‘The tide is definitely changing here,’ says analysts as foreign interest grows
After selling off a large chunk of its Canadian assets nearly a decade ago, U.K.-based energy giant Shell is now expanding its operations in Alberta and British Columbia by acquiring Calgary-based ARC Resources for $22 billion.
It is the latest in a series of deals in the Canadian oilpatch in recent months, and more are expected as companies search the globe for secure, low-cost and long-term sources of oil and natural gas, especially after the disruptions caused by the U.S. war with Iran.
This investment by Shell could also signal the European firm is preparing to spend billions more in Canada by moving ahead with an expansion that would increase natural gas exports off the West Coast.
Monday’s deal for ARC is Shell’s largest acquisition in the last decade. ARC is primarily a natural gas producer with average production of approximately 410,000 barrels of oil equivalent per day.
“We’re having more supermajors start to look at Canada as a viable place to invest,” said BMO Capital Markets analyst Jeremy McCrea about the significance of the deal.
“This is probably the start of more things to come,” he said.
Trend reversal
Shell was one of several foreign companies to sharply reduce operations in Canada or leave the country altogether after selling the majority of its oilsands operations for $11 billion in 2017.
ConocoPhillips, meanwhile, sold most of its operations for $17 billion in 2017, while BP, TotalEnergies and other foreign companies also sold off most of their assets.
Over the last 12 months, however, the opposite trend has emerged. Domestic and international companies have made several acquisitions in Western Canada, including Cenovus winning a bidding war for MEG Energy, Ovintiv purchasing NuVista Energy, and Cygnet Energy buying Kiwetinohk Energy.
On Monday, Shell’s chief executive Wael Sawan said the transaction “establishes Canada as a heartland for Shell,” years after the company divested much of its Canadian footprint.
Experts point to several reasons for the renewed interest in Canada’s energy sector, including low-cost, abundant natural gas reserves. In the oilsands, companies have continued to find efficiencies and develop new technology, making it one of the lowest-cost sources of oil in North America.
For McCrea, the shift in policy and tone from the federal government — and its ambition to become an energy superpower — is also helping.
“The tide is definitely changing here,” he said.
LNG expansion
Shell is the larger owner of LNG Canada, a consortium of companies that developed the country’s first liquified natural gas export facility in Kitimat, B.C., which began operating in July 2025.
Shell and its partners are developing a “Phase 2,” but have yet to make a final investment decision. The exact cost of the project is unknown, but would be in the billions of dollars.
Shell’s deal for ARC will boost its natural gas production, experts say, and give the company ample supply to export through the existing LNG Canada facility and a possible expansion.
“It’s a positive sign from the perspective that it certainly seems to paint the picture that Shell and its partners in LNG Canada look more likely to invest in phase two of LNG Canada,” said RBN Energy analyst Martin King.
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