Shell buys Canadian shale producer for US$16.4bn

ENERGY giant Shell is expanding its oil and gas operations in Canada’s Montney shale basin with the US$16.4bn purchase of Canadian shale producer ARC Resources.

The deal is expected to boost Shell’s production growth from 1% to 4% and add 370,000 boe/d to its output.

ARC Resources operates in the same Montney region as Shell’s existing Groundbirch asset and Gold Creek project.

Expanding in Canada

ARC is one of the country’s largest producers of natural gas and condensate, a key feedstock for petrochemicals such as ethylene.

Canada contains the entire supply chain for Shell’s operations, spanning exploration and gas production to refining and manufacturing.

Shell already owns a 40% stake in LNG Canada, a US$40bn liquified natural gas plant on the country’s west coast.

Balance sheet

Shell is expected to report higher oil and gas profits due to price hikes triggered by conflict in the Middle East. The company has warned that a continued conflict will send shockwaves across the global market well into next year.

Wael Sawan, CEO of Shell, said: “We are talking about roughly 900m barrels that haven’t been produced in the last couple of months and that’s been replaced essentially by stock drawdown.”