Oil sands in Canada

The functioning of our society is dependent on metals, minerals and fossil fuels. Extracting these materials from the crust of the earth always has an impact on people and the environment. At the same time, they are also the raw materials for a large number of other industries. On the one hand, the mining and extraction industry often has a negative impact on the environment, but on the other hand metals are a necessary input for many businesses in our society.

The Ethical Council has been maintaining dialogues with mining and oil companies since early 2007. It is important for the companies to be transparent and for extraction to be carried out in a manner that does not breach international conventions.

Greater focus on oil sand extraction

2009 has seen an increased focus on oil sand extraction. Extracting oil from oil sand has been severely criticised by many environmental organisations, since it is more carbon intensive than extraction of conventional oil. The oil sands in Canada is of interest to international oil companies because the supply of conventional oil reserves is falling, while demand for oil is expected to rise. Canada has the second largest oil reserves in the world after Saudi Arabia, thanks to its 173 billion barrels of oil sand.

The Ethical Council is working with other investors through the PRI oil sand initiative to secure improved reporting from all companies with investments in the oil sands in Canada, with regard to their carbon emissions, environmental impact and responsibility towards the indigenous population. The aim is to increase transparency in order to better assess the risks and opportunities that exist. To gain a better understanding of the environmental and social challenges relating to the oil sand, a representative of the Ethical Council travelled to Alberta, Canada in November 2009 on a field trip together with other European and Canadian institutional investors.

Field trip to Alberta

The field trip included a visit to two oil sand mines operated by Shell, Muskeg River Mine, and Jackpine Mine, which will come on line in 2010. As part of the trip there were also meetings with the Canadian Association for Petroleum Producers (CAPP), a number of oil companies involved in either oil sand mines or insitu projects, an environmental organisation and representatives of the Government of Alberta.

Around 20 percent of the oil sand is so close to the surface that it is possible to mine it in open pits. To extract the remaining 80 percent, insitu techniques are required to make oil sand in the ground fluid so that it can be pumped up to the surface for refining. Since it takes more steps to extract oil from oil sand than from oil fields, the refining process requires more energy, which means that oil sand is more carbon intensive. The environment is also affected locally and regionally by emissions of acidifying substances to air, leakage into watercourses and changes to the landscape. The degree of environmental impact depends on the techniques used for extraction. The mines use large quantities of water from a nearby river in their processes, while the insitu processes use groundwater.

A major issue for the mines is reinstatement of the land, particularly with regard to the large oil sand tailing deposits that are a waste product of the mining. The insitu project has less of a visual impact on the surroundings, but still affects land use due to the infrastructure required. The environmental impact is also a vital issue for the indigenous people of Canada who live in this area and have a legal right to lead a traditional life. All the companies must consult the indigenous people as part of their projects. In 2010, the Ethical Council will continue to engage in the mining and extraction industry, through both its own dialogue work and joint initiatives with other investors.

The Ethical Councils report impacts of the mining industry

To gain a better understanding of the environmental impacts of the mining industry, in 2008 the Ethical Council drew up a report on and visited a mine in Guatemala. The Ethical Council works with other institutional investors to address individual companies and entire sectors.