Canadian Natural Resources Ltd. (CNRL) has indicated that its previously paused $8.25-billion expansion of the Jackpine oil sands project in northern Alberta could resume, contingent upon securing favorable policy agreements with the provincial and federal governments. The Calgary-based company deferred the project in March, citing uncertainty around government regulations related to carbon pricing and methane emissions as key factors.

The company’s outlook shifted following a memorandum of understanding (MOU) signed on July 2 between Alberta, the federal government, and five oil companies, including CNRL. The MOU advances a significant carbon capture initiative in northern Alberta and sets a November 15 deadline for finalizing agreements that would encourage increased crude oil production.

Scott Stauth, CNRL’s president, told analysts during a recent earnings call that the MOU presents a substantial opportunity not only for Canadian Natural but also for Alberta and Canada as a whole. He noted that the company would reconsider proceeding with Jackpine, expansions at its Jackfish and Horizon operations, as well as a new greenfield project called Pike 2, subject to reaching definitive agreements that fulfill the MOU’s objectives.

Those objectives include expanding access to global oil markets, lowering emissions, simplifying regulatory processes, and developing fiscal policies aimed at sustaining and growing oil sands production. Stauth emphasized the importance of all these components working in tandem, stating that no single aspect should be prioritized at the expense of the others.

However, he cautioned that projects will remain on hold until concrete agreements are established and will only move forward if they are projected to deliver strong financial returns. "Our shareholder returns will not be sacrificed," Stauth said, adding that CNRL would not prioritize long-term developments if they adversely affect medium-term capital discipline.

Executives from other major oil producers, including Suncor Energy Inc. and Cenovus Energy Inc., have similarly maintained that the recent MOU will not alter their capital spending strategies.

The proposed Jackpine expansion is expected to raise CNRL’s bitumen output by 150,000 barrels per day. Meanwhile, expansion plans for the Jackfish and Horizon sites aim to increase production by approximately 30,000 and 90,000 barrels daily, respectively. The Pike 2 project, planned for Lac La Biche County in Alberta, is designed to add an estimated 70,000 barrels per day.

In its latest financial report, released Tuesday, CNRL recorded its highest quarterly oil sands mining output, averaging about 625,000 barrels per day from April through June. The company also raised its production guidance for the year for the second time. Quarterly net earnings reached $4.5 billion, a significant increase from $1.3 billion reported in the first quarter.