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Digging through the oil sands

An incomprehensible landscape greeted us at Shell’s Jackpine oil sands mine in Northern Alberta, Canada.

On the flight from Calgary to Northern Alberta, there is much to see that documents the importance of oil to this region.

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Boreal forests are clearly carved into rectangular sections by seismic lines cut by past exploration activities, thus compromising the safety of wildlife from predators. Further along, steam and smoke plumes are the first visible markers of the oil sands mining operations.

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On site, the size of the mine pit at Jackpine is difficult to evaluate, as are the towering dikes of the tailings ponds and the sprawling hills of overburden, which is catalogued and slated for reclamation once mining operations are complete.

Investor tour
A follow-up to our 2009 visit to Shell’s adjacent Muskeg mine, the investor tour of Jackpine gave us the opportunity to evaluate to what extent emissions reduction has become a core value at Shell’s Canadian upstream and midstream operations. An hour into presentations at the Jackpine administration building, we could sense that Shell is striving to have the right culture in place.  Since 2010, the company’s modelling has factored in a carbon price of $40/per tonne, and any new project deemed risky from a greenhouse gas emissions perspective must consider CO2 abatement. Shell built Jackpine based on the experience it gained from operating its older Muskeg mine.  Efficiency has led to lower production costs, which is helped by the availability of the company’s own refinery in the province. Shell also plays a leading role in Canada’s Oil Sands Innovation Alliance (COSIA), an alliance of 13 competing oil producers aiming to share environmental technology and accelerate the pace of development of solutions for the environmental problems facing the industry.

New technologies
Shell is putting new technologies to work as it is undertaking its first tailings pond reclamation at its Muskeg mine.  The company is also progressively reclaiming some large areas we were able to see as we left the Muskeg Mine site. The portable centrifuges Shell uses to help separate the water from sediment to allow the ponds to harden is just one example of how Shell has benefited from participation in COSIA.

Scotford upgrader and refinery
Shell Bill 6 croppedOn day two, we visited the Scotford upgrader and refinery. That a facility built in 1984 can boast to be the most efficient in North America highlights the maturity of the petroleum cycle. Nevertheless, Shell is operating a tight ship at Scotford, with its safety culture and commitment to reduce emissions evident throughout our visit.

Carbon capture and storage
The company focuses on carbon dioxide emissions resulting from its activities and believes carbon capture and storage is vital to the industry. The Quest carbon capture and storage project at Scotford began operating just days before our visit. Shell Bill 1 croppedThis ground-breaking 25-year life project annually captures and stores over one million tonnes of CO2 securely two kilometres underground, the equivalent of about one third of the emissions generated by the upgrader at Shell’s Scotford operation. Baseline CO2 emissions data meanwhile has been collected along the pipeline route and extensive monitoring systems are in place.

Community support
Community support for the project was obtained through  a seven-year engagement programme with the local population, which had been developed with help from the respected NGO, Pembina Institute. As a top- rated member of the Canadian Council for Aboriginal Business, Shell Canada has demonstrably strong relations with local first nations.

The female president of Shell Canada  – notable in the male-dominated Canadian oil and gas sector - meanwhile has clearly forged good relations with the newly elected Premier of the province of Alberta. This has helped expedite the implementation of a more effective regulatory framework for oil sands mine tailings management.

Low oil price concerns
However, potentially weighing on Shell’s ongoing environmental and social programmes is the continuous low price of oil.  With Shell’s Arctic programme and Carmon Creek in-situ projects now on hold, we are concerned about what effects ongoing low oil prices might have on the funding of Shell’s environmental initiatives and, perhaps even more importantly, on COSIA activities.

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