Oil Change International

Exposing the true costs of fossil fuels

Material Risks: How Public Accountability Is Slowing Tar Sands Development

Screen Shot 2014-10-29 at 1.02.00 AMOil Change International, October 2014

Download Full Report

A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and Oil Change International quantifies for the first time the financial and carbon impact of public opposition to pipelines and other expanded investment in tar sands production.

The report, “Material Risks: How Public Accountability Is Slowing Tar Sands Development,” presents market analysis and industry data to support its estimates on lost sales revenue to the tar sands industry as public opposition creates delays and project cancellations. The report also describes other market forces that are putting tar sand developers at a growing disadvantage.

The report puts tar sands development lost revenue at $30.9 billion from 2010 through 2013, in part due to the changing North American oil market but largely because of a fierce grassroots movement against tar sands development. The report attributes 55% of the lost revenue, or $17 billion, to the diverse citizen protests against pipelines and the tar sands.

A significant segment of opposition, the report notes, is from First Nations in Canada who are raising sovereignty claims and other environmental challenges.

Among the reports findings:

  • Market forces and public opposition have played a significant role in the cancellation of three major tar sands projects in 2014 alone: Shell’s Pierre River, Total’s Joslyn North, and Statoil’s Corner Project.   Combined, these projects would have produced 4.7 billion barrels of bitumen that would in turn have released 2.8 billion metric tonnes of carbon dioxide (CO2) into the atmosphere.  This is equivalent to the emissions of building 18 new coal plants that would last 40 years each.
  • Tar sands producers lost $30.9 billion from 2010 through 2013 due to transportation bottlenecks and the flood of crude coming from shale-oil fields. Of that, $17.1 billion, or 55 percent, can be attributed to the impact of public-accountability campaigns.
  • The combination of risks facing the industry has the potential for canceling most or even all of the planned expansion of the industry in Canada.
  • Rather than seeing more than a doubling of output from 2 million barrels of oil per day to 4.8 million barrels per days — as the industry predicts — the report projects flat production levels.
  • Tar sands producers have lagged, with 9 of 10 leading tar sands producers in Canada underperforming the broader stock market in the last five years.

Analysts have recently downgraded their outlook for tar sands production.

The report also explores how smaller tar sands producers are having trouble accessing capital markets, how the industry is increasing capital spending even as it faces declining cash flows, weak revenue expectations, rising production costs and tight margins.

___________________________

The Institute for Energy Economics and Financial Analysis (IEEFA), based in Cleveland, Ohio, conducts research and analyses on financial and economic issues related to energy and the environment. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources. For more information, visit www.ieefa.org.

Oil Change International is a research, communications, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy. Oil Change works to achieve its mission by producing strategic research and hard-hitting investigations; engaging in domestic and international policy and media spaces; and providing leadership in organizing resistance to the political influence of the fossil fuel industry. For more information, visit priceofoil.org.

Download Full Report

Comments (8)

  1. Jon Bayless says:

    the pipeline need shot down and this fricken frackin needs to stop, NOW!

  2. barb coddington says:

    Personally, I think Oil Change International is one of the best Climate Change disaster, organizations on Facebook; Great facts and emphasis on the proper subjects, those that have the biggest chance of making the biggest difference. Great work!
    Your Ally,
    B Coddington

  3. keith blais says:

    thanks Oil Change….I have learned so much in the last couple of months…I am more determined then ever to help put a stop to Fracking & Tar Sands in BC & Aberta…..

  4. Anthony Ted Janis says:

    i think all mining should cease and desist Mother Earth is crying and hurting. Why would anyone hurt their Mother?

  5. bill wilson says:

    Each pipe cancelled means more of the third world will be major player to solve global warming. For most of third world living on less than two dollars per day there are wonderful efforts to insure last mile of local control and solutions free from pipe schemes that harm us all. Examples are trundle pumps, drip irrigation, water purification sites with home delivery by bike etc etc. For the rest of us it seems energy efficiency and alternatives are here and just need the kind of support carbon has gotten for last hundred plus years.

  6. sharon says:

    Canada needs an Ecocide law that takes precedence over all industrial practices – burden of proof that no harm can possibly be done to our nest.

  7. The central political power of the rich countries of the world may take on a greater role and food and heat the global population in next century with the amount of fuel and fóssies that are currently available wakes world

  8. Nancy DeLong says:

    We need to ramp up pressure on the government. I believe this means we should all be out there, doing whatever we can to change our government and get rid of the conservatives. They are stripping away all our environmental protections to get more oil which will result in profits for “Big Oil”, not most of us! They are trashing our wilderness and rivers with no regard for our native people and our wildlife.

Your email address will not be published. Required fields are marked *