CNRL says it will delay $8-billion mine expansion until carbon pricing rules are clear

Canadian Natural Resources Ltd. posted strong full-year results Thursday despite weaker oil prices in 2025. Photo by Brent Calver/Postmedia files

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“This (expansion) is being deferred due to lack of finalization of government regulatory policies around carbon pricing, methane, which creates uncertainty and economic burden for a long-term growth investment,” president Scott Stauth said during the company’s fourth-quarter earnings call Thursday.

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“Once there’s more certainty on improved regulatory policy, improved timelines and additional egress, we will reassess the economic viability of this project.”

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Canadian oil and gas producers are watching closely as Alberta and Ottawa negotiate the details of carbon pricing and methane regulations ahead of an April 1 deadline set out in the province’s landmark memorandum of understanding on energy development with the federal government.

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Because oilsands mines operate for decades, even small changes to carbon costs or methane standards can materially alter project economics, potentially adding billions in compliance costs across the sector over time, according to public policy and industry analyses.

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Oil producers are also taking a cautious approach to growth projects as Western Canada once again faces a possible shortage of pipeline capacity.

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Ottawa’s approval of Alberta’s proposed new bitumen pipeline to the B.C. coast is now closely tied to the oil sector making significant progress on emissions reductions under the terms of the new memorandum of understanding — a trade-off Premier Danielle Smith has described as a “grand bargain.”

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Canadian Natural has said its Jackpine project could ultimately add about 150,000 barrels per day of bitumen production at its Albian mine, north of Fort McMurray, Alta.

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Last fall, the company said it was planning to begin engineering work on the project in 2026. CNRL inherited the project from Shell plc when it acquired most of the supermajor’s assets in 2017 — finally taking full control of the Albian mine last year following an asset swap with Shell.

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Delaying work on the Jackpine mine expansion will result in a $310 million cut to the oil producer’s capital budget in 2026.

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The Calgary company posted strong full-year results Thursday despite weaker oil prices in 2025.

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Canadian Natural saw an adjusted profit of $7.4 billion in 2025, roughly flat versus the year before. However, the oilsands giant generated $15.5 billion in adjusted funds flow in 2025 — a key measure of operating cash generation —  up from $14.9 billion in 2024.

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The price of a barrel of U.S. benchmark West Texas Intermediate crude averaged $64.77 in 2025, down from $75.72 in 2024, the company said.

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Oil prices have been volatile in the first three months of the year amid escalating geopolitical tensions, Stauth said. The year began with the U.S. taking control of Venezuela’s oil sector, a move which initially sent Canada’s heavy crude prices lower, before rallying again and climbing following the recent joint strike on Iran by the U.S. and Israel.