StarPhoenix shortchanges readers on oilsands report; WWF & CFS expose danger of shale extraction and questions viability of carbon capture and storage
It appears to be business as usual at the
On July 29 British-based Co-operative Financial Services (CFS) and WWF, the global conservation organization, released a joint report entitled Unconventional Oil: Scraping the Bottom of the Barrel.
The 52-page report 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.
WWF, founded in 1961, is one of the world’s most experienced conservation organizations.
WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity; ensuring that the use of renewable natural resources is sustainable; and promoting the reduction of pollution and wasteful consumption.
The Co-operative Financial Services (CFS) is part of The Co-operative Group, the
The editorial Strict regulation key to developing oilsands resource (StarPhoenix, Aug. 5, 2008) negatively portrays the two organizations as “naysayers.” It implies that its report is a “well-orchestrated and multi-organizational assault” against the oil industry and is merely “the latest hyper-active attack from the same kind of activists and organizations that have opposed everything from genetically modified foods to nanotechnology to uranium development.”
Interestingly, the editorial board does not say that the organizations are wrong. What it did instead was attack the groups, extract a miniscule amount of information from their report and bury it between comments supportive of companies Oilsands Quest and Shell Oil.
The SP reduced the 52-page report to approximately 126 words and avoided discussing some of the more contentious issues, things that Saskatchewan Premier Brad Wall supports without hesitation, but which may dangerously contribute to climate change and cause local ecological disaster.
The SP paints Oilsands Quest, an American company, as eager and willing to liberate “a rich stream of oilsands” from “inside the western borders of
“If its estimates prove correct, there could be as much as 6.6 billion barrels of oil trapped in those ancient sand beds. At an average world price for regular oil of $120 a barrel, it isn’t hard to do the math what that could mean to this province,” the editorial said.
Oh, but there’s “another dark shadow” that could threaten all these riches and it’s those evil activist “naysayers” shining a light on Alberta’s “questionable environmental legacy” with respect to the development of its oilsands.
What the SP doesn’t tell readers, though, is how Oilsands Quest intends to get the oil out of the ground and what the consequences of that might be.
In Sask. oilsands could hold 6.5 billion barrels, company says (CBC News, Aug. 5, 2008) the CBC reported that instead of open pit mining, Oilsands Quest is planning an in situ project, where steam would be injected deep into the ground to make the oilsands material, bitumen, soft enough to transport via pipeline.
According to the WWF/CFS report “In situ oil sands production is similar to that of conventional oil production in that oil is recovered through wells. However, the heavy, viscous nature of the bitumen means that it will not flow under normal conditions. The large areas required for steam generation plants, well pads, roads, 3-D seismic lines and pipelines for these processes means they disturb significant areas of land. Even more water and energy is required for in situ than mined oil sands.”
The report references a June 2007 joint report by the Natural Resources Defense Council, Western Resource Advocates and Pembina Institute that explores the full scale of the damage done by attempts to extract oil from liquid coal, oil shale, and tar sands and states “In situ processing requires the groundwater to be pumped out of the frozen extraction area. Water is used for steam and for cooling. Process waters are likely to have high concentrations of soluble organic materials, along with very high concentrations of ammonia nitrogen, alkalinity, chlorides and sulphates. The extraction of groundwater will also increase salinity concentrations and destroy habitat for native and endangered fish in the
“Open pit mines are much more obviously destructive in terms of excavation, but the surface activities of in situ extraction can also have significant impacts on land cover. Some of the huge mines can be seen from space,” the report states.
“The boreal forest is the single largest terrestrial carbon storehouse in the world, and deforestation has been identified by the IPCC [Intergovernmental Panel on Climate Change] as a major contributor to climate change.”
The report goes on to describe the impact of these activities stating “The forest is home to many species such as caribou, which require connected areas of intact forest that have sufficient buffers from such disturbance. At present there is no maximum density of activity that is applied to prevent cumulative impacts that destroy habitat. Studies have shown that forests within 1 km of roads and well sites tend to be avoided by caribou and that roads further fragment caribou habitat by acting as barriers to movement. Up to 80% of the surface area of current in situ developments provides less than a 250 metre buffer distance from industry disturbance. Studies by the Canadian Parks and Wilderness Society and other studies indicate caribou populations have declined in recent decades due to a range of anthropogenic factors, including unsustainable logging and oil sands exploration.”
Over half of
Rather than discussing the WWF/CFS report the SP appeared to be more concerned with how the oil industry was reacting to it saying it seemed “ill prepared” to deal with its critics.
“It took Shell Oil, a major investor in the
“Shell CEO Jeroen van der Veer said the world needs every kind of energy source it can find at a time of soaring demand, and if it isn't the tarsands -- which he insists only put out 15 per cent more carbon than conventional sources -- the world will turn to coal.”
The source of the SPs information appears to be an Aug. 1 story in the
The SP neglected to mention that the story also said “Greenpeace questioned the carbon figures and expressed further concern at Shell’s growing use of tar sands. “Oil companies are increasingly dependent on these unconventionals as they get squeezed out of countries such as
The SPs contention that it took Shell “the rest of the week” to respond to the report seems to be erroneous.
The Guardian published a story on July 29, the same day the report was released, quoting Shell and BP. [Oil: Campaigners seek an end to production of CO2-intensive ‘unconventional fuels’ (The Guardian, July 29, 2008)]
It’s interesting to note that Royal Dutch Shell had $355 billion in revenues in 2007 and Van der Veer received a total compensation package of $8,963,732 US.
The editorial closed by saying “Saskatchewan’s government should make sure it has in place regulations that ensure not only that the development of this resource doesn’t kill the planet, but that the rules are solid enough and transparent enough to take the wind out of the sails of the naysayers.”
Presumably this means that everything up to just short of “killing the planet” is fine as far as the SP is concerned.
With respect to regulations the SP might want to take another look at Saskatchewan Premier Brad Wall’s Jan. 21 speech to the Calgary Petroleum Club and the promise he made to his friends in the energy industry who, since 1999, have donated more than $1 million to the Saskatchewan Party. (The SP, by the way, contributed $10,000 to Wall’s party in 2000, as did the
On the matter of a royalty review Wall told the
“We need to move in that other direction and here’s why: we have all this undeveloped potential. We’re behind a little bit, frankly, in developing the hydrocarbon assets of the
“So, we’ve got to have a sharper pencil. We’ve got to make sure we are turning around permits. We’ve got to make sure that our regulatory structure is as conducive to non-conventional assets like shale gas and shale oil as it might be to more conventional assets. That will be our focus.
“That will be the direction that we give to
It seems clear that Wall wants less regulation not more.
Wall took the same message to the
“In terms of other non-conventional assets, certainly there’s oil and gas shale in the province, which many of you will know about. It really expands from Hudson Bay down through the centre of the province and it’s generally spread throughout
“We want to make sure we have the right regulatory regime in order to have a quick turnaround and the right approach on conventional oil permitting.
“We also want to make sure our regulatory regime is right on the non-conventional side, because frankly, we haven't had a lot of experience with it.
“So we’re going to have big ears when it comes to industry input to make sure that we get it right. To make sure that we can have, and we do now, a royalty structure even on the oilsands side, that will be very competitive with next door, because we want to make it very flexible and sensitive to costs. And I think you'll find that it will be very competitive.”
Wall’s support for exploiting shale oil is disturbing.
The WWF/CFS report indicates that “Oil sands extraction produces three times the carbon emissions of conventional oil production, whilst oil shale extraction produces up to eight times as much.”
The report states further that oil shale production is “water intensive and ecologically damaging. Mining oil shale requires between two and five barrels of water for each barrel of oil produced. Extraction levels of three million barrels per day would therefore require six to 15 million barrels of water per day.”
With respect to investor risk the WWF/CFS report notes that “The financial sustainability of unconventional oil is dependent on a scenario with limited regulation, a high oil price and a low carbon price. Policy makers, and energy and utility companies agree that limited regulation and a low carbon price will not last long. Oil sands are the most carbon intensive fuel currently being exploited and therefore the least efficient in a carbon constrained economy. Oil shales present an even more carbon intensive option.”
On climate change the authors cite a 2005 study by the RAND Corporation that “estimates it would require a 1,200-megawatt power plant to unlock just 100,000 barrels of shale oil a day. Large enough to serve half a million people, the power plant alone would burn five million tons of coal each year and release 10 million tons of GHG emissions.133 A plant of 1,200 MW is enough topower 300,000 homes in the US – more than enough for the whole of Denver, the largest city in Colorado. Shell alone is looking for production five times this level. The plant would also place further stress on water resources to provide cooling water.”
Ecological impacts of shale development in
“Airborne emissions are expected to include sulphur dioxides, nitrogen dioxides, particulates, ozone precursors and carbon monoxide.”
Among the report’s conclusions is that “Oil shale is far more energy intensive to extract and produce than conventional oil or even oil sands, and is therefore more carbon intensive. Oil shale represents the extreme efforts the oil industry continues to pursue in spite of climate change concerns.”
For months Wall has been tub thumping carbon capture and storage (CCS). So desperate is the premier to get his message out that he’s now resorting to letters to the editor to plead his case.
In Don’t discount
“This technology is real and viable,” Wall said.
The folks at WWF and CFS have a different view. In their report the organizations say that “CCS is still up to a decade away from being tested on a commercial scale and realistically will not be a viable solution for decades to come. Additionally, operators insist they require heavy subsidies to develop CCS and ensure profit margins remain worthwhile. They also do not want to be held responsible for legacy issues, such as what the stored carbon might do in the future. It is not acceptable to use a promise of CCS as a licence to significantly expand the exploitation of unconventional fossil fuels when its viability remains in the balance and its availability on a sufficient scale is decades from being achieved.”
When the Saskatchewan Party government scrapped the memorandum of understanding between the province and
So, when it comes to subsidies and CCS how is Wall going to square that circle?
The WWF/CFS report goes on to say “The Tyndall Centre has conducted an analysis showing that the costs of recovering carbon emissions are marginal per barrel of oil, even at today’s least optimistic estimated costs. However, oil companies are still seeking a subsidy for carbon capture rather than taking responsibility for their own emissions. The industry has acknowledged that CCS will not come on stream for another decade.
“In a speech in April 2008, Nobuo Tanaka, the Executive Director of the International Energy Agency gave an indication of the timescales required for CCS when he said: “In carbon capture and storage, we would need to build at least 20 demonstration plants by 2020, at a cost of US$1.5bn each. Such a construction program should be viewed as a litmus test of our seriousness towards combating climate change.” This indicates CCS is still far from being a viable commercial scale solution and realistically will not be viable for decades to come. In 2007, the World Energy Council predicted CCS could reach its full potential within the next 30 to 40 years, the IPCC believes full potential to be 20-40% of global fossil fuel emissions, and due to technical limitations does not believe it to be achievable until 2050. According to the United Nations Development Programme, “CCS technology is projected to come on-stream very slowly in the years ahead…At this rate, one of the key technologies in the battle against global warming will arrive on the battlefield far too late to help the world avoid dangerous climate change”.”
Premier Brad Wall is 42 years old. If, and when, CCS ever reaches its full potential he’ll likely be long gone from the political scene and won’t be around to answer for the damage his government will have caused as a result of the reckless decisions it makes today.