BP shareholders rejected a resolution on April 15, Special Resolution No. 25, which would require reports on the financial, environmental and social risks of Canadian oil sands drilling. Shareholders voted on the resolution during the annual general meeting in London. Only six percent of investors voted in favor of the resolution, while nine percent abstained, and over 85 percent voted against it. Shell, ConocoPhillips and ExxonMobil all plan to file similar resolutions.
BP is set to invest $10 billion in the Sunrise tar sands project located in Alberta, plus spend $2.5 billion converting a refinery in Toledo, Ohio so it can process the synthetic crude oil produced from the tar sands. BP’s capital investment in 2008 was over $30 billion and $20 billion in 2009. However, BP only invested $4 billion in alternative energy since 2005, which is something that CEO Tony Hayward touted during the annual meeting. “All forms of energy will play a role in our future, from oil sands to solar,” Hayward said.
Environmentalists are concerned about oil sands drilling. Greenhouse gas (GHG) emissions from oil sands projects are higher than emissions for conventional oil. BP estimates emissions to be 5 to 15 percent higher, but Pembina Institute, an environmental think tank, estimates oil sands emissions are up to 40 percent higher. Other concerns about oil sands drilling include deforestation, water use and toxic waste creation.
The World Wildlife Federation released a report last month (WWF) report about oil sands drilling. The Canadian Energy Research Institute estimated that $379 billion investment is required by 2025 to bring production to around four million barrels per day (bpd). Canada has probable reserves of 315 billion barrels. Tar sands production is presently around 1.3 million barrels a day (bpd). Estimates of future production range from 2.5 to 6.2 million bpd by 2020.
According to the report, $379 billion could do the following:
Continued oil sands drilling would increase atmospheric carbon up to 12 parts per million (ppm). The current level of atmospheric carbon is around 430 ppm and increasing. The critical tipping point the majority of scientists agree on that would cause devastating impacts is 450 ppm and beyond.
In BP’s sustainability report for 2009, it laid out the reasons for investing in Canadian oil sands:
BP has a clear strategy to invest to grow exploration and production profitably through a portfolio of leadership positions in the world’s most prolific hydrocarbon basins. Canada’s oil sands more than qualify, being second only to Saudi Arabia in terms of proven reserves. BP creates value through the application of technology and capability to drive performance and operating efficiency. Also, through BP’s Midwest US refineries there is a distinctive opportunity to create a balanced portfolio of upstream production and downstream conversion, which will allow BP to participate in the margin across the whole value chain.
The U.S. imports more oil from Canada than from any other country, about 19 percent of its total foreign supply. “Oil sands represent a decision point for North America and the world,” said Simon Dyer of the Pembina Institute, a Canadian environmental group. “Are we going to get serious about alternative energy, or are we going to go down the unconventional-oil track? The fact that we’re willing to move four tons of earth for a single barrel really shows that the world is running out of easy oil.”
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