Posts under ‘Environment’

Carrie Tait, Financial Post Published: Friday, March 19, 2010

Courtesy of Royal Dutch Shell Royal Dutch Shell PLC, under pressure from a small group of shareholders, has responded to critics’ concerns with a report detailing its activity in Alberta’s oil sands.

Royal Dutch Shell PLC, under pressure from a small group of shareholders, has responded to critics’ concerns with a report detailing its activity in Alberta’s oil sands.

Shell said it published the 17-page report because it shares many of the same environmental and economic worries expressed by the shareholders who are demanding the oil and gas giant provide greater transparency with respect to its operations in northern Alberta.

“All aspects of oil price outlook, oil demand, regulatory framework, cost of CO2 and industry cost structure” are “taken into account when … investment decisions are considered,” Shell said in the easy-to-read document.

“When we assess the economic attractiveness of our major projects we include an expected future price for green house gas emissions (‘carbon price’) over the full life of the project,” Shell said. “Shell includes the expected carbon price in its economic assessments, which is higher than the current carbon price [of $15 per tonne for every tonne emitted above a certain reduction target] in Alberta, anticipating that potential future greenhouse gas regulation could lead to a higher carbon price.”

Shell expects to pay between US$2-million and US$3-million in Alberta for its carbon emissions in 2009, but did not provide further financial details regarding its carbon price predictions.

The company also talked about reclamation, the process of rebuilding the hills, forests, wetlands, and fens that are torn up as companies mine for bitumen. Shell takes a provision on its balance sheet for this process, booked as land is disturbed and reflecting the discounted value of the expected future costs.

Shell expects to spend between 3% and 5% of operating costs on reclamation, which it considers before starting a project, the report said.

Other financial, environmental, and social concerns were addressed in the online report. Shell’s oil sands operations churned out 78,000 barrels of oil per day in 2009 and it expects that to hit 150,000, or 4% of its total production, in the next few years. Mining is its primarily extraction method.

FairPensions, a British lobby group, rustled up enough shareholder support to get a resolution on the ballot at Shell’s upcoming annual meeting demanding more disclosure. It is almost certain that the resolution will fail.

But despite the resolution’s long odds, FairPensions attracted considerable media attention on both sides of the Atlantic, to the point where a British MP has tabled a resolution in the House of Commons asking the MPs’ pension fund to side with FairPensions.

Shell explicitly said its report is in response to the resolution.

“We’re quite cheered that Shell has taken a look at the resolution and decided it has some merit,” Duncan Exley, a spokesperson for FairPensions, said. “We need to look through [the report]…with our partners” before deciding whether it meets their disclosure demands.

BP PLC is facing the same shareholder resolution.

ctait@nationalpost.com

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Boston Common is one of more than 140 institutional investors supporting a shareowner resolution asking Shell to report on the strategic risks of Canadian oil sands investments in the face of “future carbon prices, oil price volatility, demand for oil, anticipated regulation of greenhouse gas emissions and legal and reputational risks arising from local environmental damage and impairment of traditional livelihoods.”

SHELL is working on a submission for the Environmental Protection Agency (EPA) regarding the discharge of water which will be separated from the gas, writes Marian Harrison. The company agreed with fishermen not to discharge the treated water into the Sruwaddacon Bay and are investigating alternative options before seeking permission from the EPA.

THE WALL STREET JOURNAL

By Phil Craig
Of FINANCIAL NEWS

UK politicians today backed a shareholder revolt against oil giants BP and Shell, giving a substantial boost to demands that the companies assess the risks associated with their controversial investments in Canada’s tar sands.

A cross-party group of MPs has today published an Early Day Motion, a means by which politicians can raise an issue in parliament, calling on the parliamentary pension fund to vote in favour of shareholder resolutions requiring the oil giants to report on their tar sands projects.

Liberal Democrat MP Simon Hughes, the shadow secretary of state for energy and climate change, said: “Tar sands are a very risky investment ??? financially, environmentally and socially. The resolutions ask BP and Shell to report to their investors on how they are managing these risks.

“Government should lead by example and be a responsible investor; for this reason it is essential that the MPs’ pension fund supports these resolutions.”

Tar sands, also known as oil sands, have attracted substantial attention from campaign groups. Canada’s tar sands are one of the largest proven sources of oil in the world after Saudi Arabia’s reserves, but converting tar sands into a usable form of oil produces many more greenhouse gases than extracting oil by other means.

So far six MPs have backed the motion ??? the maximum allowed before a motion is tabled. They include members of the Labour, Conservative and Liberal Democrat parties. Other MPs are now free to back the proposal.

The involvement of the parliamentary pension scheme would add substantial weight to the revolt, which is organised by FairPensions, a campaigning organisation focused on encouraging ethical investment practices. A spokesman for FairPensions said that some sovereign wealth funds are also interested in supporting the resolutions, but declined to name which funds are considering the proposals.

The coalition already includes the Co-operative Asset Management, the Unison Staff Pension Scheme, Rathbone Greenbank, CCLA Asset Management and other fund managers, foundations and faith groups that declined to be identified.

BP and Shell have confirmed that the resolutions are valid, and will be discussed at their annual general meetings, in April and May respectively.

A spokesman for BP said that the company is in discussions with shareholders about the issue. Shell declined to comment for this article.

Web site: www.efinancialnews.com

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Daily Telegraph

Last updated: March 11th, 2010

An area near Fort McMurray, Alberta, Canada, where oil sands are believed to lie

The group of investors vociferously trying to persuade BP and Shell to re-evaluate their potential investments in the Canada tar sands has now enlisted a group of MPs in Britain to propose an early day motion questioning the project’s financial viability.

The move is part of a pretty well-coordinated campaign mobilised by FairPensions (members: ActionAid, WWF and a number of trade unions). This year, the rebels have managed to get enough shareholder support to submit motions to the oil companies’ annual meetings against the Alberta prospects, which environmentalists argue will be responsible for high levels of carbon dioxide emissions.

Shareholders obviously have a perfect right to kick up a fuss about investments they’re not keen on. Around 25pc of the FTSE-100’s dividends are paid out each year by BP and Shell, so the importance of these two companies’ decisions to UK pensions cannot be under-estimated.

However, it does seem slightly disingenuous that FairPensions is trying to claim that a big reason for their concern is the economics of the projects. They question the margins that will be made by the oil companies and warn of possible high legal fees from environmental challenges, plus the rising costs of climate change legislation.

But if they were so concerned about the right economic decisions being made by companies like BP, they would be having a look at its portfolio of renewables and “other” unit, which made a stonking $2.3bn loss in 2009. Yet there seems to be no issue with wind, solar and biofuels: all eco-friendly, low-carbon projects that are undertaken to improve the company’s green image and prepare for a future of heavier regulation of emissions/higher financial penalties, rather than turn an immediate profit.

What’s more, if you look at an investment like BP’s Project Sunrise, it represents a low proportion of the company’s overall capital expenditure. It is currently planning to spend $1.25bn on the venture over the next few years out of a total $20bn yearly budget on exploration and new projects. If given the go-ahead, BP’s oil sands will only be pumping out 60,000 barrels out of 4m barrels per day by 2014 – around 1.5pc of overall output.

I’m not taking sides on the environmental controversy of this debate. BP claims the extra carbon dioxide emissions of Project Sunrise – from well to wheel – will only be an additional 5-15pc. The campaigners put this figure at a much higher 12-40pc.

It’s just that all the talk about the oil sands’ profitability seems to obscure this real purpose of this argument – do the tar sands pose an unacceptable environmental risk and how much do we care about it? Obviously the economics of the project are borderline unless oil stays in the $80-100 per barrel range, confirmed by the fact that Shell’s Peter Voser has decided to slow the pace of investment at the moment to concentrate on conventional reserves.

But it is highly unlikely that BP and Shell would have been examining these prospects if there were not a probability that they could make some money and they will be subject to the same financial feasibility tests as every other investment – there would be little point in them wasting all this time and money just to spite the environmentalists. And I somehow doubt that the campaigners would be putting all this effort into an anti-tar sand campaign if the projects were the cleanest form of crude extraction in the world.

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So why has Shell Oil Co. remained an active member of this important organization?

EMAIL TO MR RAY FOX FROM JOHN DONOVAN

Re: RAY FOX NUCLEAR NIGHTMARE

Hello Ray

Thank you for your email.

I note with interest your news about the imminent return of Professor Dr Chris Busby to the land adjoining the former Shell Terminal at Earley, Reading, to carry out tests using new equipment. Please be advised that I received last night, a confidential Shell internal document dated 21 January 2010 containing the clearest denial yet by Shell on “the alleged nuclear reactor at Earley“.

It says…

“We have given a categorical written assurance that Shell has never been involved in “atomic” or “nuclear” research at Earley or elsewhere in the UK, and that no nuclear bunker is buried under the former Shell terminal. According to the European Commission, the data show radioactivity levels substantially below those considered harmful to human health. Any radioactivity found on the site has nothing to do with Shell’s activities.”

Please feel free to pass this information to Professor Dr Busby as it is at variance with the report he prepared in July 2009.

So who should the residents of the housing estate built on the former Shell terminal believe? Shell, which has an international track record of deadly pollution, or Professor Busby BSc, PhD, C.Chem, MRSC, the renowned scientist, who is one of the worlds leading experts on radioactive contamination?

We have to bear in mind the evidence that Shell was unsuccessful in at least the initial and second attempts at decontamination of toxic chemicals at the site, otherwise there would not have been a third attempt.

The Irish Times – Friday, March 5, 2010

MARY CAROLAN and LORNA SIGGINS

THE STATE and oil giant Shell have lost their bid to stop two Mayo residents pursuing High Court claims as to whether a ministerial consent given eight years ago for the Shell Corrib gas pipeline is valid.

Ms Justice Mary Laffoy ruled yesterday that Brendan Philbin and Bríd McGarry were entitled to have that issue and other public law claims determined by the court.

Responding to the ruling , Ms McGarry of Gortacragher, Co Mayo, said last night that she was “delighted that we can continue with our counter-claim”.

Ms McGarry and her mother Teresa owned 20 per cent of the land on the original Corrib gas pipeline route.

McGarr Solicitors, acting for Ms McGarry and Rossport landowner Mr Philbin, said the defendants welcomed the judgment. Shell EP Ireland said it had no comment to make.

The residents claim it is in the public interest to have the court decide the issues.

Among the issues they want determined is whether the consent of the minister for natural resources of April 2002 for the gas pipeline was valid. They are also challenging the constitutionality of provisions of the Gas Act 1976 under which the consent was provided.

In preliminary motions, the State and Shell had asked Ms Justice Laffoy to rule that the residents were out of time to bring claims for orders quashing the ministerial consent and various compulsory purchase orders over certain lands acquired for the pipeline, including lands of Mr Philbin.

The residents had set out their claims in 2005 in a defence and counterclaim to proceedings brought against them by Shell, which led to five men, including Mr Philbin, known as the Rossport Five spending 94 days in jail after refusing to abide by an order not to interfere with the pipeline work.

Shell later discontinued its proceedings after saying it would seek an alternative route but the residents want to proceed with their counter-claim.

Ms Justice Laffoy found while the reliefs sought fell within the scope of the relevant court rules, the time limits set out in those rules did not apply in the circumstances of this case.

She said the challenge to the ministerial consent and the compulsory acquisition orders was first initiated by the residents via their defence to a private law action by Shell against them.

In that action, Shell relied on the validity of the consent and acquisition orders to establish the lawfulness of and justify its actions against the residents, she said. The residents claimed Shell’s conduct was unlawful and were seeking remedies in those circumstances.

If she was wrong and the time limits applied, she believed the residents had not set out good reasons for extending the time limits.

The impugned consent and other instruments related to a major infrastructural project involving enormous expenditure by Shell and the residents were not entitled to take a tactical decision to postpone their public law challenge pending the outcome of the planning process.

The judge noted the court’s jurisdiction to review the constitutionality of provisions of the Gas Act 1976 is derived from the Constitution. Once a person has the necessary legal standing to bring such a challenge, no time limit could curtail that jurisdiction, she said.

The judge ruled the residents were not barred from pursuing the claims advanced in the public law module of their case.

THE WALL STREET JOURNAL

March 4, 2010, 12:55 PM ET

By Jim Carlton and Neal Lipschultz

Despite recent defections of two other oil majors, Royal Dutch Shell PLC has opted to stay in an influential lobbying group that has focused on shaping climate-change legislation, Chief Executive Officer Peter Voser said.

Mr. Voser, speaking Thursday at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Calif., was asked why Shell remained in the three-year-old U.S. Climate Action Partnership (USCAP) after two of its peers, BP PLC and ConocoPhillips, pulled out last month. The partnership is a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases, and the defections came amid growing debate over climate change.

“We feel we can actually do more being inside USCAP to achieve the right outcome,” Mr. Voser said.

But Mr. Voser agreed with a growing number of skeptics who don’t believe a climate change bill will be passed on Capital Hill this year. Asked how much money he would put betting on such an outcome, the CEO smiled wanly and said: “I think I can spend my money somewhere else.” Earlier at the conference, Michael Morris, chairman, president and CEO of utility giant American Electric Power, had pegged the chances of a climate bill’s passage in 2010 as “less than 50%.”

“The timing will be longer than we expected, but we will do our part” in influencing the bill, Mr. Voser said. He added Shell favors a market-based system of controlling carbon emissions, and that “I would like to have a marketplace that works on a global scale.” Mr. Voser said he believed eventually there would be carbon legislation in the U.S. and many other parts of the world, despite the failure of the Copenhagen climate talks to achieve a consensus.

“I think this is a journey,” Mr. Voser said. “We need more time.”

When asked about the theory of “peak” oil in the world and whether that theory was now dead, Mr. Voser said “I think what is dead is cheap oil.”

You need more technology, innovation and will find oil further away from markets, Mr. Voser said. More will be spent to get oil and consumers will pay, both for oil and gas.

Mr. Voser also said oil price volatility is here to stay. More money is flowing into commodities and there are more players in the market.

Shell, meanwhile, has been moving to become more of a natural gas supplier and continues to invest in alternative energies like biofuels, he said. With global energy demand expected to double by 2050, Mr. Voser said the world will need many sources of fuel, including oil. He predicted electricity would be needed to power 40% of  the world’s automobile fleet by 2050, when he predicted it would double to two billion vehicles from one billion.

WSJ ARTICLE

Posting by former Shell Executive Paddy Briggs on the article “Shell defends continued focus on fossil fuel-paper“: Mar 2nd, 2010 at 11:20 am