14 DAY TRIAL // According to a document published in the Monday issue of Financial Times, the oil giant Shell will scale back on its involvement in Canadian tar sands in the near future, and favor exploration instead. These tar fields keep their supplies of oil locked inside sand, so exploitations need to separate the two. This is a very energy-intensive, expensive and polluting process. In fact, it is the most environmentally damaging method of extracting oil, and considerably adds to the carbon footprint the chemical creates on its own, when it's used in fuels and plastics, Reuters reports.
Shell Chief Executive Peter Voser says that expensive, capital-intensive projects have fallen out of favor with the company, and that its future will lie in exploration, as in finding new oil fields. Original plans saw the company increasing its production to about 700,000 barrels of crude per day, but there is currently no need for that. “Over the past two years and certainly over the past six to eight months, I've taken the pace out of that because we have enough other growth opportunities,” Voser told the Financial Times. Analysts expected such an announcement because, they say, the company has been relatively inactive in tar-sand exploration over the past 12 months.
However, the measure is unlikely to last for many years, some believe. There is huge potential in tar sands, and Shell owns a significant deposit. The fields in Canada are among the largest reserves in the world, after those in the Middle East. “Given the scale of the resource base in oil sands, of some 20 billion barrels, that Shell has – which represents almost a third of Shell's total resource base – we would be surprised if there was not progress on developing that potential within the medium term,” ICAP oil analyst Colin Smith says of the announcement.
The move was most likely based on the fact that crude oil prices had tumbled down from their massive prices more than a year ago, which means that there is a lot less profit to be made. Additionally, some shareholders at Shell also expressed their concerns as to how possible climate change legislation could affect tar-sand exploitations. Moreover, environmental and lobby groups have waged a successful campaign against tar-sand extraction, saying that this impacts the environment and the adjacent communities in a significant manner. Indeed, studies have shown that biodiversity is severely affected by the harsh chemicals used by oil companies to separate the crude from sands.