Environmentalists target oil sands investors

Calgary, Canada — Environmental group Greenpeace Tuesday launched a new attack on Alberta’s oil sands, claiming that energy companies BP PLC and Royal Dutch Shell have underestimated the potential risks to investors of oil sands development.

The report has the backing of several British investment firms, including Holden and Partners, Innovest and Co-operative Asset Management.

Co-operative Asset Management, a fund worth almost $6-billion, also launched a campaign to persuade other institutional investors to support its view that the risks of developing the oil sands are too uncertain, and that BP and Shell should halt their activities.

On Monday, Alberta Energy Minister Mel Knight rejected the UK fund’s claims, saying Alberta’s plans to cut emissions from the oil sands will work.

An analyst with the fund, Niall O’Shea, said Monday BP and Shell are putting a lot into expectations of the ability of carbon capture and storage technology, which sees carbon dioxide from plants stored underground.

“We are not on the rampage looking to get everything stopped,” Mr. O’Shea said. “But it’s not clear how [BP and Shell] are going to manage their risks – there’s so many uncertainties. We’re asking for a dialogue and to understand what their position is … We want to protect our long-term investment.”
Co-operative Asset Management – the investment arm of the U.K.-based Co-operative Group, the world’s largest consumers’ co-operative – owns about $150-million in shares in both BP and Shell, or less than 2 per cent of each company.

Alberta is ramping up crude output from its oil sands, which hold vast reserves of bitumen. Extracting the oil takes more energy than conventional production, sparking criticism from environmentalists.

Alberta has invested heavily in CCS as it seeks to cut its actual greenhouse gas emissions by 14 per cent by 2050. But while the province and oil companies are plowing billions of dollars into developing the technology, it’s expected to take at least 10 years for firms to have the ability to apply CCS economically to major oil sands projects.

Nevertheless, the technology is “definitely” the answer to reducing Alberta’s emissions, Mr. Knight said. He pointed to the Weyburn conventional oil field in Saskatchewan, where carbon dioxide is injected into the reservoir, as evidence of CCS’s viability.

“These funds are taking a short-sighted view,” he said in an interview Monday. “We know the technology works, it’s a solid piece of business, and we’re about to embark on applying it on a large scale.”

BP spokeswoman Hejdi Feick said that while the company’s investors are “a very key audience … we see the oil sands as important for energy security. It’s important that development is done correctly, and we plan to take a proactive approach to ensuring that this is done in a responsible manner.”

Shell spokeswoman Janet Annesley said the company is “in full compliance with existing and emerging environmental regulation.” She added that the company has made a voluntary commitment to halve emissions from its existing oil sands project by 2010.

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