Oil sands environmental debate seen more divisive

CALGARY Wed Mar 24, 2010 3:32pm EDT

Greenpeace Tar sands campaigner Mike Hudema answers questions during the Reuters Oil Sands Summit in Calgary, Alberta, March 23, 2010. REUTERS/Jack Cusano

Greenpeace Tar sands campaigner Mike Hudema answers questions during the Reuters Oil Sands Summit in Calgary, Alberta, March 23, 2010.

Credit: Reuters/Jack Cusano

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CALGARY (Reuters) - Canada's oil sands producers have pledged to improve their environmental records and do a better job communicating their efforts to the public, but environmentalists say they see no commitment to real change.

The diverging views point to continued tough sell around the world for producers of the massive energy resource in northern Alberta, the world's second biggest oil reserve, and for the Alberta and Canadian governments.

Executives at the Reuters Canadian Oil Sands Summit in Calgary this week gave details of some technological advances they are banking on to reduce the impact of development on land, air and water while trying to stay competitive as the world economy rebounds.

The oil companies are looking at such methods as using solvents to cut the amount of steam generated to produce the tar-like crude, which would reduce greenhouse gas emissions, and they say they are testing ways to stop the spread of toxic tailings ponds at mining sites.

Environmental groups say Alberta's regulations remain too lax, company disclosure too guarded and that not enough is being done to gauge the overall regional effects of many projects being developed at the same time.

The also say their concerns are falling on deaf ears in government.

"We have discussions with some companies, but generally I'd say industry and government are not interested in having a discussion about solutions and improvements," said Simon Dyer, oil sands director of the Pembina Institute, an environmental think tank.

"The polarization is continuing. It seems many in government and industry are digging in and I'm not sure why that's the case."

Last week, Pembina released an environmental "report card" comparing nine steam-assisted gravity drainage projects, which concluded that tougher environmental standards are required. Dyer said just three of the developers agreed to provide in-house information and vet aspects of the study.

Meanwhile, Greenpeace activist Mike Hudema said to expect more direct action by his group to disrupt operations.

Canada's oil sands represent the second-largest crude reserves outside Saudi Arabia. The country is seen as the most secure foreign supplier of oil to the United States.

Some international environmental groups have mounted campaigns to spread the message that the industry must be shut down, saying greenhouse gas emissions, land disturbance and water use are far too intensive.

The industry has launched a communications counter-offensive, saying they are working to balance environmental concerns with economic benefits. They have signed on to a set of guiding principles pledging to improve performance.

Rick George, chief executive of Suncor Energy Inc, the country's largest oil sands producer, said there has been too much uninformed debate about the issues.

"I'm not defensive about his," he told the summit. "I understand that stakeholders want to see continuous improvement. I believe we have delivered that and will continue to deliver that. That's our job and we take the responsibility very seriously."

Companies such as Cenovus Energy, which concentrates on steam-driven production, say the solvent technology has strong potential to reduce carbon emissions as well as production costs by cutting the ratio of steam to oil pumped out.

"There's a recognition that there's a tremendous opportunity here for technological advance," Cenovus CEO Brian Ferguson said.

Jackie Forrest, analyst at IHS CERA, said she believed that technology can solve many of the environmental problems, and that cooperation between Canada and its biggest market, the United States, will help those efforts.

"I think there's a middle ground where you can get energy security and work together on the environmental aspects," she said.

(For oil sands summit graphics, please click on the following: Canada's oil sands (map) link.reuters.com/geh54j Largest oil reserves, 2008: link.reuters.com/ceh54j Oil/gas investment in Alberta link.reuters.com/beh54j U.S. petroleum imports: Top 15 countries, December 2009 link.reuters.com/zah54j)

(Editing by Peter Galloway)

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