ConocoPhilips – Environmental Impacts of Oil Sands (2010)
ConocoPhillips has extensive interests in oil sands operations in the Canadian boreal forest region. Our company is the operating partner of the Surmont oil sands venture and is a partner in the FCCL Oil Sands Partnership, in addition to having interests in other properties.
Oil sands extraction presents a unique set of challenges due to its resource intensive and environmentally damaging nature. Oil sands mining requires heavy water use, land disturbance, toxic waste storage, and emission of air pollutants. These environmental impacts, along with their implications for local populations and wildlife, can introduce legal, regulatory and reputational problems to oil sands companies. In addition, volatile oil prices and changing oil demand during the lifetime of these projects can impact both their costs and associated income.
Industrial logging and oil sands have reduced the boreal to less than 40% of its original size; the remaining forest is fragmented, with harmful impacts on many species. According to the Canadian Parks and Wildness Association, it will take over 300 years before reclaimed areas become functioning forest again.
Oil sands companies have not proven that full reclamation of toxic tailing ponds is possible. The long-term persistence of these ponds, which have been shown to leak toxic pollutants into local water sources, presents additional challenges to companies.
Extracting one barrel of bitumen requires 2-5 barrels of fresh water.
An average barrel’s extraction requires enough natural gas to heat a Canadian home for 1.5-5.5 days, and the removal of four tons of earth. While processed sand must be replaced and the site reclaimed, in 40+ years of oil sands operations, not a single acre has received a reclamation certificate from the Canadian government.
Oil sands have made Alberta the largest emitter of industrial pollutants in Canada.
Litigation from First Nations presents possible problems to both oil sands and pipeline companies, which may face increased costs and restrictions on development. Even after a project has been approved, it can be subject to lawsuits challenging its development.
Oil sands extraction projects are long-term, capital-intensive developments with multi-decade payback horizons. Compliance with local, regional and national regulations may not be enough to protect our company from adverse consequences.
Shareholders request that an independent committee of the Board prepare a report (at reasonable cost and omitting proprietary information) on the environmental damage that would result from the company’s expanding oil sands operations in the Canadian boreal forest. The report should consider the implications of a policy of discontinuing these expansionsand should be available to investors by November 2010.
The requested report should discuss the intense environmental and social impacts of oils sands operations that occur despite best efforts at mitigation, including the environmental impact on water resources and biodiversity, and the social impact on Albertans, including indigenous populations.