Bruce March, chief executive officer of Imperial Oil — 70 percent owned by ExxonMobil — delivered a dispassionate assessment of unconventional resource development (especially the oil sands and shale gas) earlier in October.
Speaking to an energy forum in Calgary in a speech that could have been entitled “The Facts of Life,” he made some points that few on either side of the great divide would disagree with:
• Shareholder activism is a growing trend that is “not going to go away any time soon.”
• “In the past 10 years, we’ve seen a growing global interest in key social issues.”
• “What shareholders are looking for is an increased understanding and increased disclosure of key risks,” which means those companies with the strongest leadership and operational performance will be best positioned to meet that greater scrutiny.
• “Shareholders have every right and, in fact, have a responsibility to challenge corporate decisions. … I feel this is a very healthy environment.”
Bellwether eventMarch suggested that a “bellwether event” for shareholder activism in the oil sands actually occurred in Norway last spring when Statoil investors managed to get a vote on the company’s involvement in the oil sands. The Norwegian government deployed its 67 percent ownership of Statoil to help soundly defeat the motion, leaving only 1.4 percent in favor of withdrawing from Alberta.
But the Statoil test case reflects the demands on major integrated companies with oil sands operations to increase disclosure of the risks entailed in exploiting the oil sands, he said.
Those companies have responded by trying to do a better job of discussing the risks in proxy information and financial statements as well as on a monthly and quarterly basis, March said.
Fool’s goldRegardless of this stewardship, the industry’s scramble to keep pace with its critics was reflected Oct. 5 when one of NASA’s leading scientists argued before an Alberta regulatory panel that the bitumen resource should simply be left in the ground to help the world avoid the effects of climate change.
James Hansen, of the Goddard Institute for Spaces Studies, traveled from New York to make his case before the Alberta Energy Resources Conservation Board hearing into an application by Total E&P Canada to build an open pit mine at its Joslyn North site to produce 100,000 barrels per day — the first megaproject to face the regulator in recent years.
“To achieve a safe level of carbon emissions, we cannot have more coal-fired plants, no more oil sands or shale oil,” Hansen said.
“Of course, we need energy and (the oil sands) look like a gold mine. But it’s fool’s gold.”
He said that if the costs of removing carbon were added to mining, the projects would never proceed, but by moving away from coal and leaving unconventional oil reserves in the ground, carbon emissions should decline by 80 percent by 2050.
Total: CC&S too costlyTotal Vice President Gary Houston said his company takes the issue of climate change seriously and its proposed energy-efficiency measures will achieve one of the lowest carbon emission levels in the oil sands, but it believes carbon capture and storage technology — highly touted by the Alberta government — is too costly.
Hansen said he doubts governments have the will or the independence to scale back the fossil fuel industry, leaving legal action as the only recourse for environmentalists.
“We’re going to have to get courts to order governments to provide a plan for phasing down emissions at a rate that allows a stabilization of the climate,” he said.
Samir Brikho, chief executive officer of United Kingdom-based AMEC, one of the world’s largest engineering firms, told a Calgary audience Oct. 4 that the most pressing challenges in the oil sands — energy and water use and greenhouse gas emissions — are the same as those pinpointed by environmentalists.
“I think the biggest change will involve the processes of actually mining and getting the oil out of the sands. If we can move on some of those processes, we will be able to save a lot of energy,” he said.
Brikho said that reducing the oil sands’ environmental impact means managing technologies, “but it also means that managing public perception around the development of these reserves continues to be of great importance.”