Agency ranks Canadian oil sands projects for investors

[Karl]

Agency ranks oil sands projects for investors

ENDS Europe Daily 2594 – July 28, 2008

Projects to extract oil from Canadian oil sands vary hugely in their carbon intensity and corresponding financial risk for investors, according to a study from UK-based environmental research group Trucost. The group's analysis of eight oil sands projects in Canada reveals that carbon emissions can vary from nine to 106 kilograms of CO2 per barrel of oil extracted. Emissions from extraction could more than double emissions in future, Trucost adds. The oil sands industry is already 3-4 times more carbon intensive than conventional oil production. The worst performing project analysed, Syncrude's Mildred Lake and Aurora North plant, increased its emissions in recent years after reporting a 14% drop in greenhouse gases from 1990-2004.

Trucost predicts the average annual carbon cost of oil sands exploration to Canada's oil industry will be C$5bn (€3bn) in 2015 at a carbon price of C$65 (€40) per tonne. This would equate to almost four per cent of profits at an oil price of US$130 per barrel. Nevertheless, Trucost says extracting oil from oil sands will remain "highly profitable" under the existing climate policy framework. Shell recently said both renewables and oil sands must be pursued to meet growing energy demand. Trucost's most carbon-efficient project is the Muskeg River Mine run jointly by Shell, Marathon Oil Corporation and Chevron. This was one of two projects seen as more efficient than BP's conventional exploration and production.

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