Alberta Oilsands named highest cost/risk investment in Oil sector


mentalfloss
#1
New Report Names Alberta Oilsands as Highest Cost, Highest Risk Investment in Oil Sector

A total of $1.1 trillion USD earmarked for risky carbon-intensive oil sector investments need to be challenged by investors, according to a new report released today by the Carbon Tracker Initiative.

The research identifies oil reserves in the Arctic, oilsands and in deepwater deposits at the high end of the carbon/capital cost curve. Projects in this category “make neither economic nor climate sense” and won’t fit into a carbon-constrained world looking to limit oil-related emissions, Carbon Tracker states in a press release.

The report highlights the high risk of Alberta oilsands investment, noting the reserves “remain the prime candidate for avoiding high cost projects” due to the region’s landlocked position and limited access to market.

“The isolated nature of the [oilsands] market with uncertainty over export routes and cost inflation brings risk.”

Oilsands major Canadian Natural Resources Limited (CNRL), the company responsible for the mysterious series of leaks at the Cold Lake oilsands deposit, has the largest total exposure to high-cost and high-risk oil investments, valued at a potential of more than $38 billion between now and 2025.

Production forecasts, the basis of capital investment decisions, often rely on business-as-usual assumptions of economic growth and energy demand. But given potential changes in cost, fossil fuel consumption and emission constraints, industry demand projections may need to be reconsidered.

The report’s authors recommend such projections be “stress-tested” for a variety of future scenarios.

Recent efforts by socially responsible investment firms, such as Trillium Asset Management, to limit environmentally egregious investments, as well as the growing divestment movement throw the future of especially expensive and carbon-intensive oil reserves like the Alberta oilsands into question. They face the very likely potential of becoming “stranded assets.”

Previous Carbon Tracker research suggests about two-thirds of the world's proven fossil fuel reserves need to remain in the ground if international targets to remain under a 2 C temperature rise are to be met.

“For the first time, this report bridges the worlds of oil project economics — in terms of both the marginal cost of supply — and carbon, allowing investors to gauge where risk lies, given a range of demand scenarios,” Mark Fulton, adviser to Carbon Tracker Initiative and a former Head of Research at Deutsche Bank Climate Advisors, said.

“It makes it clear that investors have reason to engage companies on many high-cost and high-carbon-content projects.”

The report recommends investors identify companies investing the majority of their capital in high-cost projects, set thresholds for investor exposure and demand greater transparency and disclosure from industry.

The seven global “majors,” which include BP, Chevron, Shell, Exxon Mobil, Total, ConocoPhillips and Eni, represent the bulk of potential oil production and have high exposure to deposits in expensive locations with expensive-to-produce oil types, such as bitumen from the Alberta oilsands.

Several oil companies have taken steps to address their carbon investment risk. Most notably, Exxon Mobil recently announced they will begin reporting more fully on risky carbon assets in response to investor pressure.

Around $21 trillion of potential capital expenditure would need to be invested by the oil sector in high-risk projects by 2050 to keep the industry afloat, according to the report. But this investment “would not pay for itself in a world where demand is lower and that continues to take climate change and air quality seriously.”

“Many investors are concerned about the growing amount of capital that the oil companies have thrown at low-return, carbon-heavy projects,” Paul Spedding, a former-HSBC Oil & Gas Sector Analyst, said.

Major oil companies need to change their strategy, he added.

“As this report shows, returns are falling and costs are rising. To reverse this, a greater focus is needed on higher return, lower cost assets. If this means lower capital investment and higher dividends or buybacks, so much the better. This analysis is important as it provides the data investors need to challenge proposed investments on the basis of returns as well as carbon content.”

New Report Names Alberta Oilsands as Highest Cost, Highest Risk Investment in Oil Sector
 
Tecumsehsbones
#2
Cool. Go big or go home.
 
captain morgan
Bloc Québécois
+3 / -1
#3  Top Rated Post
The 'report' is dead wrong.

Oilsands are the highest capital costs, but have little risk.
 
petros
+1
#4
Quote: Originally Posted by captain morganView Post

The 'report' is dead wrong.

Oilsands are the highest capital costs, but have little risk.

Have any correct reports been posted by this member?
 
captain morgan
Bloc Québécois
+1
#5
Quote: Originally Posted by petrosView Post

Have any correct reports been posted by this member?

Kudos
 
taxslave
No Party Affiliation
#6
What is the background of carbon tracker?
 
petros
#7
Crack use.
 
mentalfloss
#8
Lol @ the responses in this thread.

So much salt.
 
petros
+1
#9
You need to learn about money young man.
 
captain morgan
Bloc Québécois
+1
#10
Quote: Originally Posted by mentalflossView Post

Lol @ the responses in this thread.

So much salt.

Don't look at this as having salt rubbed in your wounds. Look at it as en educational opportunity in that you are wise not to believe in every 'study' that you come across from unreliable sources

Quote: Originally Posted by petrosView Post

You need to learn about money young man.

Just money?
 
mentalfloss
#11
Convincing arguments are convincing.

I am convinced.
 
petros
#12
Quote: Originally Posted by captain morganView Post

Don't look at this as having salt rubbed in your wounds. Look at it as en educational opportunity in that you are wise not to believe in every 'study' that you come across from unreliable sources



Just money?

Good points. Kids these days. Jesus.
 
captain morgan
Bloc Québécois
#13
Quote: Originally Posted by petrosView Post

Good points. Kids these days. Jesus.

Sure makes the case that wearing a hockey helmet be mandatory up to the age of.... How old is Flossy again?
 
Cliffy
Free Thinker
+2
#14
Quote: Originally Posted by mentalflossView Post

Convincing arguments are convincing.

I am convinced.

The greedy will never be convinced. They will poo poo anything that stands in the way of their capital gains. "Phuque the grands kids and all their spawn, I want mine now!"
 
Spade
Free Thinker
+1
#15
Industry has done little to eliminate the tailing ponds at the Tar Sands. It is estimated 200 000 birds land in these ponds yearly.
Last edited by Spade; May 13th, 2014 at 10:28 AM..
 
mentalfloss
#16
On balance things eventually take a natural course for the best.

We just have go through the con mistakes first.
 
captain morgan
Bloc Québécois
-1
#17
Quote: Originally Posted by SpadeView Post

Industry has done little to eliminate the tailing ponds at the Tar Sands. It is estimated 200 000 birds lind in these ponds yearly.


How many millions of birds die by flying into wind turbines each year?

Millions?.. Tens of millions?

Not so much the planet-friendly alternative from the bird's perspective, non?
 
Spade
Free Thinker
+3
#18
Quote: Originally Posted by CliffyView Post

The greedy will never be convinced. They will poo poo anything that stands in the way of their capital gains. "Phuque the grands kids and all their spawn, I want mine now!"

That is called unbridled capitalism with government complicity.
 
mentalfloss
+3
#19
Quote: Originally Posted by captain morganView Post

How many millions of birds die by flying into wind turbines each year?

Millions?.. Tens of millions?

Not so much the planet-friendly alternative from the bird's perspective, non?


This is such a dumb post lol

I shouldn't have to tell you why.
 
captain morgan
Bloc Québécois
#20
Quote: Originally Posted by mentalflossView Post

This is such a dumb post lol


There, there; don't be too hard on yourself here.

Besides, it's not just your one post you've identified, it's fair to say that all your posts are equally as dumb, so at least you can boast that you are consistent!
 
petros
#21
Quote: Originally Posted by SpadeView Post

Industry has done little to eliminate the tailing ponds at the Tar Sands. It is estimated 200 000 birds lind in these ponds yearly.

Hopefully snow geese. I can only shoot 60 a year. Far from enough.
 
Cliffy
Free Thinker
+1
#22
Quote: Originally Posted by SpadeView Post

Industry has done little to eliminate the tailing ponds at the Tar Sands. It is estimated 200 000 birds lind in these ponds yearly.

Not to mention the drastic rise in cancer rates of aboriginals living in the vicinity and downstream. It is always someone else who pays the price for some peoples greed.
 
mentalfloss
#23
Quote: Originally Posted by captain morganView Post

There, there; don't be too hard on yourself here.

Besides, it's not just your one post you've identified, it's fair to say that all your posts are equally as dumb, so at least you can boast that you are consistent!

Statistically speaking you've been proven wrong a million times more than me.
 
petros
+1
#24
Quote: Originally Posted by CliffyView Post

Not to mention the drastic rise in cancer rates of aboriginals living in the vicinity and downstream. It is always someone else who pays the price for some peoples greed.

Downstream on the west side of the river only. On the east side they are prospering and in great health.

It's time you got a job in resources like a real Indian.
 
mentalfloss
#25
Quote: Originally Posted by petrosView Post

It's time you got a job in resources like a real Indian.

Way to go Sterling.
 
DaSleeper
+1
#26
Quote: Originally Posted by mentalflossView Post

This is such a dumb post lol



Quote: Originally Posted by captain morganView Post

There, there; don't be too hard on yourself here.

Besides, it's not just your one post you've identified, it's fair to say that all your posts are equally as dumb, so at least you can boast that you are consistent!


He meant "A dumb thread"
 
mentalfloss
+1
#27
Unfirtunately, I can't control the idiotic responses to valid research.
 
petros
#28
Valid research? You're kidding right?
 
Cobalt_Kid
+1
#29
Quote: Originally Posted by captain morganView Post

The 'report' is dead wrong.

Oilsands are the highest capital costs, but have little risk.

That's true if we continue to ignore reality.

The evidence is that the most carbon intense sources of energy are going to become more vulnerable to risk as time goes on and the cost of climate change becomes greater. Right now the fossil fuel sector is only able to maintain it's current model by externalizing much of the cost of emitting so much CO2 and other negative impacts. This will inevitably result in legal actions being taken to redress damage that is caused by using such carbon intense sources of power.

There's also the challenge of getting such a difficult product to market as we've seen with recent and often deadly accidents with trains carrying crude. Moving dilbit to pipeline transportation is going to have it's own challenges as it's far more viscous, acidic and abrasive than light crude.

Instead of investing what will be trillions of dollars over the next several decades on unconventional fossil fuels, we could instead be building a low carbon energy model that relied on nuclear, synthetics, and renewables. The question isn't if the energy is there or can it be developed sustainably, it's how do we get the big players in the energy sector to wake up to reality and move out of areas that are no longer sustainable.
 
Tecumsehsbones
#30
Quote: Originally Posted by Cobalt_KidView Post

The question isn't if the energy is there or can it be developed sustainably, it's how do we get the big players in the energy sector to wake up to reality and move out of areas that are no longer sustainable.

And the answer is "money." Such a simple answer, and yet it continues to elude lefties.

Go figure.
 

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