Change is coming to Alberta's oilsands. Carol Linnit reports that:
Suncor Energy CEO Steve Williams rocked the oil industry boat last week when he announced a plan to leave some of the company’s oilsands reserves unrecovered during a conference call with investors.
Williams said the company is working to develop a plan with Alberta to “strand” its least economical reserves, a proposal that appears to align with the call of environmentalists to leave the high-cost and high-carbon fossil fuels in the ground to prevent catastrophic global warming.
“We are advocating in a modest way to work with government so that we can strand some of the oil in the oilsands,” Williams said.
It remains to be seen whether the Alberta government will buy into Williams plan:
Keith Stewart, head of Greenpeace Canada’s climate and energy campaign, said Williams surprised many people with his call for a new approach to the oilsands, but it’s unclear how Alberta will manage Suncor’s request.
“It’s important to recognize that what [Williams] really wants to do is ‘high-grade’ his existing reserves, exploit only the cheapest and most profitable parts,” Stewart said.
The Alberta government, which relies on oil royalties, may be reluctant to allow companies to back out of oil extraction agreements, Stewart added.
Extraction agreements are managed under Directive 82, a regulation Alberta might have to alter to accommodate Suncor’s proposal.
“Lease agreements often establish rules that limit ‘high-grading’ and Suncor is clearly trying to get those rules changed,” Stewart said, adding this would likely help companies shut-in low-performance in situ operations.
It's only a small change. But it's the first time in a long time that someone from the oil industry has talked about leaving bitumen in the ground. The train is leaving the station.