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Oil groups mount legal challenge to Schwarzenegger’s tar sands ban home

• Californian legislation branded ‘unconstitutional’

• Lobby group includes UK energy companies

Terry Macalister
Sunday 14 February 2010 18.58 GMT

Californian low-carbon legislation ‘unconstitutional’ says NPRA oil lobby group. Above, Syncrude oil sands project in Alberta, Canada. Photograph: Mark Ralston/AFP/Getty Images

A lobby group that includes BP and Shell in its membership has launched a legal challenge against low-carbon legislation in California that in effect rules out the use of oil from Canadian tar sands. The action by the National Petrochemical & Refiners Association (NPRA) comes amid growing political, investor and consumer pressure on US oil companies not to participate in the carbon-intensive tar sands of Alberta.

A NPRA statement said the legislation was unlawful for a number of reasons, including the imposition of “undue and unconstitutional burdens on interstate commerce”.

It claimed the legislation would also have “little or no impact” on greenhouse gas emissions nationwide and would harm US energy security “by discouraging the use of Canadian crude oil and ethanol produced in the American midwest”.

The refiners are joined by the American Trucking Associations and the Centre for North American Energy Security in their attempt to overturn legislation from California’s governor, Arnold Schwarzenegger, who wants to cut C02 emissions from transport by 10% by 2020.

Shell’s chief executive, Peter Voser, recently announced plans to slow investment in Alberta, though he denied this was anything to do with environmental issues, saying it was a reaction to lower oil prices and a reduction in Shell’s profitability.

The company distanced itself from the NPRA legal action but did not express its opposition to it. “Shell is not represented on the committees of the National Petrochemical and Refiners Association that made the decision to legally challenge the rules,” said a spokesman in The Hague. “We continue to work with the California Air Resources Board as they refine rules and address outstanding issues.”

BP also claimed it was not associated with the court challenge. A spokesman for the oil company in London said: “BP’s membership in NPRA is limited to specific issues related to the chemical industry.”

BP has started to spend tens of millions of dollars restructuring two US refineries so that they can process tar sands crude imported from its operations in Canada. There were reports over the weekend that BP is in $1.2bn talks to buy a Canadian company called Value Creation, which has substantial tar sands reserves.

Tony Hayward, chief executive of BP, told the Guardian in an interview this month that he was confident tar sands would play a major role in future US energy security. He played down suggestions that the US army, one of the biggest single users of oil products in the world, might be prevented by politicians from using fuel derived from tar sands.

Tar sands have risen fast up the political agenda since the Copenhagen climate change conference last December.

The issue will also be discussed at the forthcoming annual general meetings of Shell and BP. On the agenda are resolutions from the Co-op and other investors questioning the wisdom of continuing their controversial tar sands operations in Canada.

John Sauven, executive director of Greenpeace UK, said he was pleased that investors were putting the oil company on the spot, adding that exploitation of the tar sands would become “a campaign battle­ground for years to come”.


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