29
Jul 2008 - Exploitation of North America’s
shale and tar-sand oil reserves could increase
atmospheric CO2 levels by up to 15%, a new
report from WWF-UK and the major UK financial
group Co-Operative Financial Services (CFS)
has warned.
Extraction of the projected
1,115 billion barrels of recoverable oil
from unconventional fuel sources such as
Alberta’s oil sands and Colorado’s oil shale,
which involve much more energy intensive
procedures for extraction than traditional
oil reserves, would significantly increase
global risks of dangerous climate change,
the report said.
Unconventional Oil:
Scraping the bottom of the barrel reported
that companies including Shell, ExxonMobil
and BP have announced over $CAN 125 billion
worth of development in Canada’s oil sands
by 2015. Increasing oil prices are also
increasing interest in unconventional oil
sources has been given added impetus by
rising oil prices.
“The extraordinary lengths
some oil and gas companies go to in attempting
to make the climate-hostile fuels somewhat
less so should be re-directed to bringing
forward low-carbon energy,” said Ian Jones,
head of Responsible Investment at Co-Operative
Investments, part of the CFS group.
“Most oil companies
have hardly begun to factor in the externalities
that are currently imposed on the environment.”
These externalities
include mass deforestation, such as Alberta’s
Boreal forests, which lie above 140,000
square kilometres of oil sands, and are
now crisscrossed with seismic lines and
open-cast mines.
This region, identified
as a “life support system for the planet,”
is home to 11% of global terrestrial carbon
sinks, themselves necessary for mitigating
the climate change.
Production of oil sands
is also extremely water intensive, requiring
three barrels of water to produce each barrel
of oil. This is threatening the ecosystem
of the Athabasca river by reducing flows
to dangerous levels.
Canada’s indigenous
communities are also concerned with water
quality in former wetlands now featuring
tailings ponds up to 50 square kilometres
in size which can be seen from outer space.
Only 5-10% of waste water is judged sufficiently
non-toxic to be returned to waterways
Risks to investors
Scraping the bottom
of the barrel outlines potential risks to
investors from the high capital costs of
sand and shale to oil projects, looming
regulatory restrictions, the likelihood
of litigation, environmental liabilities
from tailing ponds and restoration requirements
and reliance on unproven technologies such
as carbon capture and storage. Investors
could end up with stranded assets,
The authors of the report
themselves call for tighter regulations
such as the Emissions Standards in place
in California that, by prohibiting sales
of fuels with high lifecycle emissions,
would effectively outlaw fuel extracted
from tar sands and oil shale.
“Companies and investors
claim to recognise the need to tackle climate
change and support international efforts
such as Kyoto. In oil sands we have an activity
that is going against this imperative…it
is time for investors to challenge this
strategy” said James Leaton, WWF-UK’s senior
oil and gas adviser.
“Shareholders should
challenge those oil companies that fail
to steward investment responsibly.” added
Jones.
