As the era of “easy” oil ends, producing oil will continue to get more energy and CO2 intensive. Increasing production from local unconventional sources, like oil sands and, in the future, possibly oil shales, is part of this industry trend. These sources provide a secure long-term supply that is close to major markets. However, the extra energy needed to produce them means higher CO2 emissions. On a lifecycle basis, petrol from oil sands currently emits approximately 10% more CO2 than petrol from conventional oil. Producing petrol from oil shales could require more energy still. So finding ways to reduce or offset CO2 emissions from these sources is a clear priority.
Shell is a leader in unconventional oil. This is part of our strategy for developing a broad range of energy options. We are committed to developing these resources responsibly. For example, Shell Canada’s first oil sands mining operation, the Athabasca Oil Sands Project (60% Shell Canada), has a voluntary GHG reduction target: to make the combined CO2 emissions from producing and using its petrol lower than those for petrol from the imported oil it replaces by 2010. The reductions are being sought in energy efficiency improvements and CO2 capture and storage at our oil sands facilities, and in mitigation measures outside the project that offset its emissions. Shell Canada’s external Climate Change Panel has provided independent advice on the reduction programme for this project. We are continuing to improve oil sands technology. The first expansion at Athabasca, announced in 2006, will use the new Shell Enhance technology. It reduces energy and CO2 emissions from the step in the production process when the oil is separated from the sand, by 10% compared to previous technology.
A voluntary GHG management plan will be developed for the expansion. We are, for example, working with government and other stakeholders to develop new technologies such as CO2 capture and storage.