Oil sands risks like slow-motion oil spill: report

Mon May 17, 2010 5:38pm EDT
 

By Jeffrey Jones

CALGARY, Alberta (Reuters) - Some environmental risks of Canada's oil sands are similar to the Gulf of Mexico oil spill "but playing out in slow motion," the co-author of a report warning investors of the ecological, financial and social risks of oil sands development said on Monday.

The report, by RiskMetrics Group, said investors are putting their money in jeopardy unless developers of the vast unconventional resource in Alberta come up with clearer plans to deal with carbon emissions, water use and land reclamation,

Companies have not adequately tallied the long-term risks to balance sheets for such things as policy changes aimed at cutting carbon emissions or reclaiming land used for toxic tailings ponds, said the study, commissioned by Ceres, a network of investors and environmental groups.

"What is happening at the moment in the oil sands of Alberta is kind of like the Gulf spill, but playing out in slow motion," RiskMetrics' Doug Cogan said on a conference call.

He compared the impact on water, pointing out the large volumes used in the oil sands in the production and refining processes and the formation of tailings ponds, where waste products including leftover crude and heavy metals are stored over several years.

Tailings made headlines after 1,600 ducks died in one at Syncrude Canada Ltd's oil sands mine in 2008. A judge is due to rule in June on Syncrude's responsibility following a trial.

The study said oil sands projects require oil prices of at least $65 a barrel, and possibly more than $95, to justify $120 billion in planned expansions over the next 10 years. Meanwhile there is no guarantee of continued demand in future decades.

U.S. crude retreated 2 percent to $70.08 a barrel on Monday, having fallen more than 15 percent in a month.   Continued...