[R-G] Environmentalists target oil sands investors

[Anthony Fenton]

Environmentalists target oil sands investors

http://www.theglobeandmail.com/servlet/story/RTGAM.20080916.woilsands0916/BNStory/energy/home

NORVAL SCOTT

Globe and Mail Update

September 16, 2008 at 9:48 AM EDT

CALGARY — 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.