Shell Canada is planning to pull out of the Mackenzie Valley pipeline project and sell its assets in the region.
The company is trying to sell its share in the $16.2-billion natural gas project in the Northwest Territories, according to company documents obtained by CBC News.
Shell is part of a corporate consortium, led by Imperial Oil, that is backing the proposed pipeline. Other members of the consortium are Exxon Mobil Corp., ConocoPhillips, and the Aboriginal Pipeline Group.
Fred Carmichael, chairman of the Aboriginal Pipeline Group, estimated that Shell has an 11 per cent share in the project.
"They are actively now looking for buyers, and we're not really that concerned," Carmichael told CBC News.
"We're sure that there's … a lot of companies out there that would love to step up to the plate and take over."
The Aboriginal Pipeline Group, which represents three of the four aboriginal groups along the proposed pipeline route, has a one-third share in the project.
If built, the 1,200-kilometre pipeline would transport natural gas from anchor fields in the Beaufort Sea, through the Northwest Territories' Mackenzie River Valley, to a hub in northern Alberta.
Shell owns Niglintgak, one of the three anchor fields that the Mackenzie pipeline would tap into. The other two fields are Taglu, which is owned entirely by Imperial, and Parsons Lake, which is 75 per cent owned by ConocoPhillips and 25 per cent owned by ExxonMobil.
According to the Shell documents, the company has analyzed its global portfolio and decided to focus on other opportunities.
Shell, which has been backing the Mackenzie project since 2004, does not plan to withdraw from it until June 2012. Those who want to bid on Shell's assets have until Aug. 31.
The Mackenzie pipeline project finally won federal approval this year, following years of study into the project's potential impacts in Canada's North.
Even if Shell does find a buyer for its share in the project, there is no guarantee that the pipeline will be built. The consortium has until December 2013 to decide whether it actually wants to proceed with construction.
Kevin O'Reilly, of the Yellowknife-based social justice group Alternatives North, said Shell's decision is not a good sign for the project overall.
"I think it's really the death knell, perhaps, of the Mackenzie gas project," O'Reilly said on Friday.
"If one of the world's biggest oil and gas companies, Shell, if they don't think they can make money there and they're pulling out, what does that say about this project? I think it says that they're not interested in investing in it."
Imperial Oil said on Friday that it remains fully committed to seeing the pipeline go ahead. The company would not comment on Shell's business decision.