US boycott of Alberta oil sands spreads

Six Fortune 500 companies target bitumen; Albertans plan counter-boycott; Stelmach says CEOs fail to recognize government measures

Gary Park

For Petroleum News

Whether or not it is — as many government and industry leaders believe — a willful distortion of the facts for ulterior purposes, the spreading campaign against the Alberta oil sands is creating a siege mentality in the province.

It started with U.S. retail giants Whole Foods and Bed Bath & Beyond declaring that they won’t use fuel refined from the oil sands bitumen, extended to shareholder attempts to force companies such as Royal Dutch Shell and BP to pull out of northern Alberta, and has gained momentum by involving four major U.S.-based companies in a bid to boycott or reduce their use of oil sands-derived fuel.

In the latest action, drugstore chain Walgreens and clothing manufacturers The Gap, Timberland and Levi Strauss — spurred on by San Francisco-based environmental group Forest Ethics — have agreed to give preference to transportation contractors who avoid oil sands fuel or can provide evidence of what they’re doing to eliminate those fuels.

All six of the companies are on the Fortune 500 list and Federal Express has agreed to consider the environmental and social impacts of the fuels it uses, according to Forest Ethics, which predicts that companies participating in the campaign will reach 13 in coming months.

As well, a coalition of environmental groups is funding the Rethink Alberta campaign that has erected billboards across the U.S. and the United K

Stelmach responds

The U.S.-based refiners processing Canadian bitumen include BP, ConocoPhillips and ExxonMobil as well as Sonoco, Murphy Oil and Marathon Oil.

Alberta Premier Ed Stelmach is writing letters to the chief executive officers of the four companies expressing dismay that they acted without at least talking to government officials.

“As a government, we intend to show what others will not — that we are responsible energy developers,” he said. “We are also ready and willing to discuss their concerns.”

Stelmach said the companies have failed to recognize what the government and industry have done to improve the environmental record of the oil sands.

“Alberta is the only jurisdiction in North America with mandatory greenhouse gas emissions reduction targets for all large emitters,” he said.

“In fact, since 1990, greenhouse gas emissions per barrel of production in the oil sands have been reduced by 39 percent.”

As well, Stelmach said, the government has committed C$2 billion to carbon capture and storage and has allocated tens of millions of dollars to research at Alberta universities.

Counter-boycott movement

AEG President Tim Shipton said “closing The Gap and affiliated Old Navy and Banana Republic stores is one of the best hot-air reduction opportunities we have right now.”

“Gap, a company that is regularly accused of using unethical labor practices in developing countries to produce its stock, wants the world to buy bloody oil from Nigeria and the Middle East,” he said.

A Forest Ethics spokesman, conceding that the U.S. produces heavy oil of its own, argued the size and impact of Alberta oil sands — which are the biggest single contributor to the 2 million barrels per day of crude export from Canada to the Lower 48 — make it an appropriate target.

“No, it’s not 100 percent fair,” he said. “But there’s nothing fair about what they’re doing either.”

The spokesman said it is easy to track where oil sands bitumen ends up.

“It’s tied to infrastructure. … The pipeline goes somewhere and we can find out who is buying it,” he said.

Forest Ethics has waged previous successful economic campaigns including one against companies logging old-growth boreal forests by targeting customers of the pulp.

CAPP: ‘Knee-jerk’ reactions

A CAPP spokeswoman said a lot of transport companies and retailers understand the challenges facing the oil sands and the complexities of removing any specific type of fuel from the fuel supply.

“They want to work with us to find solutions rather than simply making a PR statement about a boycott,” she said.

In a related move, Alberta Sustainable Resource Minister Mel Knight said government plans to develop a land-use policy for the Lower Athabasca area of the oil sands region could see 32 percent of that land turned into a new conservation zone, including land currently leased by energy companies.

“There are many conservation easements now in the province of Alberta that are on leases and are on privately owned land,” he told the Globe and Mail. “Do we do it? Yes. Would we continue to do that? Absolutely.”

Companies currently hold rights to 73 percent of the Lower Athabasca, including Athabasca Oil Sands Corp., Laricina Energy and Connacher Oil and Gas.

CAPP President David Collyer said the industry does not believe that protecting up to 32 percent of the lands strikes the right balance of environmental protection and economic opportunity.

However, the Cumulative Environmental Management Association, a nonprofit research group financed by government and industry, estimated that even if 40 percent of the Lower Athabasca was conserved the industry could still produce 8 million barrels per day, five times the current output.

Athabasca Oil Sands Chief Executive Officer Sveinung Svarte said his company would not oppose conservation of land provided it was not rich in bitumen.

Connacher Chief Executive Officer Richard Gusella said the industry’s overriding concern would be any prospect of government land confiscation without appropriate compensation.

Further consultations are scheduled over coming months by representatives of government and special interest groups from agriculture, the environment, energy, forestry, municipalities and aboriginal communities.