October, 29 2014, 02:00pm EDT
For Immediate Release
Contact:
Karl Cates, kcates@ieefa.org, @ieefa_institute
Steve Kretzmann, steve@priceofoil.org, @PriceofOil
New Report: Tar Sands Producers Face a Growing 'Constellation of Risks' as Public Opposition Hits Industry's Bottom Line
$31 Billion in Lost Revenues to date; Tar Sands Expansion Unlikely to Proceed as Protests Mount
WASHINGTON
A new report by the Institute for Energy Economics and Financial Analysis (IEEFA) and Oil Change International quantifies for the first time the financial and carbon impact of public opposition to pipelines and other expanded investment in tar sands production.
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.
"Tar sands producers face a new kind of risk from growing public opposition," said Tom Sanzillo, Director of Finance at IEEFA, and one of the lead authors on the report. "This opposition has achieved a permanent presence as public sentiment evolves and as the influence of organizations opposed to tar sands production continues to grow."
"They have a deep reservoir of committed talent from all walks of life: High-profile billionaires and regular workaday folks are taking part. This is a group that is very well-schooled in the use of public-accountability tools meant to protect the public health and environment, and this is a group that is right also in its criticism of the questionable finances behind tar sands development."
Steve Kretzmann, Executive Director of Oil Change International, said, "Industry officials never anticipated the level and intensity of public opposition to their massive build-out plans. Public opposition has caused government and its administrative agencies to take a second and third look. Legal and other challenges are raising new issues related to environmental protection, indigenous rights and the disruptive impact of new pipeline proposals."
"Protests against pipelines are keeping carbon in the ground, and changing the bottom line for the tar sands industry. Business as usual for Big Oil - particularly in the tar sands - is over." Kretzmann said.
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.
"Many tar sand producers are moving forward with large investments during a time of increasing financial uncertainty," Sanzillo said. " One or two of these factors would be manageable, but taken together they call into question the viability of these projects."
***
The Institute for Energy Economics and Financial Analysis (IEEFA), based in Cleveland, Ohio, conducts research and analyses on financial and economic issues related to energy and the environment. The Institute's mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources. For more information, visit www.ieefa.org.
Oil Change International is a research, communications, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the ongoing transition to clean energy.
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Defeating 'MAGA Dark Money,' Summer Lee Wins Primary in Landslide
"This is a huge testament to our collective strength and resilience as a progressive movement," said the executive director of Justice Democrats.
Apr 24, 2024
U.S. Rep. Summer Lee, a member of the progressive "Squad," won the Democratic primary for Pennsylvania's 12th Congressional District on Tuesday, fending off an opponent whose campaign was backed by a billionaire Republican megadonor and ally of Israeli Prime Minister Benjamin Netanyahu.
Lee, a vocal critic of the Netanyahu government and leading supporter of a cease-fire in Gaza, handily defeated Bhavini Patel, a borough councilmember in Edgewood, Pennsylvania whose effort to unseat the progressive incumbent was bankrolled by Jeffrey Yass, the state's richest man. Patel actively courted Republican and pro-Israel voters, characterizing Lee as "fringe."
With more than 95% of the vote counted, Lee is ahead of Patel by more than 20 percentage points.
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Opposing genocide is good politics and good policy. #CeasefireNOW https://t.co/A7pnJNskWS
— Summer Lee (@SummerForPA) April 24, 2024
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"MoveOn members are ready to defeat this dangerous flood of dark-money spending against progressive champions and ensure that we continue to elect working-class people to Congress," said Epting.
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Mountain Valley Pipeline LLC sent a letter Monday to Federal Energy Regulatory Commission (FERC) Acting Secretary Debbie-Anne Reese seeking final permission to begin operation on the MVP next month, even while acknowledging that much of the Virginia portion of the pipeline route remains unfinished and developers have yet to fully comply with safety requirements.
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Russell Chisholm, co-director of the Protect Our Water, Heritage, Rights (POWHR) Coalition—which called MVP's request "reckless and impossible"—said in a statement that "we are watching our worst nightmare unfold in real-time: The reckless MVP is barreling towards completion."
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Appalachian Voices noted that MVP's request comes days before pipeline developer Equitrans Midstream is set to release its 2024 first-quarter earnings information on April 30.
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U.S. workers' rights advocates and groups celebrated on Tuesday after the Federal Trade Commission voted 3-2 along party lines to approve a ban on most noncompete clauses, which Democratic FTC Chair Lina Khansaid "keep wages low, suppress new ideas, and rob the American economy of dynamism."
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Demand Progress' Emily Peterson-Cassin similarly commended the commission "for taking a strong stance against this egregious use of corporate power, thereby empowering workers to switch jobs and launch new ventures, and unlocking billions of dollars in worker earnings."
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