BP and Shell face new shareholder revolt over tar sands

| 26th February 2010
Tar sands protest in Canada
Until the 1960s, this Canadian landscape was unspoiled boreal forest, home to moose and caribou (Image copyright: Greenpeace)

Shell has previously been forced into halting production at its Canadian oil sands mine after a protest by environmental activists

Investors want oil giants to answer questions on their involvement in the environmentally damaging extraction of oil from tar sands

Shareholders at BP and Shell will get the chance to vote at upcoming AGMs on whether to force oil giants to come clean on their Canadian tar sands involvement

Institutional investors including The Co-operative Asset Management and Rathbone Greenbank have co-signed a ‘special resolution,’ which would force the two companies to fully disclose and justify their involvement in Canadian tar sands.

The oil sands in Canada are the largest reserve of petroleum in the world outside of Saudi Arabia with an estimated 1.7 to 2.5 trillion barrels of oil trapped in a mixture of sand, water and clay.

However, the energy needed to extract and process the oil results in greenhouse gas emissions per barrel three times those of conventional oil. The spread of the tar sands exploration and production is also destroying forests and impacting on local wildlife and communities.

Shell has invested almost one-third of its resources in extracting oil from tar sands and produces 155,000 barrels a day. However, it is reported to be 'scaling down' some of its investment because of concerns over the high costs of extracting the oil.

In contrast, BP is rapidly expanding its investment. Amidst criticism from investors, the oil company has acquired a 50 per cent stake in the Sunrise Project, a tar sands extraction project near Alberta and has entered into talks to buy a major share of Canadian oil sands company Value Creation.

Shareholder power

The investors putting forward the special resolution remain sceptical that it will get the 75 per cent support necessary for it to be passed and discussed but are hopeful it will bring the issue of tar sands to the fore once again.

‘Since the resolution was announced, BP has been forced out of their bunker to comment on the carbon intensity of the projects, the oil price they need to make the projects economically viable and whether they are factoring in a carbon price,’ said Niall O’Shea, Head of Responsible Investing at the Co-operative Asset Management.

‘Realistically there is no chance that we will get enough votes for the resolution to be passed, but it’s what happens around the resolution that is important,’ he added.  

The NGO Fair Pensions, which helped to draft the resolution, said even when unsuccessful such resolutions can prove influential.

‘If you look back at the history of shareholder activism there have been changes in company behaviour when a small percentage of investors vote in favour of special resolutions of this kind. 

'Hugh Fernley Whittingstall’s ‘free-range chicken resolution’ had a big impact even though only one in ten investors voted for it,’ said Louise Rouse of Fair Pensions.

Have greens got it wrong about tar sands?
For environmentalists, tar sands are a 'climate crime'; for peak oil experts, they can never do the job of ordinary crude. But neither critique tells the full story: that exploiting tar sands may worsen both the climate crisis, and the energy crisis...
Tar sands: tearing the flesh from the Earth
As the price of oil increases again, Canada's tar sands once more look like a giant cash cow to the industry. Now, the only thing standing between the 400 ton bulldozers and rampant environmental destruction may be a small group of First Nations people...
Carbon capture no solution to tar sands
Even the most optimistic forecasts for the potential of CCS technology to reduce CO2 emissions are not enough to make the development of tar oil sands comparable with other fossil fuels, says a new report
Tuktoyaktuk: a community on the frontline of climate change
Canadian coastal communities are faced with rising sea levels as the government continues to support destructive tar sands mining
Emissions from tar sands seriously underestimated
Governments and companies making no effort to quantify the real climate impacts

More from this author