* 12 producers to develop, share environmental technology
* Not specifically part of lobbying efforts, they say
* Environmental groups willing to give alliance a chance
By Jeffrey Jones
CALGARY, Alberta, March 1 (Reuters) - A dozen of the largest Canadian oil sands developers have banded together to develop and share environmental technology as they seek to persuade critics at home, in the United States and in Europe that they are doing all they can to clean up operations.
Suncor Energy Inc, Royal Dutch Shell Plc, Canadian Natural Resources Ltd and Statoil ASA are among the companies that have agreed to collaborate on dealing with such problems as greenhouse gas emissions, water contamination, land disturbance and the spread of toxic tailings ponds, all sore spots with environmental groups.
Together, the 12 produce 80 percent of Canada’s tar sands-derived crude.
Top executives acknowledged the effort is still in its early stages and the new group, called Canada’s Oil Sands Innovation Alliance, or COSIA, has no real budget to speak of.
However, they said new plans to set goals, report progress and develop technology together rather than individually should mean quicker results. The industry wants to show that it is not as environmentally damaging as it has often been portrayed in battles over such issues as approvals for new export pipelines or the European Union’s move to classify oil sands crude as inherently dirty.
Murray Edwards, vice-chairman of Canadian Natural and one of the country’s most prominent energy investors, said that although billions of dollars of investments are at stake, the plan to speed up environmental improvements goes beyond the industry’s efforts to diversify markets and lobby governments.
“It don’t think it’s a means to an end, I just think it’s the right thing to do,” Edwards told Reuters. “This is a major world-class asset and we’re just fortunate to have this asset in Canada. It will generate substantial wealth for Canadians for decades to come, and because it’s so large we just have to make sure we do it right.”
At 170 billion barrels, northern Alberta’s tar sands are the world’s third-largest oil resource. Unlike conventional oil, the bitumen must be mined in open pits or steamed to allow it to flow to the surface. Both methods are energy-intensive, meaning they have higher carbon emissions than other types of crude extraction.
COSIA’s efforts will include sharing intellectual property, but collaboration will be done in a way that prevents running afoul of competition laws, said Dan Wicklum, who is the group’s chief executive. He is a scientist who was most recently a senior official in the federal government’s environment ministry.
“There are a series of legal agreements that make COSIA real,” Wicklum said. “They were developed over months and months with teams of competition lawyers, both internal and external. They have scrutinized every word of the agreement and they are fully confident that COSIA complies with not just the intent but the letter of all competition laws.”
Officials at environmental groups that have been highly critical of oil sands developers, governments and regulators for being too lax, said they are willing to give the big-name alliance a chance.
Alan Young, executive director of the Canadian Boreal Initiative, said it could be “transformative” if it lives up to its billing as a group established in response to public concerns and one in which corporate leaders are directly involved.
“They’ve said they’re committed to metrics and they’re going to be judged on metrics, and I congratulate them for making that commitment to expose themselves to real performance measures. So we’ll see,” Young said.
The trick will be showing that the effort is more than another communications campaign, said John Abbott, vice-president of heavy oil for Shell.
“Whether it be a reduction in land use, a reduction in water use, a reduction in greenhouse gases or whatever, I think the real proof of this alliance will be tangible and demonstrable performance improvement,” Abbott said. “Then, indeed, I believe we can go out and talk about it. I genuinely think it should not be the other way around.”
The group’s other members are Cenovus Energy Inc, ConocoPhillips, Devon Energy Corp, Imperial Oil Ltd, Nexen Inc, Teck Resources Ltd and Total SA. (Reporting by Jeffrey Jones; Editing by Peter Galloway)