Alberta Tar Sands

From Global Energy Monitor

CO2 Emissions

The tar sands contain an estimated 168 billion barrels of oil that is recoverable with current technology and are the largest reserve in the world after Saudi Arabia. (Total oil in the tar sands is an estimated 1.8 trillion barrels.)[1] In 2017 the Albert government announced that tar sands production would rise from 2.5 million bpd in the 2016-17 fiscal year to 3.3 million bpd in 2019-20.[1] This figure is higher than predicted by Greenpeace in 2013, in a report which estimated that production of oil from the tar sands in Alberta "will triple from 1.5 to 4.5 million barrels a day by 2035, adding 706 million tonnes of CO2 to global emissions a year. By 2020, the tar sands expansion would add annual emissions of 420 million tonnes of CO2, equal to those of Saudi Arabia.[2]

New Projects

Despite reports that growth was slowing in the tar sands, several large projects have been proposed:

  • Suncore's Lewis oilsands project (160,000 bpd, $6.2 billion)[3]
  • Prosper Petroleum's Rigel oilsands project (10,000 bpd, $390 million)[4]
  • Teck's Frontier Project (260,000 bpd)[5]

Strategic Significance

The tar sands of Northern Alberta, Canada, is one of the largest remaining deposits of oil in the world. Developing the tar sands has created the biggest industrial development project, the biggest capital investment project, and the biggest energy project in the world. At its peak before the drop in oil price, the investment was in the order of $100bn.

Companies Involved

Investors in the early development stages included Total, Exxon, Statoil, Shell, ADNEC, China / PetroChina (on a C$1.9bn lease).

Potential ESG Risks

Corruption issues

In August 2008, Shell was found guilty of misleading the public over its tar sands operations. The British Advertising Standards Authority (ASA) ruled that the company should not have used the word “sustainable” in describing its Canadian tar sands operations. The ASA ruled that the advert had breached rules on substantiation, truthfulness and environmental claims.

It was back in February 2008, that the Financial Times had ran an advert by Shell to accompany its financial results. The oil giant claimed that: “We invest today’s profits in tomorrow’s solutions.” Shell explained it was harnessing its technical expertise “to unlock the potential of the vast Canadian oil sands deposits”, but then added: “Continued investment in technology is one of the key ways we are able to address this challenge, and continue to secure a profitable and sustainable future.”

Shell was challenged by environmental organisation WWF. David Norman, the WWF’s director of campaigns, said: “The ASA’s decision to uphold WWF’s complaint sends a strong signal to business and industry that greenwash is unacceptable.” Celebrating its victory, WWF launched an ad campaign outside London’s Waterloo station stating “Shell can’t hide the environmental impact of their oil sand projects.” [6]

In 2015 the Canadian government was found to have secretly spent $4.5 million on public relations advertising and domestic and international “outreach activities” to promote Alberta’s tar sands.[7]

Human rights

In 2016 indigenous tribes from Canada and the northern United States signed a treaty to jointly fight proposals to build more pipelines to carry crude from Alberta’s oil sands, saying further development would damage the environment. The treaty came as the politics around pipelines have become increasingly sensitive in North America, with the US justice department intervening last week to temporarily delay construction of a contentious pipeline in North Dakota. The Treaty Alliance Against Tar Sands Expansion was signed by 50 aboriginal groups in North America, who also plan to oppose tanker and rail projects in both countries, they said in a statement. Targets include projects proposed by Kinder Morgan Inc, TransCanada Corp and Enbridge Inc.[8]

Environmental

In 2012 James Hansen said that extracting Canada's tar sands oil would mean "game over for the planet."[9]

NGO's Involved

Local Opposition

Status of Project

Infrastructure

Opponents have focused on stopping construction of the Keystone XL Pipeline, which would carry oil from the tar sands to Nebraska. In August 2018 a federal judge in Montana has ordered the U.S. State Department to do a full environmental review of a revised route for the Keystone XL oil pipeline, possibly delaying its construction.[10]

Other major pipelines that would be used to transport tar sands oil are Kinder Morgan's Trans Mountain Pipeline and Enbridge's Line 3.

Domestic Political Situation

Advocates have tried to frame tar sands development as an issue of economic opportunity, and national and even cultural sovereignty. In an editorial entitled “'Dirty oil' beats bloody oil” the Calgary Herald argued that that those in the ethical investment community who are worried about oil sands are “misguided.” [11] The Herald tried to belittle the tar sands contribution to global CO2. "First, there's the matter of scale. Canada produces two per cent of the world's CO2. Of that modest amount, a mere 4.6 per cent comes from the oilsands. This is not melting the snows of Kilimanjaro and to focus upon it as environmentalists do, is simply fearmongering." The real evil, argued the Herald is not tar sands, but "China's coal-fired electrical power generation industry." The paper also attacked the ethics of Saudi oil. "Apart from presiding over a misogynistic, medieval, and tyrannical society, the House of Saud quietly finances an extreme form of Islam around the world -- Wahabbism -- that considers the West infidel, and less militant forms of Islam to be heretical. It is the intellectual seedbed of terrorism."

Alternatives

A 2017 IEA report projected slower growth in Canada's renewables sector from 2017-2022, with an increase of 9 GW, down from 13 GW.[12] The decrease was due to the Ontario government suspending the second phase of its Large Renewable Procurement (LPR) program, axing $3.8 billion in planned renewable energy contracts, and Quebec cancelling tenders for several clean energy projects. The IEA projected that Canada will receive 69% of its energy from renewables by 2022, mostly from solar, wind, and hydro.

Project Economics

Subsidies

A study by four major Canadian environmental groups has shown that carbon pricing risks being undermined by billions of dollars in subsidies to fossil fuel interests, from both federal and provincial governments.[13]

The $3.3bn annual subsidy, made up of extraction incentives and research and development, amounts to paying polluters $19 for each tonne of carbon dioxide they emit, according to the green groups. This would conflict, they say, with the planned carbon price, which will ramp up to $50 a tonne by 2022.

“This system is like taxing consumers when they buy cigarettes while giving massive tax breaks to tobacco companies that encourage them to produce more cigarettes. It doesn’t make sense,” said Alex Doukas of Oil Change International.

International Dynamics

Financing

Transcanada Financing (Keystone XL Pipeline)

Without project finance in the works, these banks financing Transcanada are de facto the banks financing KXL, according to a 2017 report by Price Of Oil.[14]

US: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo Canada: ATB Financial, Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), Desjardins, Export Development Canada, National Bank of Canada, Royal Bank of Canada (RBC), Scotiabank Europe: Barclays, Crédit Agricole, Credit Suisse, Deutsche Bank, HSBC Japan: Mitsubishi UFJ Financial Group (MUFG), Mizuho, Sumitomo Mitsui Financial Group (SMFG)

Kinder Morgan Financing (Trans Mountain Pipeline)

The banks are providing financing for Kinder Morgan's Trans Mountain Pipeline.

US: Bank of America, JPMorgan Chase, Suntrust Canada: ATB Financial, Bank of Montreal, Canadian Western Bank, CIBC, Desjardins, National Bank of Canada, RBC, Scotiabank, Toronto-Dominion (TD) Europe: Barclays, HSBC, Siemens Asia: Bank of China, China Construction Bank, Industrial and Commercial Bank of China (ICBC), Mizuho, MUFG, SMFG, United Overseas Bank

Enbridge Line 3 Financing

The pipeline does not have dedicated funding, but here are banks financing Enbridge.

US: Bank of America, Citi, Huntington, JPMorgan Chase, Morgan Stanley, Wells Fargo Canada: ATB Financial, Bank of Montreal, CIBC, Desjardins, Export Development Canada, National Bank of Canada, RBC, Scotiabank, TD Europe: Barclays, BNP Paribas,11 Crédit Agricole, Credit Suisse, Deutsche Bank, DNB, HSBC, Société Générale, UBS Asia: Bank of China, Bank of Taiwan, China Construction Bank, China Merchants Bank, First Commercial Bank, ICBC, Mega International Commercial Bank, Mizuho, MUFG, SMFG, State Bank of India, United Overseas Bank



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