Since Royal Dutch Shell, Shell Canada’s parent company, sold most of their Alberta assets to CNRL on March 9th, both conservatives and some environmental NGOs have claimed Shell’s divestment from Alberta is a sign of the decline of the oil sands industry.

Conservatives claim the Shell/CNRL deal happened because the NDP aren’t good for the oil industry, especially in a lower for longer price environment. Some ENGOs are claiming the deal is a sign that oil sands production is becoming increasingly untenable in a carbon constrained world.

The reality is the Shell/CNRL deal is part of the ongoing restructuring of the Alberta oil industry, not a sign of the industry’s decline.

Royal Dutch Shell bought BG Group on February 15th for US$49B. After that purchase Shell needed to offload some of its other assets, so they sold most of their Alberta assets to CNRL (Shell’s oil sands operations were making decent returns, so this bold move should pay off for CNRL).

Divesting from oil sands was one move in a larger global strategy for Shell. Shell’s aim is to compete with ExxonMobil in the ultra-major league of global oil production. They are both forecast to produce 4.3M barrels/day in 2020. ExxonMobil’s strength is in unconventionals and Shell’s is in LNG and deepwater production.

Shell didn’t leave Alberta because of the carbon tax, as some conservatives claim. Shell actually supports putting a price on carbon. So do the two largest oil sands producers by volume, CNRL and Suncor. Imperial is the only top 5 oil sands producer that opposes the carbon tax and their parent company ExxonMobil has been funding climate change denial for years.

As for the lower for longer price environment, CNRL projects their production costs will be down to $20/barrel by the end of 2017 and Suncor’s costs for some operations are also below $30/barrel (Syncrude’s costs were down to $32.55/bbl in Q4 of 2016, and Shell’s oil sands operating costs were below $30/barrel before the CNRL deal).

Maybe the substantial decline in oil sands production costs over the last few years explains the two largest oil sands producers each making a major deal to increase their holdings since the oil price began to decline in fall 2014. Suncor increased its stake in Syncrude (they now own over 50%), and CNRL’s purchase of Shell’s assets pushes CNRL into the million barrel per day club.

Most oil sands majors actually seem pretty happy with the NDP. The NDP reduced some resource royalties (which were already low), put a price on carbon that most major producers support, and brought in the 100Mt emissions cap that most majors support (100Mt is too high, but an improvement from a climate policy perspective). The latter two measures led to two pipelines being approved by the federal government, which if built will reduce costs per barrel even further.

Those are the facts, and I can say that as someone who opposes building new pipelines because they lock us into a trajectory of higher oil production for decades to come at a time when climate scientists are saying we need a managed decline of fossil fuel use around the world over the next three decades. I don’t think it does any good to claim Alberta’s oil industry is on the decline when it isn’t, especially if you believe the world needs a just transition to cleaner energy sources.