Suncor Energy CEO Steve Williams rocked the oil industry boat Thursday 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, as reported by The Canadian Press.

“Our regulation is written so that we take to a very high percentage the last piece of oil out. That tends to be the most expensive both economically and environmentally. What we would like to do is leave that last piece in (the ground),” he said.

“I’m very optimistic we are making some breakthroughs with government to do that.”

The proposal is about more than leaving some oil deposits undeveloped, according to Simon Dyer, director of the Pembina Institute.

“We’re talking about Alberta moving philosophically from maximizing production to optimizing value,” Dyer told DeSmog Canada.

Having a conversation about where, when and how to leave behind the most expensive and highest polluting deposits just makes sense within the context of the Alberta climate plan, which caps total oilsands emissions at 100 megatonnes, and the Paris Agreement, he said.

“We have 166 billion barrels of oil in the oilsands. In 40 years we’ve extracted six per cent of them. It’s inconceivable to think we’ll extract all of them even though our regulations are written in a way that we don’t leave a barrel behind.”

Dyer said Williams is seeking a change in those regulations.

“It’s the first timid steps towards a ‘leave it in the ground’ conversation,” he said.

Suncor holds approximately 8.7 billion barrels of oil in the oilsands, including open pit mines and in situ operations. Focusing on its most profitable projects could save the company 10 to 20 per cent in operating costs, Williams said.

Keith Stewart, head of Greenpeace Canada’s climate and energy campaign, said Williams surprised a lot of people with his request but added it’s unclear at this stage 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.

There may be some hesitation on the part of Alberta, which relies on oil royalties, to simply allow companies to back out of oil extraction agreements, he said. Extraction agreements are managed under Directive 82, something Alberta may have to alter to accommodate Suncor’s request.

Suncor Opens Conversation about ‘Stranded Assets’ in #Alberta’s #Oilsands https://t.co/Ne04sUzuFB #cdnpoli #ableg

— DeSmog Canada (@DeSmogCanada) August 2, 2016

“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.

Stewart said it makes sense in an increasingly carbon-constrained world for fossil fuel companies to want to back out of their least profitable leases and added it’s interesting in this case that Williams chose to adopt the language of environmentalists to justify doing so.

“He could have said this in corporate-speak that would be meaningless to most, but instead he used a term that — until recently — was only used by the environmental movement. The asset is stranded, or worthless, because the oil has to stay in the ground to avoid dangerous levels of warming and that isn’t something most oil executives want to talk about.”

While high-grading assets isn’t necessarily a bad thing from an environmental perspective, the act of stranding assets needs to be considered in a global context, Stewart said.

“Williams called for a ‘modest’ stranding of assets, whereas climate science tells us we need to strand around 80 per cent of fossil fuel reserves. So we’re still far apart on how much ‘stranding’ is called for. But if you think back to the federal election, it was considered heretical when an NDP candidate suggested some of the oilsands had to be left in the ground so this is an interesting development.”

Alberta’s climate plan placed a hard cap of 100 megatonnes on oilsands production, but 130 megatonnes of projects have already been approved.

Dyer, who sits on the Alberta Oilsands Advisory Group, a coalition of industry, environmental and First Nations leaders, said Alberta faces the difficult task of taking approved projects off the table.

“We’re going to have a competitive process whereby the Alberta regulator decides which projects go forward. They can’t all go forward under the cap so again we’re in a situation where the Alberta Energy Regulator, instead of approving every project, has to decide which of these projects is better for Alberta,” he said.

“If we’re never going to extract all of the bitumen, why don’t you high-grade and take the most profitable stuff that has the least environmental impact?”

Dyer said it’s important for Alberta to recognize a global transition away from fossil fuels is taking place.

“You’ve got to consider the Paris agreement and countries musing about being fossil fuel free by 2050 and the uptake of electric vehicles,” he said.

“It’s a tough point for Albertans but whether we like it or not the world’s changing,” he said. “At the current rate of production it would take us 200 years to get through the oilsands. It’s just inconceivable that will happen.”

So, if some of Alberta’s bitumen is being taken off the table, a conversation needs to take place about how that will happen. Dyer said he hopes that conversation will take place publicly and transparently.

“I think if we get policy to move from the idea that you extract everything regardless of the benefit or the cost and instead you actually make decisions based on optimizing benefits, that can only be a positive thing.”

Image: Steve Williams at a 2012 Suncor Annual General Meeting via Flickr

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Only three-and-a-half months have passed since the federal election, but fossil fuel companies and lobby groups haven’t wasted any time in ramping up their lobbying efforts.   Suncor, the country’s largest energy company by revenue, has led the pack in meeting with high-ranking federal officials — logging at least 12 meetings in just over one month.   Between Nov. 2 and Nov. 19 the dominant oilsands player met four times with Louise Metivier, who was Canada’s chief negotiator at the UN climate summit held in Paris between Nov. 30 and Dec. 12.   Steve Williams, the company’s CEO and head lobbyist, also met three times with Environment Minister Catherine McKenna (on Nov. 18, Dec. 7 and Dec. 8) another three times with Environment Canada’s chief of staff Marlo Raynolds (on Nov. 5, Dec. 7 and Dec. 9) and twice more with Gerald Butts, Prime Minister Justin Trudeau’s right-hand man and principal secretary ( Nov. 18 and Nov. 19).   “The meetings were preparatory meetings for Suncor’s participation at COP 21 in Paris,” explained Sneh Seetal, spokesperson at Suncor, via e-mail. “Our president and CEO, Steve Williams, attended as a member of the Canadian delegation at the invitation of the federal government. We discussed Suncor’s perspectives on climate change and how industry can help be a part of the solution.”

Lobbyists Include LNG Canada and TransCanada

Other oil and gas interests have displayed similar determination since the Liberals formed government.   Take LNG Canada Development (a Kitimat-based joint venture composed of Shell, PetroChina, Korea Gas and Mitsubishi), which met with Erin O’Gorman, assistant deputy minister of Natural Resources Canada, on Oct. 27, Nov. 5 and Jan. 8.   TransCanada, the proponent of both the Energy East and Keystone XL pipelines, lobbied Canada’s ambassador to the United States, Gary Doer, three times on Oct. 30.

The Canadian Energy Pipeline Association met with NEB chairperson Peter Watson on Nov. 2 and Dec. 17. And the Petroleum Services Association of Canada lobbied McKenna, Finance Minister Bill Morneau and Employment Minister MaryAnn Mihychuk in separate meetings on Dec. 22.

It’s important to keep in mind that the lobby registrations are likely just scraping the surface of the actual lobbying happening in Ottawa.   Richard Girard, executive director of research centre Polaris Institute, notes that only employees who spend more than 20 per cent of their month’s work on lobbying efforts are required to register as a lobbyist. As a result, Girard suggests there are “lots of meetings that are more likely taking place that we don’t know about.”   Even the meetings that are registered lack specifics, only hinting at general subjects such as “environment” or “energy.”   “It certainly provides you with a list of who’s seeing who, which is helpful,” says Gillian Steward, author of the Toronto Star’s 2015 Atkinson Series on public policy on the oilsands. “They do have to at least put down the topic of what they’re talking about. On the other hand, it can be very difficult to get — say, from CAPP — exactly what they’re presenting.”

Bear Head LNG Lobbies Federal Government 15 Times in 10 Weeks

Some companies have clearly been making plenty of moves, with Bear Head LNG — the company proposing to build a liquefied natural gas facility in Nova Scotia — meeting with Doer on Oct. 21, Oct. 26, Oct. 30, Nov. 10, Nov. 11, Dec. 10 and Dec. 18.   Represented by former U.S. ambassador Derek Burney, the company also lobbied the duo of Jay Khosla (assistant deputy minister of Natural Resource Canada’s energy sector) and Terence Hubbard (director general of Natural Resource Canada) four times between Nov. 12 and Dec. 29, with Khosla chatting individually with the company an additional four times in the window.

‘It’s a Question of Balance’

Girard notes that while the Canadian lobbying registry has improved over the years, it’s still flawed because it doesn’t show how much companies are spending on lobbyists, unlike the U.S. But reasonable conclusions can still be made.   “The number of times people register communications increases around certain important pieces of legislation,” says Girard, who served as co-author for the Polaris’ report Big Oil’s Oily Grasp. “Many of those pieces of legislation were very positive for the industry. We can’t draw the line, but yes we can see there’s a correlation between the level of lobbying — who’s lobbying and for what — and the outcome of the legislation.”   The Polaris Institute’s 2012 report found that that 2,733 lobbying communications were made by oil and gas companies between July 2008 and November 2012, far outweighing similar efforts by mining and forestry interests. Prominent lobbying organizations such as the Canadian Association for Petroleum Producers (CAPP), TransCanada, the Canadian Gas Association, Imperial Oil and Suncor led the way. Meanwhile, only 11 environmental non-governmental organizations were registered as lobbyists in that window.   “It’s a question of balance,” Steward says. “[Oil and gas companies] have a right to go and do that. It’s just that they have more resources and more power to actually have those meetings, where environmental and First Nations groups and other kinds of NGOs don’t have the funds or staff, and aren’t represented as well. It’s much harder for them to actually get their message across to the people who influence those decisions.”

Image: Steve Williams takes the helm as Suncor CEO in 2011.  

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