Sunday, 12 March 2017
Shell bails on the tar sands
Shell was a good company to work for. It paid well, offered generous benefits and excellent training opportunities, and always allowed you to progress to the limit of your abilities. And I made many good friends. I packed my bags mostly because I wanted a change, but also partly because I thought of myself as an oil man and considered tar sands development more as mining, something I had no interest in. Since then, my attitude toward the sands has hardened further and I now oppose their development entirely.
So when I read about Shell's disengagement, I couldn't help but wonder if it wasn't tracking my journey. Its decision was no doubt economics based—its hard to wrestle a profit from the sands at $50/barrel—but I suspect economics fueled by environmental concerns to some extent at least. Investors in the industry are becoming increasingly worried about stranded assets. According to CEO Ben van Beurden, "I do think trust has been eroded to the point that it is becoming a serious issue for our long term future."
Shell has for some time shown sensitivity to environmental concerns. It intends to increase its investment in renewable energy to $1-billion a year by the end of the decade. Ten per cent of its directors’ bonuses will be tied to how well the company manages greenhouse gas emissions. Van Beurden has said that government policies, including a carbon price, are essential to phase out the most polluting sources of energy, and, indeed, when Alberta Premier Notley revealed her climate change plan, which included a carbon tax, the president of Shell Canada stood on the stage along with other executives, academics, environmentalists and First Nations' leaders.
In 1991, years before Al Gore's Inconvenient Truth, Shell produced a film entitled Climate of Concern in which it warned about climate change "at a rate faster than at any time since the end of the ice age—change too fast perhaps for life to adapt, without severe dislocation." It continued, nonetheless, to invest heavily in oil and gas, largely ignoring its own warning, even as it continued to recognize the threat. Habits are hard to break, particularly when they're profitable.
I am delighted, therefore, that it is now joining other oil firms, including Exxon Mobil, Conoco Phillips and Statoil, in writing down or selling tar sands assets. Still a long way to go, but at least it's moving in the right direction.