Environmental Groups to Contest Shell's Oil Sands Projects

By RUSSELL GOLD
Two environmental groups say they will ask the Canadian government to halt Royal Dutch Shell PLC's planned expansion of production in the oil sands after they claim the energy giant reneged on environmental promises.
The groups says Shell agreed to take steps to limit greenhouse-gas emissions from two expansion projects and received government approval based on those pledges, but failed to meet them.
The groups plan to ask the federal government and Alberta Energy Resources Conservation Board to revisit permits grants to expand production by the Shell-led Athabasca Oil Sands Project. Shell's Canadian affiliate owns 60% of the project, while Chevron Corp. and Marathon Oil Corp. each own 20%. The two projects being contested -- called Jackpine and the Muskeg River expansion -- would each add 100,000 barrels of daily oil production to existing facilities.
"They made a commitment in writing to reduce their greenhouse gas emissions from these two projects by approximately 900,000 tons of carbon dioxide a year," said Roland Lines, a spokesman with The Pembina Institute. "They have been telling us they are not going to follow through on that."
The Calgary-based Pembina Institute, an environmental think tank, is being joined by lawyers from Ecojustice, a Canadian group formerly called Sierra Legal Defence Fund.
Phil Vercoe, a spokesman for Shell Canada Ltd., declined to comment until the company saw details of the allegations. He said the Muskeg River expansion was scheduled to initiate production in 2010 or 2011, but the Jackpine project was delayed pending a reassessment of costs.
Canada's oil sands contain vast reserves of oil, second only to Saudi Arabia. But the oil is viscous and awash in sand and other impurities. Processing the sludge-like crude take enormous amount of effort and releases many more greenhouse gases than conventional crude production.
Write to Russell Gold at russell.gold@wsj.com