It’s been a tough start to the year for Alberta and its oilsands dependent economy: the price of West Texas I crude recently fell below US$50 a barrel, stockpiles of oil in the U.S. have grown to record levels, there’s doubt that OPEC-led production cutbacks will hold and the Alberta government just announced a $10.3-billion deficit.

And if all that’s not enough to cause provincewide anxiety, news dropped at CERAWeek, an annual energy-sector conference, in Houston last week that Royal Dutch Shell PLC was retreating from the oilsands by selling most of its assets there to Canadian Natural Resources Ltd. (CNRL) for $8.5 billion. There was some sentiment that the sale by Shell – and similar moves from other global giants – was evidence of the inevitable demise of the oilsands.

But beware of getting caught up in the ephemera of the everyday. First of all, Shell found a willing buyer in CNRL which, along with Suncor Energy Inc., has been investing heavily in the oilsands. Notably, the move puts more of the oilsands back into the hands of Canadian companies. You won’t find many complaints about that in Calgary. Ultimately, this was a case of a company making a strategic decision to alter its asset mix – in Shell’s case, to lower-carbon deposits with a faster return on investment. Fair enough. Shell also had been looking to get out from under some of its US$30 billion in debt that it had taken on to acquire BG Group PLC last year, so this cash-and-shares deal with CNRL will help.

Then there’s U.S. President Donald Trump’s approval of the Keystone XL pipeline, a project specifically designed to carry diluted bitumen from the oilsands to the U.S. Gulf Coast refineries that handle only heavy oil, giving them options from the Venezuelan and Mexican product they traditionally have relied on.

One of the other bits of big news out of CERAWeek was the International Energy Agency’s (IEA) outlook for oil’s supply/demand balance. The IEA predicts that supply will struggle to keep pace with demand after 2020 because there has been so little upstream investment in the past three years, even as demand is projected to grow. That, right there – the basics of supply and demand – provides the foundation for the price of oil and will impact the development of the oilsands more than a carbon tax or the name of the company doing the development. The current retreat in the price of oil will only exacerbate the problem caused by so little exploration. Ultimately, sentiment in the oilpatch remains cautiously optimistic, and certainly not as bad as the outlook was a year ago. Clearly, CNRL and Suncor, in particular, believe improving economies of scale and advancing technologies justify big outlays.

But a moment of truth is coming. Prime Minister Justin Trudeau approved Kinder Morgan Inc.’s Trans Mountain pipeline expansion in November, but that’s just one step in a long journey. Kinder Morgan has stated it wants to begin construction this autumn and to have the pipeline operating by 2019. Between now and then, we’re sure to see civil unrest – particularly at the pipeline’s terminus in Burnaby, B.C. Trudeau will have to stand up to protestors – and to some of his own Lower Mainland MPs – to ensure the pipeline is built.

The expansion will allow a million more barrels of oil a day to be pumped from the oilsands to be shipped to global markets – access the energy sector is clamouring for in its efforts to diversify its customer base.

That pipeline will boost the oilsands’ prospects for decades to come.

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