EUROPE: Greenpeace warns on Shell oil sands projects

Publisher Name: 
Financial Times

Royal Dutch Shell,
Europe's biggest oil company, will on Tuesday face renewed opposition
to its investments in Canada's carbon-intense oil sands.

A
study by Greenpeace and several other environmental campaigners has
concluded the company's carbon intensity will rise 85 per cent as it
develops its oil and gas fields in the coming years.

"When
Shell's total resources are taken into account, the amount of
greenhouse gases emitted per barrel of oil equivalent produced will
outstrip those of its nearest competitors," environmentalists found in its report, which will be released Tuesday in time for Shell's annual meeting.

Campaigners
will warn Shell's investors that this disadvantages the company vis a
vis its peers as US and European policymakers move towards a broad
cap-and-trade system to limit carbon emissions. Shell's growing carbon
intensity stems from its resource base, which is heavily made up of
Canadian oil and Nigerian gas whose production is relatively carbon
intense, environmentalists said.

In its latest sustainability
report Shell admitted its upstream energy intensity had risen by more
than a quarter since 2001 as it had ventured into dirtier projects. But
Shell said: "On a 'wells-to-wheels' basis, oil sands fuel is 15 per
cent more CO2-intensive than conventional crude-based fuel, and we continue to seek opportunities for GHG emission reduction."

Shell was an early entrant into Canada's vast oil sands reserves, which in the past six years have attracted interest from all the big western oil companies.

Shell, Total of France, Chevron
of the US and the rest of their peers have found it increasingly
difficult to invest in conventional oil fields, such as those in the
North Sea and the Middle East. Many of the older fields are drying up,
and those fields with the most potential are being closely guarded by
the national oil companies of the countries that control them.

This has left companies such as Shell having to venture into ever more remote and complicated oil fields.

Producing
oil from Alberta's sands is environmentally challenging and costly. The
oil must be separated from the sand, either by being mined and mixed
with hot water, or by being coaxed from the ground by steam injection.

These
processes use a lot of energy and therefore produce higher emissions
than conventional oil production. But because extracting this oil is
also more expensive than producing conventional oil, Shell has delayed
the second phase of its Canadian oil sands development, thereby also
delaying the expected emissions release.

AMP Section Name:Energy
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