x Abu Dhabi, UAEThursday 27 July 2017

It isn't easy being clean

Oil companies strive to clean up messes and reputations as companies such as ExxonMobil and Shell run into problems at some of their sites.

The Syncrude oil sands extraction facility behind a lake reclaimed from an old mine near the town of Fort McMurray in Alberta Province.
The Syncrude oil sands extraction facility behind a lake reclaimed from an old mine near the town of Fort McMurray in Alberta Province.

Environmentalists have long portrayed Big Oil as Public Enemy Number One, creating intense pressure on oil companies to clean up their messes. Firms that take environmental stewardship seriously, however, are not getting an easy ride.

Take Syncrude Canada, the oil-sands consortium that hoped to become the poster child for environmentally responsible energy development, despite digging open pit mines so large they are visible from space. The group, which includes ExxonMobil among its shareholders, says it has invested C$100 million (Dh357m) in the past five years on land reclamation. "To date, we've reclaimed over 4,500 hectares and planted over five million tree seedlings," the company's website says.

In 2008, Syncrude became Canada's first oil-sands operator to receive government reclamation certification for a former mine, meaning that the company had demonstrated the site could support the same vegetation and wildlife as before the land disturbance. That has not saved it, however, from facing legal action over the deaths that same year of 1,600 ducks in a single incident at one of its tailings ponds, where mining waste is dumped.

Some other large oil producers, often the state-owned variety, are held to lower standards of environmental accountability, reducing their costs and creating a competitive advantage in a quintessentially global industry. That should raise red flags for environmentalists, as it creates a commercial incentive for oil development to migrate to the regions with the least stringent regulations, with cross-border implications for biodiversity, pollution and climate change.

Already, most of the world's oil resources are controlled by national oil companies rather than their international counterparts, reversing the situation that prevailed before 1970. Among national oil companies, some adhere to environmental standards that are at least as high as those expected of international players, but others do not. "I think the pressures are different," says Robert Liddington, a spokesman for Abu Dhabi Marine Operating Company, a subsidiary of Abu Dhabi National Oil Company (ADNOC). "From the point of view of an international oil company, you've got a market image to sustain. Therefore you've got to appeal to your customer base and shareholders.

"For national oil companies, it depends on your national relationship. There's not as much commercial pressure, only political pressure." Corporate culture also comes into play. For example, obtaining the reclamation certificate for the 104-hectare Gateway Hill site, which in the early 1980s was refilled and planted with spruce trees and other northern forest vegetation, was a source of pride and motivation for Syncrude employees.

"Reclamation begins with a vision," says Ron Lewko, the leader of the group's in-house reclamation research team. "The plan is to design landscape to consist of a mosaic of land forms, ecosystems and a linked system of wetlands, lakes and streams." By 2080, all the company's mining leases will be reclaimed, Mr Lewko predicts. At Gateway Hill, he says, "what we said we'd do, we did". And yet, Syncrude was in court last week fighting charges relating to the duck disaster from both the federal government and the Alberta provincial government. Environmentalists as well as oil and mining industry representatives are watching the case closely because it will set a precedent.

Speaking outside the courthouse in Fort McMurray, Alberta, last week, Lindsay Telfer, the director of the environmental group Sierra Club Prairie, said the case went beyond a specific incident. "The tailings ponds themselves are on trial. I think that this incident specifically showed the world just how toxic the tailings ponds are," she said. Syncrude faces maximum fines of only $800,000 if found guilty of endangering wildlife, but its reputation could be badly tarnished and some of its managers could serve prison terms. Both would make it harder for the company to do business and attract the most skilled employees.

Syncrude has already apologised publicly for the ducks' demise and stepped up measures to dissuade migrating birds from alighting on its oily ponds. Another oil company trying to rehabilitate a messy reputation is Europe's biggest petroleum group, Royal Dutch Shell. For decades its Nigerian oil operations have attracted condemnation from environmental and humanitarian groups. Last summer, a report from the humanitarian organisation Amnesty International blamed oil companies and the Nigerian government for widespread environmental and social abuses in Nigeria's main oil-producing region.

"The Niger Delta provides a stark example of the lack of accountability of a government to its people, and of multinational companies' almost total lack of accountability when it comes to the impact of their operations on human rights," said Audrey Gaughran, the organisation's head of economic relations. Shell's big mistake may have been paying too little heed to the standards of the national oil companies it chose as partners. That is not an error it is likely to repeat.

Recently, Shell said it was seeking to replace lost revenues from Nigeria. Qatar, where Shell has joint ventures in liquefied natural gas and gas-to-liquids synthetic fuels with Qatar Petroleum, is the chief candidate. "Qatar underpins Shell's growth plans to 2012 and will be a heartland for decades to come," Peter Voser, the group's chief executive, said in November. Qatar Petroleum has also been active in environmental rehabilitation. In 2006 and 2007 it relocated more than 4,500 coral colonies from undersea pipeline corridors, in the largest project of its type in the world. Researchers established a year later that 99 per cent of the transplanted corals had survived.

In Abu Dhabi, Shell is in join ventures with ADNOC, which supports a number of projects to protect biodiversity and wildlife in the Gulf, including a dugong research project and monitoring of the nesting sites of marine turtle and osprey. tcarlisle@thenational.ae