Western Oil Companies Challenged on Oil Sands Liabilities as Chinese Move In

An international alliance of individual and institutional investors have filed resolutions to require four of the world’s largest oil companies to report on the financial, environmental and societal risks of developing Canadian oil sands.

The resolutions were filed by Green Century Capital Management, the California State Teachers Retirement Fund, and other institutional and individual investors in both the United States and the United Kingdom.

The resolutions are to be taken up at the shareholders’ meetings for ExxonMobil, BP, ConocoPhillips and Shell. All four companies have major investments in oil sands either directly or through wholly or partly owned subsidiaries.

There’s oil in them sands — really dirty oil

Canada’s oil sands are the second largest oil resource in the world, comprising some 173 billion barrels in reserves. Extracting oil from oil sands, also known as tar sands or bitumen, is energy-intensive and environmentally damaging.

According to Green Century, life-cycle greenhouse emissions from one barrel of oil sands oil is 15 to 40 percent higher than conventional oil.

The Beaver Lake Cree Nation has also filed a lawsuit that could slow or halt sands development.

Despite increased costs of extraction, however, investment in the sands has grown with the expectation of rising oil prices. The shareholder resolutions are an effort to force companies to divulge the risks of operating in the sands, with the hope, presumably, that investors may pressure them to curtail their activity there.

Do the Chinese have shareholder resolutions?

The good news? ConocoPhillips has sold part of its oil sands investments. The bad news? They sold to the Chinese.

On Monday ConocoPhillips sold its 9 percent stake in an oil sands company, Syncrude Canada Inc., to China Petrochemical Corp. (Sinopec) for $4.65 billion. (ConocoPhillips still retains a stake in other oil sands projects.)

The move “may be followed” by other Asian and European investors, according to Business Week. China has been especially eager to secure sources of oil for its rapidly modernizing population, and Conoco was thought to have gotten a good price.

Asian movements into such environmentally damaging development could have a negative impact on social responsibility-based resolutions. Trying to get a state-run Chinese oil company like Sinopec to listen to environmental concerns will be much more difficult than catching the ear of Texas-based ConocoPhillips.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.

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