April 8, 2009 / 6:38 PM / 8 years ago

Green groups want Shell oil sands permits rescinded

CALGARY, Alberta (Reuters) - Canadian environmental groups asked regulators on Wednesday to rescind approvals for part of a $13.7 billion expansion of Royal Dutch Shell Plc's oil sands project, alleging the company backed off promises to cut greenhouse gas emissions.

The Oil Sands Environmental Coalition -- which includes the Pembina Institute, the Toxics Watch Society of Alberta and the Fort McMurray Environmental Association -- say Shell has broken a negotiated agreement to significantly cut the output of greenhouse gases (GHG) such as carbon dioxide from an expansion of its Muskeg River and Jackpine oil sands mines in northern Alberta.

The coalition is asking the Canadian government and Alberta's Energy Resources Conservation Board, who jointly approved the project, to reconsider their ruling through a new public hearing because Shell's promise was a factor in the decision.

"Shell has broken a binding agreement," said Simon Dyer, oil sands program director at the Pembina Institute. Regulators "can reopen those approvals given that Shell has clearly reneged on its commitment."

The groups claim Shell agreed to come up with specific targets for cuts to greenhouse gas emissions at the mine sites. Instead, they say the company told them it will not quantify its GHG cuts, deciding instead to wait for the federal government to come up with regulations on emissions.

Canada's oil sands have the largest reserves outside the Middle East. However separating the tar-like bitumen from sand and soil and upgrading it into refinery-ready synthetic crude is more energy intensive and emits more carbon dioxide than conventional oil production.

In a release, Shell said it would work with stakeholders to strengthen carbon dioxide emissions policies and was looking to the government to establish its rules.

"The need to reduce emissions is too important to rely on voluntary commitments, and along with the rest of the industry we are now focused on meeting these new regulatory targets," the company said.

Bob Curran, a spokesman for Alberta's Energy Resources Conservation Board, said it is reviewing the coalition's application. He did not say when a decision would be made.

Shell has a 60 percent stake in the Athabasca Oil Sands Project, which includes an oil sands mine near Fort McMurray and an upgrader near Edmonton. Its partners, each controlling 20 percent, are Chevron Corp and Marathon Oil Corp.

The 100,000 barrel per day expansion would boost output from the project to 255,000 barrels a day, and includes a new mining project and additional capacity at the Scotford upgrader. The project is expected to be complete late next year.

Editing by Rob Wilson

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