at the beginning of this year. Cabinet minister Deron Bilous told reporters in Edmonton on Thursday that both Canadian Natural and Shell both support carbon pricing.

"This was an opportunity for CNRL, an Alberta company, to acquire those assets," said Mr. Bilous, who serves as the province's economic development and trade minister.

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"As Shell indicated, this is a business decision. And we know the world needs our energy, and that Alberta is poised to be the world energy leader of the 21st century."

However, the NDP's political opponents said it was a clear sign that global oil firms with less financial attachment to the oil sands are beating a quick retreat – at least in part due to provincial policies.

Video: Carbon price not behind Shell’s oil sands sale: McKenna (The Canadian Press)

"Today's NDP lesson: Companies like 2 virtue signal about the 'low carbon economy' but their investors flee when they have to pay 4 it," said one tweet from Blaise Boehmer‏, a spokesman for Jason Kenney, who is running for the Progressive Conservative Party leadership and to unite conservative factions in the province.

"Nobody has to invest in Alberta. NDP still learning this fact," Mr. Boehmer said.

Robert Fitzmartyn, managing director of institutional research for the Calgary-based GMP FirstEnergy, said he can see different sides to the megadeal.

He said Alberta's carbon tax "is not helping" attract external capital investment in the province. Speaking from the investment bank's East Coast Energy Symposium in New York, he also said there are concerns that the Canadian industry could become even less competitive as the Trump Administration and the Republicans work to lower corporate taxes south of the border.

"I am disappointed. I mean, how many more entities do we need to see leave Canada before people get a little bit concerned about the broader competitive landscape," Mr. Fitzmartyn said, who noted that Shell still has interests in Canada, including leading the proposed LNG Canada export project in Kitimat, B.C.

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On the other side, Mr. Fitzmartyn said the deal is a clear positive for Canadian Natural. "It's very Warren Buffetesque – you can buy something at 44 per cent of replacement value and do a deal that's 17 per cent accretive, which is amazing for a company its size."

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