Page 10 - NorthAmOil Week 24

NorthAmOil COMMENTARY NorthAmOil

Week 22) The fact that Suncor is now delaying Public image limited
its own development of green projects illustrates The deferral of green investments – combined
how oil sands producers will struggle to recon- with criticism of Alberta’s temporary easing of
cile the need for decarbonisation with the costs environmental monitoring – threatens to set oil
involved. sands players back in their attempts to improve
Cenovus Energy, for its part, has cut its the public image of their industry. Reuters noted
technology budget by 78%, or CAD137.5mn the withdrawal of financing of the oil sands by
($101.5mn), saying in a filing that it was cur- some banks and investors, which is thought to
rently only advancing select initiatives that had be partly motivated by the idea that it will put
cost benefits as well as environmental ones. pressure on the industry to step up on the envi-
The company’s technology budget included ronmental front.
work on green initiatives such as solvent-aided Investors exiting the oil sands on concerns
extraction, as well as a new design for oil sands over their environmental impact include Nor-
facilities. way’s sovereign wealth fund – in a recent move
In January, Cenovus unveiled a target of “net criticised by Cenovus’ president and CEO, Alex
zero” emissions, which it is aiming to achieve Pourbaix.
by 2050. This week, a Cenovus spokeswoman “Pulling investments from the oil sands and
told Reuters that the company’s commitment to claiming it’s for climate change reasons is more
decarbonisation had not changed. about publicity than fact,” he told the Finan-
Cenovus is one of a growing number of com- cial Post at the time. And indeed, the oil sands
panies to adopt a net zero target. The fact that industry has made strides in cutting emissions
it is now having to advance only initiatives that in recent years, and has been trying to showcase
combine cost benefits with environmental ones it. But news that leading producers are holding Investors exiting
illustrates the challenges that these companies off on new green investments are likely to make
face in pursuing green ambitions when they are those who pulled funding from the region feel the oil sands
already under financial pressure. vindicated. This can already be seen in com- on concerns
However, UK-listed super-major BP – ments from KLP, Norway’s largest pension fund,
another company with a net zero target – said which pulled investment from the oil sands last over their
this week that it expected the crisis in the oil mar- year.
ket to accelerate the pace of the energy transition, “This has strengthened our view on the mat- environmental
as the long-term profitability of oil looks more ter, that our decision that we took … was cor-
questionable than ever. rect,” KLP’s head of responsible investments, impact include
The oil sands producers appear to be resist- Jeanett Bergan, was quoted by Reuters as saying. Norway’s
ing this, however – at least for now. The last of And Rystad Energy noted in May that the oil
the three companies to have its green initiative sands had the highest upstream emissions inten- sovereign wealth
cuts detailed this week is Canadian Natural sity among major world oil and gas-producing
Resources Ltd. (CNRL), which has delayed a regions, at 39 kg per barrel of oil equivalent fund.
CAD46mn ($34mn) pilot project that aims to (boe).
reduce emissions by extracting bitumen at the It is not surprising that producers are having
mine face, thereby limiting the need for trucks to defer investments – including those in green
and equipment. A CNRL spokeswoman was initiatives – but there is a risk that the moves
quoted by Reuters as saying that while the com- could backfire by driving away other investors
pany had deferred some projects, it remained at a time when the industry is trying to shore up
committed to environmental targets. its finances.™

P10 www. NEWSBASE .com Week 24 18•June•2020