Oil Change International

By Elizabeth Bast, Shakuntala Makhijani, Sam Pickard, and Shelagh Whitley - Oil Change International, November 2014

Governments across the G20 countries are estimated to be spending $88 billion every year subsidising exploration for fossil fuels. Their exploration subsidies marry bad economics with potentially disastrous consequences for climate change. In effect, governments are propping up the development of oil, gas and coal reserves that cannot be exploited if the world is to avoid dangerous climate change.

This report documents, for the first time, the scale and structure of fossil fuel exploration subsidies in the G20 countries. The evidence points to a publicly financed bailout for carbon-intensive companies, and support for uneconomic investments that could drive the planet far beyond the internationally agreed target of limiting global temperature increases to no more than 2ºC.

It finds that, by providing subsidies for fossil fuel exploration, the G20 countries are creating a ‘triple-lose’ scenario. They are directing large volumes of finance into high-carbon assets that cannot be exploited without catastrophic climate effects. They are diverting investment from economic low-carbon alternatives such as solar, wind and hydro-power. And they are undermining the prospects for an ambitious climate deal in 2015.

Read the report (PDF).

By Tom Sanzillo, Lorne Stockman, Deborah Rogers, Hannah McKinnon, Elizabeth Bast, and Steve Kretzmann - Oil Change International, October 29, 2014

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 report’s 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.

Read the report (PDF).

By Lorne Stockman, et. al. - Oil Change International, September 2014

Tar sands pipelines face increasing resistance both in the United States and Canada. As existing pipelines reach capacity, the delay and possible cancellation of new pipelines is costing tar sands producers billions of dollars and reducing investment in the sector. The success of anti-pipeline campaigns has forced industry to look to rail in an attempt to address these losses and open new markets for their product.

The crude oil produced from the Albertan tar sands is a semi-solid substance called bitumen, rather than a liquid crude oil. Shipping bitumen by rail is more expensive than shipping it by pipeline and the added cost is a substantial challenge to the long-term viability of the tar sands industry. Despite significant evidence, market analysis, and real world experience to the contrary, some prominent institutions - including the U.S. Department of State - continue to assert that rail has the potential to replace tar sands pipeline capacity, and thus the rapid pace of tar sands development will continue regardless of whether new pipeline capacity is built or not.

This report details why this is not the case.

Read the report (English PDF).

By Lorne Stockman, et. al. - Oil Change International, May 2014

This report tracks the rise of crude-by-rail in North America, detailing where crude trains are being loaded and unloaded, how many trains carrying crude oil are crossing the North American continent, and who is involved in this burgeoning trade.

This reportis the first in a series covering North America’s booming crude-by-rail industry and is being published in conjunction with a unique interactive on line map of crude-by-rail terminals and potential routes.

Future reports in this series will look at the economics of crude-by-rail, safety, and climate change issues. Please see this site for the map and links to reports and data.

Read the report (English PDF).