ExxonMobil placed a risky bet on the tar sands of Canada, even though they contain some of the dirtiest oil in the world and the company's own scientists had documented the link between fossil fuels and global warming.
Now, representing more than a third of Exxon's global liquid reserves, the investment is running into strong headwinds: increased international pressure to curtail emissions that contribute to climate change as well as persistently low oil prices that make tar sands petroleum, among the most expensive to produce, a drag on the bottom line.
In a routine financial disclosure this fall, Exxon said it could be forced to wipe billions of barrels of tar sands reserves from its books if oil prices don't rebound before the end of the year, potentially cutting its reported holdings there by 70 percent and erasing a decade of investment.
The company said it was merely complying with financial disclosure rules, and that the change would have no impact on future production. Investors hardly reacted.
Yet Exxon, through its Canadian affiliate Imperial Oil, has known for decades that international efforts to slash greenhouse gas emissions could threaten its deepening reliance on the resource, according to documents in the company archives and interviews with former employees.
"It's not a very complex calculation," said John Godfrey, a Liberal Party veteran who served 15 years in Parliament and was a cabinet minister in the mid 2000s. All-out development of the tar sands is incompatible with cutting emissions, Godfrey said. "From 15 years ago it was pretty obvious. The basic facts of the case haven't changed since."
As early as 1991, Imperial recognized that a stringent carbon tax would halt investment in the sands and that growing efforts to cap emissions would increase production costs, according to an analysis the company commissioned that year.
Read more at With Oil Sands Ambitions on a Collision Course With Climate Change, Exxon Still Stepping on the Gas
No comments:
Post a Comment