WUEG October 2015 Newsletter

October 2015
the larger countries can bully the smaller
producers to fall in line, OPEC’s bargaining power
and influence on global oil prices may have been
shattered. With its power waning over the past
decade with the emergence of alternative sources
of oil, OPEC may be on its last legs. If it cannot
reverse the damage done through this vicious
period of competition and incoordination, its
relevance will dissipate.
The environmental consequences and the
tightened regulation that will accompany them of
extracting oil from the tar sands are just as much
of a reason not to invest. The oil sands are located
in the heart of the world’s largest forest, the Boreal
forest, known as the largest oxygen producing
ecosystem for its huge diversity of species. In order
to simply access the sands, thousands of acres of
forest are deforested yearly. Extracting the oil
does even more damage. Removing the sand from
the ground destroys the possibility of flora and
fauna returning to the area for hundreds of years,
and even more destructive is the process of
converting the sand into usable oil. About four
barrels of water for every barrel of oil are
superheated, pumped through massive containers
of the sand, contaminated, and then pumped into
large ‘tailings ponds’, creating the largest toxic
impoundments in the history of the earth. And, as
the fastest growing source of emissions in Canada,
it has played a key role in making Canada the third
largest greenhouse gas producer per capita. But
the incentive to not invest in Canada’s oil sand
because of its environmental destructiveness is
more than just a moral one. Alberta’s regulation of
oil-sand operators has become stricter recently as
the province increasingly comes under attack for
the environmental consequences of the operation,
and regulation is only expected to increase.
The incentives to divest in oil sands are clear, and
given the current oil prices, there is no better time
to do so than right now.
Sources:
Forbes
Reuters
New York Times
Bloomberg
MarketWatch
U.S. Department of Interior Cancels Lease Sales in
Arctic after Shell’s Disappointing Exploration
Sheetal Akole – Senior Member, Academics Committee
A month after Royal Dutch Shell Oil decided to
halt drilling efforts in the Chukchi Sea off the coast
of Alaska, the U.S. department of the Interior
announced that it was cancelling new lease sales in
Alaska and would not be extending Shell’s lease in
the region (which was set to expire in 2020).
The company began drilling earlier this year after
the Obama administration gave Shell conditional
approval to drill of oil. Shell had initially attempted
to drill in the area, but broke off efforts in 2012 due
to safety concerns. Shell was looking to regain
some of the billions of dollars it had spent on
federal leases and other preparations over the last
few years.
While Shell had initially proposed the “drilling of
up to six wells within the Burger Prospect , located
in approximately 140 feet of water about 70 miles
northwest of the village of Wainwright”, they were
only able to drill one exploratory well this summer.
The Burger J well was drilled down 6,800 feet and
was thought to have been located in a basin that
had a sizeable reservoir of petroleum.
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