The rush to exploit Canada’s heavy tar-sand oil, which necessitates more energy to recover than conventional oils, could significantly increase global risks of dangerous climate change, warns a new report by the WWF and the Co-Operative Financial Services (CFS), a UK financial group.
The exploitation of unconventional oil reserves in Canada and North America could increase global atmospheric CO2 levels by up to 15%, says the report, ‘Unconventional Oil: Scraping the bottom of the barrel?‘, published on 29 July.
The continuous rise in oil prices, worsened by increasing difficulties in accessing “easy oil” in supply countries such as Russia, mean the costly exploitation of Canada’s tar-sands and Colorado’s oil-shales have gone from economic nonsense to profitable business.
According to the authors, Shell, ExxonMobil and BP have together announced over $CAN 125 billion (€78 billion) worth of development in Canada’s oil sands by 2015. Total and StatoilHydro also have plans to exploit unconventional oils, in Venezuela and Canada respectively.
With reserves estimated at 174 billion barrels of oil, Canada is already promoting itself as an energy superpower, says the report, placing it second only to Saudi Arabia.
But the extraction and processing of these heavy, bitumen-like oils, involves huge amounts of energy and water, adding to concerns about climate change. “Oil sands extraction produces three times the carbon emissions of conventional oil production, whilst oil shale extraction produces up to eight times as much,” says the report.
As a result, Canada’s greenhouse gas emissions have shot up by 26% since 1990, according the report, way above its Kyoto commitment of a 6% reduction.
In addition, the report points out that the open mining method used to extract the oil sands is creating other problems, with toxic pollution discharges in rivers and intensive water use chief among them.
But the oil companies say they are only exploiting previously unrecoverable resources and have announced sophisticated progammes to lower their environmental impact. “For our Oil Sands base business, our target is to cut emissions by 50% below those estimated at project start-up by 2010,” says Shell Canada underlining that “this is an industry-leading target for oil sands business.”
The authors of the report however say these efforts are a false answer to the problem, and warn investors of the potential risks of the business, ranging from the high capital costs to looming regulatory restrictions and the likelihood of litigation.
“The extraordinary lengths some oil and gas companies go to in attempting to make the climate-hostile fuels somewhat less so should be re-directed to bringing forward low-carbon energy,” said Ian Jones, head of Responsible Investment at Co-Operative Investments, part of the CFS group.