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Shell faces Alberta oil sands dispute

Financial Times

By Carola Hoyos

Published: April 8 2009 23:12 | Last updated: April 8 2009 23:12

Canadian environmental groups on Wednesday accused Royal Dutch Shell, Europe’s biggest energy group, of reneging on its promise to reduce greenhouse gas emissions at its oil sands project in Alberta.

Pembina and EcoJustice said the company had won approval in 2004 and 2006 to extend its Athabasca oil sands project by promising to reduce emissions. Pembina yesterday presented the Alberta Energy Resources Conservation Board and government of Canada with a sworn affidavit stating Shell had set its Canadian oil projects the goal of becoming “less carbon dioxide-intensive than the most likely alternative, which is imported crude”.

Pembina said Shell had yet to set precise targets as to how it would achieve this. The environmental group estimated Shell’s promise was the equivalent of pledging to cut greenhouse gas emissions by 900,000 tonnes, or of taking 200,000 cars off the road.

Simon Dyer, Pembina’s oil sands director, said Canadian regulators would not have approved Shell’s Jackpine mine and Muskeg River mine expansion – a 100,000 barrel-a-day project – had it not made that promise. “The approvals are no longer valid given [that] Shell got them on the [understanding] these commitments would be followed through on.”

Shell has begun work but is not yet producing bitumen.

John Abbott, Shell Canada’s executive vice-president, said Shell had taken early voluntary action, making its ventures the least greenhouse gas intense of all mineable oil sands projects.

He indicated Shell was shifting from voluntary targets. “Alberta’s current regulations and the emerging Canadian policies recognise that the need to reduce emissions is too important to rely on voluntary commitments and, along with the rest of the industry, we are now focused on meeting these new regulatory targets.”

Pembina’s accusation not only risks a delay at Shell’s Athabasca oil sands projects but also another setback to its environmental credentials. Last month it pulled out of investing in solar and wind energy.

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