Greenpeace, the Oil Industry and the Stuart Oil Shale Project in Australia

Eco-Activism Greenpeace, the Oil Industry and the Stuart Oil Shale Project in Australia

11/2006-5339

This case was written by Renato J. ORSATO, Senior Research Fellow at Insead Business in Society (IBiS), INSEAD, Fontainebleau, France and Kes McCORMICK, Research Associate at the International Institute for Industrial Environmental Economics (IIIEE) at Lund University, Sweden as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The authors would like to thank Andrea North-Samardzic for research assistance on the case.

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In 1995, an Australian-Canadian joint venture invested (A$250 million) €159 million in an oil shale demonstration plant in Queensland, Australia, known as the Stuart Oil Shale Project.1 The location of the development near the Great Barrier Reef, the significant greenhouse gas emissions associated with oil shale, and the potential impacts of global warming on coral reefs and human activities attracted the attention of Greenpeace and local stakeholders. The Federal and State Governments, project partners, and oil companies operating in Australia were confronted with several dilemmas, including: the difference between an environmental impact assessment of an oil shale project and a life cycle assessment of oil shale; the demands of energy security and climate change mitigation; how to offset carbon dioxide emissions from fossil fuel projects; and finally, how oil companies can position themselves in relation to oil shale and renewable energy.

Context

Consumption of energy is growing worldwide, and unless demand is met using cleaner, safer and more efficient energy technologies, associated environmental and social problems will worsen.2 Currently, the majority of energy needs are met with fossil fuels, which contribute to a number of problems, including climate change through the release of greenhouse gases, and health problems as a result of human intake of particulates generated by the burning of fossil fuels.

As the world wakes up to the ecological consequences of its patterns of production and consumption, there is increased pressure for business to acknowledge its responsibility and improve its environmental performance.3 Some organizations have accepted their role and committed to improving their environmental performance and addressing the broader issue of ecological sustainability. Nonetheless, in order to safeguard the economic sustainability of the business, such firms often meld ecological commitments with the economic and structural constraints involved in their economic survival.

To place energy use in perspective, both for today and for the future, it is important to review projections (see Exhibit 1). Global primary energy consumption in 1990 was about 379 EJ/yr. By 2100, it could be about 1,859 EJ/yr, as in Case A, 1,464 EJ/yr in Case B, or 880 EJ/yr, as in Case C. These cases of alternative global development suggest how the future could unfold in terms of economic growth, population trends, and energy use (see Exhibit 2). In any scenario by 2100, 6 to 8 billion more people will need access to affordable, reliable, flexible, and convenient energy services.

Presently, global primary energy is reliant on fossil fuels (see Exhibit 3). Oil, natural gas and coal represent almost 80% of the energy fuel mix, while oil alone provides over 35% of world energy needs. Nuclear power contributes nearly 7%, while renewable sources provide about 1 All values presented in this case have been converted from American, Canadian and Australian Dollars to

European Euro based on the exchange rate according to x-rates. Visit http://www.x-rates.com/ for more information. The conversions are only intended for indicative purposes. Exchange rate: 1 AUD = 0.636180 EUR.

2 World Energy Assessment. (2000) Energy and the Challenge of Sustainability. New York: United Nations Development Programme.

3 Orsato, R. J. (2001) Environmental Challenges in Organizations. In: Smelser, N. and Baltes, P. (eds.) International Encyclopedia of the Social and Behavioural Sciences. Oxford: Elsevier.


14%. However, the ‘new’ renewables like modern biomass, small hydro, geothermal energy, wind energy, solar energy and marine energy only generate 2% of global energy.4

Oil Today

Crude oil is the substance found trapped below the earth’s crust. It is a dark, sticky liquid, which is classed as a hydrocarbon. In other words, it is a compound containing only hydrogen and carbon. In order to extract the maximum value from crude oil, it first needs to be refined into other products. The most well-known of these is gasoline, or petrol. However, there are a variety of other products that can be obtained when crude oil is refined, including liquefied petroleum gas, naphtha, kerosene and fuel oil. All of these are fuels, but other useful products can also be manufactured from a barrel of crude oil, such as lubricants and asphalt (see Exhibit 4).

In fact, there are more than 4,000 different petrochemical products, such as ethylene, propylene, butadiene, benzene, ammonia and methanol. The main groups of petrochemical end products are plastics, synthetic fibres, synthetic rubbers, detergents and chemical fertilisers. A vast number of products are therefore derived from crude oil, and many applications today would be extremely difficult to duplicate without crude oil and its by-products.5

The high number of products relying on oil is compounded by worldwide dependency on oil for transportation. Today, oil provides 92% of the fuel required for our cars and trucks, and it is the essential fuel for our planes and boats (see Exhibit 5). The USA, for instance, consumes almost 25% of all oil stocks, and most of it for transport.6 Presently, petrol taxes in the USA are so low that they do not take any account of environmental impacts.7

Even though there are calls for greater research on alternatives to the internal combustion engine, such as fuel cell systems, such measures are not expected to have a significant impact until beyond 2020; all industrialised countries will therefore remain highly dependent on oil for transportation needs for some time. While some governments and industries around the world are investing heavily in developing new fuels that are less greenhouse intensive, this is expected to take at least a generation.

Oil Tomorrow

It is widely understood by governments around the world that any decline in oil supplies in the near future would be damaging to the global economy.8 In order to calculate oil production, there are some vital figures that need clarification. Although the finitude of oil reserves is unquestionable, the time frame for its exhaustion is highly controversial. The 4 World Energy Assessment. (2004) Energy and the Challenge of Sustainability: Overview Update. New

York: United Nations Development Programme. 5 Organisation of the Petroleum Exporting Countries. (2003) Frequently Asked Questions.

http://www.opec.org/ 6 The Economist. (1999) Drowning in Oil. The Economist. 6th March. 7 The Economist. (1999) Drowning in Oil. The Economist. 6th March. 8 Campbell, C. J. and Laherrère, J. H. (1998) The End of Cheap Oil. Scientific American. March: 60-65.


fundamental disagreement resides in the following issues: (i) the estimation of existing and undiscovered petroleum reserves, (ii) the rate of oil consumption, and (iii) the costs of extracting the final deposits of oil from wells. Together, these figures define the total amount of oil available for recovery. There is intense debate over these calculations and thus the conclusions to be drawn for the future of the oil industry.

Oil Reserves

The estimation of oil reserves is vulnerable to political manoeuvres. Around the world, the numbers of reserves published by oil-producing countries and corporations are not subject to public scrutiny. By inflating reports of reserves, members of the Organisation of Petroleum Exporting Countries, for instance, can increase their exports of oil. Estimates of reserves can also raise the value of a corporation working in oil exploration, increasing the chances of speculation around the real number of oil deposits.

Consumption Rate

There are controversies about the rate at which oil will be consumed in the coming decades. Although statistical data indicate demand tendencies, speculation about changes in patterns of consumption make it difficult to extrapolate from past trends. Disputes among political parties and other interest groups make estimates of probable consumption even more vulnerable to political speculation, than is the case with oil reserves.

Extraction Costs

The cost of optimising extraction rates from oil wells is also controversial. In simple terms, the cost of extracting oil increases with the depletion of the well. Apart from the geological differences between wells, as petroleum is extracted, the costs of pumping the remaining deposits tend to escalate. For this reason, pumping 100% from a well might be technically feasible but in most cases is economically unattractive.

Campbell and Laherrère9 considered the issues discussed to estimate that 1,000 billion barrels of petroleum remain underground − 850 billion in oil reserves, and 150 billion in undiscovered oilfields. At current rates of 2% growth in consumption per year, Campbell and Laherrère predict that this amount of oil will be able to ‘fuel’ societies for approximately 40 more years.

Contrary to popular concern, however, for Campbell and Laherrère, the identification of the exact date when the world runs out of petrol is irrelevant. Instead, what is of consequence is when world production will start to decline. If their calculations are correct, oil production should peak in 2010 and, unless technological and social factors significantly reduce demand for oil, prices will rise considerably. With less oil to be marketed, it goes without saying that oil will be sold at higher prices.

The availability of petroleum and its consequent fluctuation in price will certainly remain subject to dispute. For instance, Wells10 asserts that the mainstream view of the near term 9 Campbell, C. J. and Laherrère, J. H. (1998) The End of Cheap Oil. Scientific American. March: 60-65. 10 Wells, P. (1998) Automotive Materials: The challenge of globalisation and technological change. London:

Financial Times Automotive.


future for petroleum is that supply will easily meet demand − there will be no fundamental economic or physical resource constraints. Until actual demand numbers start to top predictions, such as those of Campbell and Laherrère, the debate will remain open.

The significant rise in oil prices in 2004 and 2005 contradicted such a view (see Exhibit 6). According to Sawin,11 increased oil prices stimulated investments in ‘new’ renewables (not including large dams), which grew from (US$24 billion) €20 billion globally in 2003 to (US$29 billion) €24 billion in 2004, with the pace of growth even faster in 2005.12 While the development of the renewables industry is good news for the environment, it seems premature to assume that ‘new’ renewables are the main winners of high oil prices.

Cost reductions and innovations in oil shale processing are also leading to a bonanza, with investments in 2005 leaping to (C$7 billion) €5 billion, up from (C$4,2 billion) €3 billion in 2000.13 High oil prices have prompted a flurry of investment in new projects and expansion efforts in oil sands that will add up to (C$70 billion) €50 billion in the coming years.14

Oil Shale

Oil is most commonly known as conventional crude oil. But vast stocks of oil take another form – a black tar-like substance, called bitumen, which sticks between certain sands and shale.15 Oil shale is a 40 to 50 million year-old sedimentary rock. Within its structure of clay minerals, it contains a solid hydrocarbon, known as kerogen. This has been formed during the deposition of sediments in ancient lake environments. In its natural state, oil shale contains no liquid hydrocarbons.

In fact, the hydrocarbon component of oil shale is an organic solid, which requires heat to liberate it. The heating forces the decomposition of the kerogen and the release of hydrocarbons as a vapour. When cooled, the vapour becomes liquid oil and gas. Conventional oil is formed through a similar process, the difference being that it has been subjected to millions of years of deposition, pressures and temperatures. In other words, extracting the hydrocarbon from oil shale involves speeding up the geological process.

Oil shale is different from tar sands. The oil is actually kerogen, which is converted into something like petroleum, and the shale is a type of rock. However, tar sands are actually bitumen deposits, which accounts for the tar label, but also accounts for the different processes used to extract the material. Both procedures are quite capital intensive. When mining tar sands, significant natural gas is required to transform it into something resembling

11 Sawin, J. L. (2004) Mainstreaming Renewable Energy in the 21st Century. Washington: Worldwatch

Institute. 12 All values presented in this case have been converted from American, Canadian and Australian Dollars to

European Euro based on the exchange rate according to x-rates. Visit http://www.x-rates.com/ for more information. The conversions are only intended for indicative purposes. Exchange rate: 1 USD = 0.832465 Euro.

13 Exchange rate: 1 CAD = 0.717822 Euro. 14 The Economist (2005) Another False Dawn? 5th November. 15 George, R. L. (1998) Mining for Oil. Scientific American. March: 66-67.


fuel. So technically, using tar sands as a fuel alternative produces fewer greenhouse gas emissions, but on the other hand, it will use up all natural gas reserves.16

A developing technology for extracting oil from shale appears to allow industry to exploit huge deposits that are too deep to mine.17 By injecting steam into the ground, the oil can be made to liquefy. The oil thins and pools underneath the injection area, thus allowing ordinary oil equipment to bring it to the surface. This process is being tested to examine its viability.

Influences on Oil Shale

There are many influences on the future development of oil shale mining, which are interlinked with the oil industry in general. These cut across economic, political and environmental spheres. But whatever happens in the future, a comment often noted is that the Stone Age did not end because the world ran out of stones, and the Oil Age will end long before the world runs out of oil.18

Economic

From an economic point of view, when the world runs out of oil is not the major concern. What really matters is when production begins to decline. At this point, prices will keep rising, unless demand declines. In other words, it will be the end of abundant and cheap oil on which all industrial nations depend.19 The dominant question is how markets and societies will react. Will there be a relatively seamless transition to alterative fuels, such as hydrogen, or will there be economic and social turmoil?

Political

The combination of instability in the Middle East, a USA that is prepared to act with force rather than diplomacy – as recent wars clearly demonstrate – and a growing demand for oil in many parts of the world are cause for concern.20 All this could stimulate investment in cleaner and new alternatives to oil, or technology to advance the exploration and production of oil, such as oil shale. That is the quandary.

Environmental

Contrary to concerns over oil dependence are the arguments that oil will remain cheap and plentiful for some time to come. In this scenario, there is nothing to suggest why oil will not remain a dominant energy source. However, there is evidence that cheap oil may not be such a good thing. In fact, there are serious concerns for the environment and world peace.21 Firstly, (relatively) cheap oil continues to support investments in fossil fuel dependent technology and therefore only accelerates global warming and slows the transition to

16 World Energy Council Survey of Energy Resources. (2001) Oil Shale. http://www.worldenergy.org/ 17 George, R. L. (1998) Mining for Oil. Scientific American. March: 66-67. 18 The Economist. (2003) The end of the Oil Age. The Economist. 25th October. 19 Campbell, C. J. & Laherrère, J. H. (1998) The End of Cheap Oil. Scientific American. March: 60-65. 20 The Economist. (1999) Drowning in Oil. The Economist. 6th March. 21 Campbell, C. J. and Laherrère, J. H. (1998) The End of Cheap Oil. Scientific American. March: 60-65.


renewable sources of energy. Secondly, cheap oil creates conditions in which most of the world relies on a few unstable countries in the Middle East.22

Despite these disputes, a common ground seems to be that environmental concerns are the most important reason for avoiding oil dependency. Extracting oil from sand, for instance, could become economically profitable in the next few years, but public concerns about the global environmental impacts of such activities pose tremendous pressure on governments and corporations engaged in these types of projects.

Moreover, even if oil can be extracted with a minimum local environmental impact, the need to curb greenhouse gas emissions from the burning of fossil fuels will possibly affect the eagerness of governments to endorse oil mining activities. In short, whether or not oil prices will rise substantially in the next decade, as a result of resource depletion, is an open issue. Environmental concerns, on the other hand, already exert concrete pressure on corporations to reduce their dependence on fossil fuels.

The Stuart Oil Shale Project in Australia

Background

In 1995, an Australian-Canadian joint venture invested (A$250 million) €159 million in an oil shale demonstration plant in Queensland, Australia, known as the Stuart Oil Shale Project (see Exhibit 7).23 The project planned several stages in development from a research and pilot plant through to commercial operation (see Exhibit 8).24 Many stakeholders were involved in a public debate about this project and oil shale in general. The major actors included the Australian Government (Federal and State), the project partners (Southern Pacific Petroleum and Suncor Energy), oil companies operating in Australia (British Petroleum, Shell, Caltex and Exxon Mobil), local stakeholders (residents, industry and local government) and Greenpeace.

Exploiting oil shale comes at a time when some oil companies argue that they are moving towards renewable energy sources and technology. However, because the demand for energy around the world will continue to increase into the future, most companies in the industry are expected to remain in the business for quite some time. Exploration, production and transportation operations will increase the pressure on the natural environment and local communities, not to mention the global impacts of fossil fuels on climate.

Oil companies have made significant efforts to deal with such environmental impacts (and concerns); some have even committed formally to sustainable development. Many oil companies now have environmental policies, environmental management systems and regular audits.25 Nonetheless, as public concern and debate grow, different reactions emerge.26 This became quite clear in the specific case of the Stuart Oil Shale Project in Australia.

22 The Economist. (1999) Drowning in Oil. The Economist. 6th March. 23 Exchange rate: 1 AUD = 0.636180 EUR. 24 Hogarth. M. (1999) Barrier Reef Given 40 Years to Live. The Sydney Morning Herald. 7th July. 25 Ketola, T. (1998) Why Don’t Oil Companies Clean Up Their Act? The Realities of Environmental Planning.

Long Range Planning. 31(1): 108-119.


Australian Government

The Federal and State Governments provided considerable grants and incentives to the Stuart Oil Shale Project.27 Such support opened the door to the possibility of further development. The generous support from the Australian Government can be explained by the significant oil shale deposits in Queensland, Australia, which contain an estimated 17 billion barrels of oil equivalent. In addition to the oil, it was estimated that 100 permanent, and 6,500 indirect jobs could have been created from the project.28

The total known liquid petroleum reserves in Australia are around 4 billion barrels. In case Australia does not find another alternative source (additional to liquid petroleum), self sufficiency is expected to decline from 90 percent in 2005 to below 40 percent in 2010.29 This sharp decline is expected to have negative effects on the Australian economy. The development of new sources of domestic oil is, therefore, of strategic importance for the Australian Government.

However, as the developments of the Stuart Oil Shale Project demonstrate, such projects encompass huge challenges for governments. The conflict between energy security from the national perspective and climate change on the global perspective were highlighted in a document leaked from Environment Australia and the Australian Greenhouse Office reviewing the Stuart Oil Shale Project in July 2002. The document stated:

“The project is currently facing difficulties marketing its product in Australia due largely to a campaign against shale oil by Greenpeace and other environmental NGOs which focuses on the potential contribution to greenhouse gas emissions posed by the use of oil shale.”

Environment Australia and Australian Greenhouse Office. (2002)

The considerable potential to exploit oil shale and the benefits to the Australian economy, as well as significant numbers of jobs, are opposed by concerns over the greenhouse gas emissions resulting from the use of oil shale. Not only did the government need to evaluate the Stuart Oil Shale Project in particular, but also the future of oil shale exploration in general in Australia. The Stuart Oil Shale Project, therefore, presented a daunting challenge for both the Federal and State Governments.

26 Ketola, T. (1998) Why Don’t Oil Companies Clean Up Their Act? The Realities of Environmental Planning.

Long Range Planning. 31(1): 108-119. 27 Hogarth, M. (1999) Barrier Reef Given 40 Years to Live. The Sydney Morning Herald. 7th July. 28 Environment Australia and Australian Greenhouse Office. (2002) Government Support for Oil Shale.

http://www.greenpeace.org.au/climate/overview/ 29 Environment Australia and Australian Greenhouse Office. (2002) Government Support for Oil Shale.

http://www.greenpeace.org.au/climate/overview/


Project Partners

Southern Pacific Petroleum

Southern Pacific Petroleum (SPP) was an Australian company founded by Sir Ian McFarlane in 1968, which specialised in the discovery and commercial development of oil shale deposits. The following outlines their business objectives:

“Our mission is to create value for our shareholders and other stakeholders through the rapid and responsible development of oil shale resources. We will do this by applying innovative technology and superior management while demonstrating environmental leadership.”

Southern Pacific Petroleum. (2000)

For SPP, the long-term development of the deposits in Queensland, Australia, has the potential to meet the oil import needs of Australia and in the future create an export market. The first stage of development in the Stuart Oil Shale Project had the capacity to produce 4,500 barrels of oil per day. After the second and third stages, the venture had the objective of increasing production to some 85,000 barrels of oil per day.30 Furthermore, they claimed that the venture to exploit the oil exceeded the most stringent environmental standards.

According to SPP representatives, the oil shale industry could provide a bridge to meet modern energy needs until a cleaner source of fuel is developed, which is viable and affordable. SPP made the following statement:

“Oil provides 92% of the fuel required for our cars and trucks and is the essential fuel for our planes and boats. For at least the next 15 years, Australia, along with all other developed countries, will be highly dependent on oil for all major transportation needs. Whilst governments around the world are investing heavily in developing new fuels that are less greenhouse intensive, this is expected to take at least a generation. In the meantime, we all remain dependent on oil.”

Environment Australia and Australian Greenhouse Office. (2002)

In order to mitigate the emissions of carbon dioxide, SPP proposed a massive tree planting exercise to create sinks to help reduce carbon dioxide – the major greenhouse gas – in the atmosphere. However, this proposal is challenged by many environmental groups. As a general proposition, any land where trees can be grown is land where trees used to be growing, in any case. So planting trees only pays back the historical debt for the original tree clearing. Offsetting fossil fuel emissions using typical tree planting schemes, is therefore not an adequate solution.

The only way to offset fossil fuel emissions is to use an avoidance or sequestration method that goes beyond normal tree planting – it would have to involve either paying someone else to use renewable energy instead of fossil fuel energy sources; sequestering carbon dioxide in the earth’s crust; building up soil carbon levels to much higher than would occur in nature; or 30 Environment Australia and Australian Greenhouse Office. (2002) Government Support for Oil Shale.

http://www.greenpeace.org.au/climate/overview/


planting trees in areas where they never grew in the last 8,000 years, or growing stands of vegetation that have biomass higher than what was there naturally over the last 8,000 years.31

In May 2002, the Chairman of SPP, Campbell Anderson, pledged their commitment to improve environmental performance in both their current and future plants, and submitted several initiatives asking for SPP to be judged on their ability to resolve their environmental problems, once identified.32 SPP argued that the Stuart Oil Shale Project had achieved a great deal in being able to improve their operations to ensure that they met, or were below, relevant environmental guidelines for emissions. Their broad sustainability strategy was communicated by highlighting several issues:

• Although the strategic implications of oil self-sufficiency for Australia are important, this should not be at the expense of good environmental management.

• SPP would not look for special dispensation as to plant emissions.

• Greenpeace claims that oil produced from shale is the most greenhouse gas polluting fossil fuel on earth, and four times more carbon intensive than conventional oil, is inaccurate; it should not be surprising that a more energy intensive process would produce more carbon, but in the combustion phase, the cleaner oil from shale produces less carbon than the lightest conventional oil.

• Design and engineering developments indicate that there are attractive opportunities to further reduce carbon emissions to less than 40%.

• Independent consultants confirmed that if required, they could offset this percentage gap through reforestation to be equal or less than the emissions attributed to conventional oils.

Suncor Energy

Suncor Energy has been a pioneer in the development of oil sands exploitation in Canada, and it is currently the single largest producer. The oil sands region in Canada holds an estimated 2.5 trillion barrels of oil, and approximately 300 billion barrels can be recovered under present economic and technological conditions.33 The company is also involved in natural gas exploration and production, as well as refining and marketing operations.34

In 1998, Suncor Energy helped to support the development of greenhouse gas emissions trading through an agreement with Niagara Mohawk Power. Under the terms of this agreement, Suncor Energy purchased (A$10 million) €7.3 million in greenhouse gas reduction credits.35 The reductions will occur as Niagara Mohawk Power switch from coal to natural gas, invest in renewable energy and promote smarter energy use by its customers.36

31 Sutton, P. (2005) Is it valid to offset carbon dioxide emissions by planting trees? http://www.green-

innovations.asn.au/ 32 Campbell, A. (2002) Greenpeace vs. the Future of Australian Oil Shale. http://www.smedg.org.au/ 33 Mathieson, D. and Yurkovich, T. (2002) The Canadian Oil Sands. The Drill Bit. July: 6-34. 34 Suncor Energy. (1999) Suncor – Niagara Mohawk Emission Trade. Calgary: Suncor Energy. 35 Exchange rate: 1 CAD = 0.730340 EUR. 36 Suncor Energy. (1999) Suncor – Niagara Mohawk Emission Trade. Calgary: Suncor Energy.


Suncor Energy has volunteered to offset some of its greenhouse gas emissions through this partnership. Suncor Energy37 states that the trade provides flexibility to pursue its growth strategy, while also meeting the demands of shareholders and its environmental responsibilities. For Niagara Mohawk Power, the agreement provides funds to invest in solar and wind energy in the USA.

Rick George, the President and Chief Executive Officer of Suncor Energy, states that oil companies must earn the right to operate by demonstrating economic and social benefits, as well as strict standards for environmental performance.38 In September 2000, to illustrate this point, Suncor Energy39 developed a list of criteria for evaluating oil shale ventures, including:

• A mandate from local, regional and national governments and the public to develop oil shale.

• Establishing performance standards acceptable to stakeholders that address the environmental and social dimensions of oil shale developments.

• Greenhouse gas management plans that align with future national and international commitments to address the risk of climate change.

• The capability to generate shareholder value.

In April 2001, after considerable investment in the demonstration plant for the Stuart Oil Shale Project, Suncor Energy pulled out of the development. Speculation surrounds the contributing factors for the end of the partnership between Suncor Energy and SPP. However, the withdrawal by Suncor Energy suggests that there were concerns over meeting their own criteria.40

Oil Companies

Exxon Mobil

For shareholders of Exxon Mobil, concerns over global warming and renewable energy only threaten profits. In 2003, a proposal to explore renewable energy options was rejected by 79% of shareholders, while another proposal calling for a report on climate change was also rejected by 78%.41 The Chief Executive Officer, Lee Raymond, believes that solar and wind power will probably not exceed a 1% share of the global energy market by 2020.42

According to Exxon Mobil, oil and gas, which represents about 60% of energy supplies today, will remain the major energy source into the foreseeable future.43 Such views partially explain why Exxon Mobil is among the energy companies flocking to Canada to explore opportunities to extract crude oil from the tar sands. Greenpeace has long been demonizing Exxon Mobil, identifying the company as one of the main villains of climate change. Exxon Mobil has a 37 Suncor Energy (1999) Suncor – Niagara Mohawk Emission Trade. Calgary: Suncor Energy. 38 Suncor Energy (1999) Suncor – Niagara Mohawk Emission Trade. Calgary: Suncor Energy. 39 Suncor Energy. (2000) Suncor Plans to Resolve Operating Issues at Oil Shale Project.

http://www.suncor.com/ 40 Greenpeace Australia Pacific. (2003) No Future in Shale Oil. Sydney: Greenpeace Australia Pacific. 41 Herskovitz, J. (2003) Exxon Shareholders Vote Down Environment Proposals. http://www.planetark.org/ 42 Herskovitz, J. (2003) Exxon Shareholders Vote Down Environment Proposals. http://www.planetark.org/ 43 Herskovitz, J. (2003) Exxon Shareholders Vote Down Environment Proposals. http://www.planetark.org/


reputation for supporting political groups whose agenda items include environmental deregulation and free trade.44

Due to their 50% ownership of the Rundle oil shale deposits near the Stuart oil shale deposits, and their previous joint venture agreement with SPP to invest in oil shale, Exxon Mobil (through their subsidiary, Esso Australia) became a main target of Greenpeace during the Stuart Oil Shale Project. Although the original plan was to commence their own mining of the Rundle oil shale deposits, in 1984 Esso Australia officially rejected these plans because of the declining oil prices at the time. Nonetheless, the company retained their 50% interest.

British Petroleum

More commonly known as BP, British Petroleum is a leading energy provider on global markets. As a company with a long history in oil and natural gas, petrochemicals, and in recent times, renewable energy, BP prides itself on being responsive to change. For BP,45 the strategy for solar technology is clear: “Our overriding aim is to create new solar markets where customers can confidently and cost-effectively exercise their preference for cleaner, renewable solar energy.” BP Solar is the largest manufacturer of solar electric products and systems in the world. But the challenge remains to expand the renewable energy market.

This change was reflected in the new logo for the company – the ‘helios’ (a green and yellow sunburst) – unveiled in July, 2000. They also changed their branding, with the company initials now being the lower-case bp (for the purposes of this case, British Petroleum shall be referred to in the upper-case BP), and the term ‘beyond petroleum’, featuring heavily in advertising campaigns. It is of interest to note that with this change of logo and branding, the name British Petroleum is not mentioned in any advertising or material from the company, perhaps to reposition itself as focusing on energy sources ‘beyond petroleum’.

BP is now cited as an example by environmental activists and politicians alike, as one of the energy corporations that have felt the negative consequences of investing in the Stuart Oil Shale Project. After purchasing a shipment of oil shale from the project, in November 2001, BP Australasia Regional President, Greg Bourne, wrote to Greenpeace stating that it “currently had no interest in further purchases” from the Stuart Oil Shale Project.46 This action follows statements by BP to the Australian Government, encouraging the ratification of the Kyoto Protocol and advocating the need to focus on a low carbon future.

Shell

Shell proclaims its commitment to sustainable development and further investment in renewable energy technologies. Established in 1997, Shell Renewables develops commercial opportunities in both solar and wind energy. Analysis of long-term energy forecasts by Shell suggests different possible routes to what it calls ‘decarbonisation’.47 The first case involves a direct path to renewables, with the support of gas in the medium term. The second case takes an indirect path, via a global hydrogen economy that grows out of new developments in fuel

44 Corporate Watch. (2002) Exxon Mobil Corporate Crimes. http://www.corporatewatch.org/ 45 Ernst and Young. (2002) BP and Renewable Energy. London: Ernst and Young. 46 British Petroleum. (2001). Renewable Energy. http://www.bp.com.au/ 47 Shell International. (2001) People, Planet and Profits. London: Shell International.


cells and other technologies.48 Whatever happens, it is clear that renewables play an important part in the energy mix in the Shell visions.

Although Shell distanced itself from the Stuart Oil Shale Project in Australia, they are still intimately involved in shale oil technology development within the USA. The Green River oil shale deposits, which are the most extensive in the world, stretching from Colorado to Utah and Wyoming, have the potential to produce five times the proven USA petroleum reserves. This has encouraged energy companies to reconsider their development of shale oil technologies (that were disregarded in the 1970s due to high capital costs), in the light of the present constraints of expensive foreign crude oil.

Shell privately owns a portion of the Green River oil shale deposits, which is the site for a project called ‘Mahogany’. Although shale oil has had many detractors, Shell argues that their current technology is quite different from the traditional processes used to extract oil. The benefit is that it reduces waste disposal through pumping out only lighter hydrocarbons, which Shell maintains is less damaging to the environment. However, this new method means that it will take longer to test the processes to ensure commercial viability. Rich Hansen, spokesman for Shell, emphasizes that ‘Mahogany’ is only a development project, but Shell are planning to build commercial facilities in the future.49

Caltex

As the largest refiner and marketer of petroleum products in Australia, Caltex has a very public image to uphold. Caltex stresses their commitment to sustainability and environmental management, using the example of their Clean Fuels Project, which was created in 2004 to ensure that they meet the Fuel Quality Standards Act and the more stringent fuel standards in the years to come.50 Caltex has also played a pivotal role in the Stuart Oil Shale Project.

After Caltex purchased some 50,000 barrels of naphtha in August 2001, the company was the target of significant lobbying by Greenpeace and other environmental groups to make a commitment of no further purchases from the Stuart Oil Shale Project. These environmental groups felt that the purchase by Caltex was a blatant contradiction of their environmental promises, specifically their pledge to sell cleaner fuels with fewer greenhouse gas emissions.

Greenpeace called upon public involvement with more than 2,500 members of the general public e-mailing the Managing Director to make this commitment. Initially, Caltex refused to bow down to these demands, and a national day of protest was launched in February 2002, with Greenpeace creating a spoof Caltex website with a send-up of the company logo. In a letter to Greenpeace, the Managing Director and Chief Executive Officer of Caltex threatened legal action to prohibit this activity, resulting in activists protesting at over 100 Caltex retail outlets. Caltex publicly ruled out any further purchases from the Stuart Oil Shale Project by September 2002.

48 Shell International. (2001) People, Planet and Profits. London: Shell International. 49 Chakrabarty, G. (2004). Shale’s new hope. Denver Rocky Mountain News. 18th October. 50 Caltex. (2004) Clean Fuels Project. http://www.caltex.com.au/


Local Stakeholders

Much of the Great Barrier Reef off the coast of Queensland, Australia, appears to be in danger, due to global warming and the resulting increases in ocean temperatures. The location of the Stuart Oil Shale Project near the Great Barrier Reef only intensified the concern by local stakeholders (such as residents, small companies, and the local government) about the negative impacts associated with oil shale.

Professor Ove Hoegh-Guldberg, a marine scientist at the University of Sydney who has conducted extensive research on climate change and coral reefs, believes that the rising sea temperatures will probably lead to mass coral bleaching on many reefs around the world.51 Bleaching occurs when coral organisms are stressed by excessive heat or other factors. They react by expelling the microscopic plants which live in their cells. Normally, this is a very successful symbiotic relationship, but without the plants the coral reefs will die. Bleached coral loses its natural colours and turns white. Professor Ove Hoegh-Guldberg has confirmed that heat stress is the main cause of bleaching, and it would take only a slight change in temperature to cause a significant impact.52

Many local stakeholders perceived that damage from coral bleaching could cause tourism and fishing losses of hundreds of millions of dollars. Many people depend on coral reefs for their livelihood, with tourism generating local jobs and considerable economic benefits. There were many submissions rejecting the continuation of the Stuart Oil Shale Project:

• Over 100 local residents took legal action for (A$12 million) €7.4 million in compensation for health problems and reductions in property values.53 Over 70 of these local residents claim to be affected from the dioxin air emissions.

• Over 14,000 people and 17 environment, tourism and fishing groups lodged written submissions to the State Government opposing the proposed expansion of the plant, a record for public submissions to the State Government.

• A total of 27 environment, tourism and fishing groups jointly submitted an assessment to the Fuel Tax Inquiry, calling for the Federal and State Governments not to approve any further development or increased financial support.

• The Environmental Protection Agency stated in 2001 that the Stuart Oil Shale Project was a public health nuisance.

• An 18-month investigation into the impact of the Stuart Oil Shale Project on local communities, carried out by regional development specialists, and completed in 2003, indicated that the extent of the environmental impact had been underestimated, and that there was the intractable problem of a noxious industry adjacent to a horticultural community.

51 Hogarth, M. (1999) Barrier Reef Given 40 Years to Live. The Sydney Morning Herald. 7th July. 52 Hogarth, M. (1999) Barrier Reef Given 40 Years to Live. The Sydney Morning Herald. 7th July. 53 Exchange rate: 1 AUD = 0.636180 EUR.


Greenpeace

Climate change and global warming have been in the news for some time now, and the principal issue of discussion at many international conferences. Greenpeace offers the following definition:

“Climate change is the warming of our planet, caused by humans. It is the worst environmental problem we face today. Most scientists and governments around the world now agree that climate change will damage or destroy many natural ecosystems and human communities.”

Greenpeace Australia Pacific. (2004)

The warming occurs because of increased amounts of greenhouse gases in the atmosphere, such as carbon dioxide. The gases around the earth normally trap heat and sustain life. This natural phenomenon is called the greenhouse effect, but industrial activities appear to be disrupting this process and causing accelerated global warming.54

Greenpeace argues that there appears to be new evidence to suggest that most of the observed global warming over the last 50 years or so is attributable to human activities. Many respected scientists from around the world believe that the initial impacts of climate change are apparent. Greenpeace55 highlight a number of these impacts, including:

• The 1990s was the warmest decade on record, and 1998 the warmest year ever. Both 2001 and 2002 were also extremely warm.

• Snow and ice expanses are decreasing as temperatures rise.

• Sea levels are rising and oceans are warming up.

• Local weather is more extreme with floods, droughts and storms.

• Plant and animal populations are shifting, trees are blossoming earlier and birds are laying eggs earlier.

From the very early stages of the Stuart Oil Shale Project, Greenpeace56 highlighted serious concerns about its possible expansion, including: greenhouse gas emissions from oil shale are nearly four times higher than from normal oil; and Australia faces significant increases in greenhouse gas emissions if it develops all its deposits. This would be in flagrant contravention of the target defined under the Kyoto Protocol (which the Australian Government has signed but not ratified).

The evidence that global warming is threatening reefs and ocean life, made the Stuart Oil Shale Project iconic for Greenpeace. It brought not only the impacts of global warming to the forefront, but also the debate over government subsidies for fossil fuels and the growing arguments for sustainable energy policies. As for the mitigation actions proposed by the

54 Hogarth, M. (1999) Barrier Reef Given 40 Years to Live. The Sydney Morning Herald. 7th July. 55 Greenpeace Australia Pacific. (2004) Climate Change Overview.

http://www.greenpeace.org.au/climate/overview/ 56 Greenpeace Australia Pacific. (2003) Coral Reefs Threatened by Climate Change. Sydney: Greenpeace

Australia Pacific.


Stuart Oil Shale Project partners, such as tree planting, Greenpeace57 argues that tree planting is not a long-term solution to climate change. The focus should be on prevention rather than inadequate cures.

Summary

Greenpeace initiated direct action against the Stuart Oil Shale Project in 1999, and the steady decline could be seen from then on (see Exhibit 9). Greenpeace was instrumental in rallying intense local support behind their cause to see the Stuart Oil Shale Project terminated, through highlighting the long-term impact of the project on the natural environment, as well as championing local issues such as community health. They also gained extensive media coverage through publicised protests at the project site and staging events to attract further attention.

Greenpeace also specifically targeted partners of SPP, blockading deliveries at Suncor Energy tar sands projects in Canada and calling for a public boycott of all Caltex service stations in Australia. As a result, SPP was unable to find domestic buyers for output from the Stuart Oil Shale Project, with BP and Shell publicly distancing themselves from the project and oil shale products.

During the 1990s, the Stuart Oil Shale Project seemed to have a promising future. The pilot plant, which was designed in 1990, drew government support in the form of an excise rebate. Shortly after, in 1995, Suncor Energy secured 50% of the Stuart Oil Shale Project in the form of a joint venture agreement. Construction of the pilot plant was completed by 1999, at a time when the full extent of the emissions from the plant was identified. This caught the attention of Greenpeace, who publicly stated that they would continue their campaign directly against Suncor Energy until they withdrew from the Stuart Oil Shale Project.

Suncor Energy withdrew from the Stuart Oil Shale Project in 2001.58 The official statement from the company was the need to focus on projects in its home nation of Canada. However, press releases from Greenpeace purported that it was their campaign to educate Suncor Energy and the public about the unsustainable industry, rather, that led to the retreat. The pressure from Greenpeace had been forceful from the outset, with public submissions to the government and widespread boycotts of SPP strategic partners. Due to public opposition of the Stuart Oil Shale Project, which resulted in a loss of contracts, and thus financial stability, SPP faced difficulties finding a new investor.

In April 2003, Sandefer Capital Partners were introduced to SPP in a bid to save the ailing company. An offer of around (A$30 million) €19 million was made, and the company Queensland Energy Resources Ltd (QERL) was created to take over SPP and the Stuart Oil Shale Project.59 Initially, it appeared that this new investment would inject enough capital to see the project through to completion; however, certain individuals behind Sandefer Capital Partners appeared not so interested in the project’s longevity, but in short-term profitability.

57 Greenpeace Australia Pacific. (2003) Coral Reefs Threatened by Climate Change. Sydney: Greenpeace

Australia Pacific. 58 Southern Pacific Petroleum. (2001) SPP purchases Suncor Energy interests in the Stuart Oil Shale Project in

Australia. http://www.sppcpm.com/ 59 Exchange rate: 1 AUD = 0.636180 EUR.


These individuals operated Ziff Brothers Investments, who are known for their formidable business dealings.

Within only a few months of involvement, receivers were appointed after Sandefer Capital Partners and Ziff Brothers Investments forced SPP into receivership. This is despite SPP not being in default on any of its loans. Although loyal shareholders were called upon, SPP was not able to outbid Ziff Brothers Investments when they bought back all the assets. In 2004, QERL announced the closing down of the Stuart Oil Shale Project. In a nutshell, what led SPP to bankruptcy was a combination of public opposition to the Stuart Oil Shale Project and unstable financial partnerships with offshore companies.


Exhibit 1 Assumptions in Energy Development (Cases A, B and C)

Case A Case B Case C

Population (billions) 199020502100

5.310.111.7

5.3 10.1 11.7

5.310.111.7

Gross world product (trillions of 1990 dollars)

199020502100

20100300

20 75

200

2075

220

Gross world product (annual percentage change) 1990-2050

1990-2100

High 2.72.5

Medium 2.2 2.1

Medium2.22.2

Primary energy intensity (megajoules per 1990 dollar of gross world product)

199020502100

19.010.4

6.1

19.0 11.2

7.3

19.08.04.0

Primary energy intensity improvement rate (annual percentage change)

1990-20501990-2100

Medium-0.9-1.0

Low -0.8 -0.8

High-1.4-1.4

Primary energy consumption (exajoules)

199020502100

3791,0411,859

379 837

1,464

379601880

Source: World Energy Assessment. (2000) Energy and the Challenge of Sustainability. New York: United Nations Development Programme.


Exhibit 2 Global Primary Energy Trends (Cases A, B and C)

Note: The figure also shows the wide range of future energy requirements for other scenarios in the literature. The vertical line that spans the scenario range in 1990 indicates the uncertainty across the literature of base year energy requirements. Source: World Energy Assessment. (2000) Energy and the Challenge of Sustainability. New York: United Nations Development Programme.


Exhibit 3 Global Primary Energy Consumption

Energy Source Primary Energy (Exajoules) Primary Energy (Percentage)

Fossil Fuels 332 79.4

• Oil 147 35.1

• Natural Gas 91 21.7

• Coal 94 22.6

Renewables 57 13.7

• Large Hydro 9 2.3

• Traditional Biomass 39 9.3

• ‘New’ Renewables 9 2.2

Nuclear 29 6.9

• Nuclear 29 6.9

Total 418 EJ 100.0 %

Note: All figures are for 2001. ‘New’ renewables include modern biomass, small hydro, geothermal energy, wind energy, solar energy and marine energy. Source: World Energy Assessment. (2004) Energy and the Challenge of Sustainability: Overview Update. New York: United Nations Development Programme.


Exhibit 4 What a Barrel of Crude Oil Makes

Product Gallons in

a Barrel

Gasoline 19.40

Distillate Fuel Oil 09.70

Kerosene-Type Jet Fuel 04.30

Coke 02.00

Residual Fuel Oil 01.90

Liquefied Fuel Oil 01.90

Still Gas 01.80

Asphalt and Road Oil 01.40

Petrochemical Feedstock 01.10

Lubricants 00.50

Kerosene 00.20

Other 00.40

TOTAL 44.60

Note: A barrel contains 42 gallons of crude oil. The total volume of products is 2.6 gallons greater because it represents processing gains. Source: American Petroleum Institute. (2002) Facts about Oil. http://api-ec.api.org/


Exhibit 5 Transport Dependency on Oil

Source: Southern Pacific Petroleum. (2000) Development of Stuart Oil Shale Project in Australia. http://www.sppcpm.com/


Exhibit 6 Crude Oil Prices (1998-2006)

10203040506070

jan-

98

jul-9

8

jan-

99

jul-9

9

jan-

00

jul-0

0

jan-

01

jul-0

1

jan-

02

jul-0

2

jan-

03

jul-0

3

jan-

04

jul-0

4

jan-

05

jul-0

5

jan-

06

jul-0

6

Dol

lars

per

Bar

rel

Forecast

Source: Energy Information Administration. (2005) Projections: Short-Term Energy Outlook. http://www.eia.doe.gov/


Exhibit 7 Map of the Stuart Oil Shale Project

Source: Sinclair Knight Merz. (2002) Stuart Oil Shale Project Environmental Impact Statement. Brisbane: Sinclair Knight Merz.


Exhibit 8 Stages of Development for the Stuart Oil Shale Project

Source: Southern Pacific Petroleum. (2000) Development of Stuart Oil Shale Project in Australia. http://www.sppcpm.com/


Exhibit 9 The Greenpeace Campaign

1968 Shale oil company Southern Pacific Petroleum (SPP) founded.

1974-1986 SPP discovers 10 shale oil deposits in Queensland, totalling 29 billion barrels of oil.

1979 Esso announces a joint venture with SPP at the Rundle shale oil deposit, just north of the Stuart deposit.

1983-1984 Esso decides not to proceed with plan to build a shale oil plant at Rundle but retains 50% interest in the Rundle deposit.

1987-1990 SPP develops plans for Stuart Shale Oil Project.

1991 The Federal Government agrees to provide a subsidy for Stage 1 of the Stuart Project of nearly A$55 a barrel and worth up to A$36.4 million a year until the end of 2005. In July, leaked Federal government documents reveal that none of the government departments consulted supported the subsidy.

1992

December The Federal Government classifies Stage 1 as a Research and Development Project, entitling it to extra tax deductions.

1993

January Queensland environment groups oppose the Stuart Shale Oil Project as part of the environmental impact assessment study for Stage 1.

1995

December Canadian oil company, Suncor, signs an agreement with SPP to develop the Stuart Project.

1996

August The Queensland Government grants Stage 1 mining lease.

1997

January-April The Queensland Government agrees to provide A$11 million worth of infrastructure for Stage 1. The Federal government provides a A$7 million START grant for Stage 1.

August Stage 1 construction begins.

1998

April In the worst bleaching event ever recorded on the Great Barrier Reef, over 1,000km of reef suffers extensive coral bleaching, caused by high temperatures resulting from climate change. It is part of a coral bleaching event that affects reefs around the world.

May/June Press reports reveal that the Great Barrier Reef Marine Park Authority is concerned about the environmental impacts of shale oil mining, and has been pushing the Federal Government to take action on the issue for over a year.

October Greenpeace halts construction at the Stuart Project for 36 hours by occupying key equipment.

1999 April Stage 1 commissioning begins – SPP estimates it will take 6-9 months.

July Greenpeace takes direct action to prevent testing at the Stuart Project for 48 hours. The Greenpeace report, Climate Change, Coral Bleaching and the Future of the World's Coral Reefs, shows that the world's reefs will be devastated by climate change in 70 years, unless greenhouse emissions are dramatically reduced.

August SPP lodges an Environmental Impact Statement (EIS) for Stage 2. Greenpeace's boat tour of coastal Queensland gains public support for the campaign against shale oil.


Exhibit 9 (Cont’d)

September Greenpeace releases briefings from the Great Barrier Reef Marine Park Authority to Federal Environment Minister Robert Hill, obtained under freedom of information. They show that SPP wants to mine shale oil in the Great Barrier Reef World Heritage Area during Stage 3. Suncor commits to never mine in the World Heritage Area but SPP refuses to make such a commitment.

October A cloud of toxic emissions is released from the Stuart Project, with serious health impacts on the local community. The plant is shut down immediately. The Stage 2 EIS is stalled as a result.

November The public submission period for the Stage 2 EIS ends. Greenpeace lodges a submission opposing Stage 2, together with 17 environment, tourism and fishing groups. Over 10,000 people make submissions opposing Stage 2, a record for any EIS in Queensland. An additional 4,000 people write to the Queensland Premier opposing Stage 2 during the Greenpeace boat tour.

December Stage 1 goes over-budget and the timeline for reliable oil production is delayed. The Federal Government extends the ban on mining, including for shale oil, to include the Great Barrier Reef Region, but not the World Heritage Area. This prevents shale oil mining in the marine environment at the SPP Condor deposit, but not at the company’s Stuart and Rundle deposits.

2000

January Greenpeace International and Greenpeace Canada join the campaign to stop the development of shale oil in Australia.

March Greenpeace Australia, Greenpeace International and Greenpeace Canada prevent the transport of a giant piece of machinery for Suncor’s oil sands project in Alberta, Canada. They call on Suncor to withdraw from the Stuart Project. Suncor CEO, Rick George, tells Canadian media that the Stuart Project 'is a relatively small investment and one that we have looked at, but not one that we're seeing as an absolutely sure thing'.

April Greenpeace Canada’s Executive Director addresses the Suncor AGM in Canada and calls on the company to move away from fossil fuels, such as shale oil, and invest in renewable energy.

May The annual Queensland environment groups’ conference passes a resolution calling on the Queensland Government to stop Stage 2 of the Stuart Project.

June/July Greenpeace lodges formal complaint with the Australian Stock Exchange (ASX) and the Australian Securities and Investments Commission (ASIC), alleging that SPP has misled investors about the future cost of the Stuart Project’s greenhouse emissions. The ASX decides it cannot rule on the complaint because it does not believe that greenhouse emissions currently have a financial value. Nevertheless, the complaint successfully raises the issue of greenhouse emissions in the corporate and financial sector. Greenpeace activists use bobcats to put stockpiled shale rock back into the mine pit at the Stuart Project, highlighting that shale oil should never have been dug up in the first place.

September Suncor announces its decision to defer the commercial development of the Stuart Project for several reasons, including its greenhouse emissions. Greenpeace pledges to continue the campaign until Suncor withdraws from the project.

November Greenpeace activists halt oil production and testing at the Stuart Project for two days. SPP and Suncor take out an injunction in an attempt to prevent further protest.

2001

February Greenpeace reveals that the Stuart Project could become Australia's largest known source of the toxic pollutant dioxin, with serious implications for the health of local people and the Great Barrier Reef. Greenpeace repeats its call for Suncor to withdraw from the Stuart Project.



April Canadian oil company, Suncor, pulls out of the Stuart Shale Oil Project. According to Suncor, "Until shale [oil] can be developed on a sustainable basis, meeting greenhouse gas emissions, meeting social commitments and meeting local environmental commitments, it just won't happen and Suncor won’t be part of it."

November Greenpeace activists delay the unloading of a shipment of shale oil for nine hours at Sydney's Port Botany.

December Over the past 3 months, Greenpeace activists distribute over 15,000 leaflets outside Caltex headquarters, informing the public of Caltex's purchase of shale oil.

2002

February Greenpeace activists distribute leaflets about Caltex’s purchase of shale oil at over 100 Caltex service stations in Adelaide, Brisbane, Melbourne, Perth and Sydney. Greenpeace also launches www.dirtycaltex.org Shell sends a letter to Greenpeace stating that despite being offered shale oil for purchase, it has 'not purchased this product, nor do we expect to do so'. Both local councils in the Stuart Project area recommend to the Queensland Government that Stage 2 should not go ahead because Stage 1 continues to negatively impact on local people, and has continuing environmental problems.

March 27 environment, tourism and fishing groups, including Greenpeace, make a joint submission to the Federal and Queensland governments opposing Stage 2.

May The Federal government announces a 12-month sales grant up to a maximum of A$36.4 million for exports of naphtha from Stuart. In July, leaked Federal government documents reveal that none of the government departments consulted supported the subsidy.

July Over 100 local residents take legal action for A$12 million in compensation from SPP and Suncor for health impacts and decline in property values because of Stage 1. Mobil signs a contract with SPP to buy all the naphtha produced from Stuart until the end of 2005.

September SPP releases a greenhouse gas strategy for shale oil, but refuses to release the data on which the strategy is based, making independent analysis of SPP’s greenhouse claims impossible.

October Greenpeace ship, MV Arctic Sunrise, arrives in Australia to highlight the risks posed by developing a shale oil industry, particularly the risk to the Great Barrier Reef from further climate change. Greenpeace activists hang a 20-metre banner on the Storey Bridge in Brisbane, reading 'Shale oil one day, climate change the next'. Read the press release.

November SPP announces a cost-cutting programme after less than 10% of the new shares offered in a rights issue were taken up, with SPP's own directors failing to take up 90% of the shares available to them.

December SPP sack 24 staff due to financial troubles.

2003

January Greenpeace activists delay the delivery of a shipment of shale oil to Mobil's refinery in South Australia. Mobil is the only oil company in Australia that is buying shale oil and is propping up this dirty industry. Production figures released by SPP reveal that the Stuart Project's 2002 oil production was less than 35% of the company's original forecast.

February The Australian Shareholders Association announces that SPP is one of its top 20 worst performers.

March SPP admits that "some industry members have been hesitant in seeking participation in the shale oil sector due to concerns over the release of greenhouse gas emissions. This concern has been heightened by a specific campaign by Greenpeace."



April An SPP-commissioned report by KPMG for the company's shareholders warns that investing in SPP is a "perceived risk" and that a "significant inducement" is required to persuade anyone to invest. The extent of SPP's financial plight is revealed when it announces it has sold between 42 and 51% of the company to obscure US energy investor, Sandefer, for only A$51 million. Within weeks of the announcement, Sandefer receives over 1,500 e-mails calling on him to withdraw his investment in SPP.

May US energy investor, Jeff Sandefer, faces protests at an SPP shareholder meeting in Brisbane and receives phone calls and faxes at his hotel from the public, calling on him to withdraw his investment in SPP.

June A report by the West Australian Government's Transport Energy Strategy Committee finds "the production and use of both shale oil and tar sands have significant adverse environmental impacts in terms of greenhouse gases, air pollution and waste material".

July Key environment groups meeting in Brisbane at the annual conference of Climate Action Network Australia pass a resolution calling on the Queensland government not to approve Stage 2.

August A Queensland government report finds that, without significant action to reduce greenhouse emissions, climate change will devastate the Great Barrier Reef in less than 50 years, significantly damaging Queensland's economy and its tourism industry. The Queensland Premier, Peter Beattie, receives over 6,000 e-mails in the following weeks, calling on him not to approve Stage 2.

September SPP is fined by the Queensland government for breaching the Stuart project's environmental licence four times in one month.

October A report funded by the Federal government describes the Stuart Project as "the best example of planning failure in Australia's recent industrial history".

November SPP halts trading in its shares as it announces it needs more cash. The Federal Department of Environment tells a Parliamentary hearing that SPP's statement in its recent Quarterly Report that it has addressed all of the issues necessary during the Stage 2 EIS process is "an optimistic suggestion from their [SPP's] PR department".

December SPP's receivers announce they are seeking potential purchasers for SPP's troubled Stuart Project and other shale oil deposits. SPP is forced into receivership by Sandefer. Leaked SPP board papers reveal that US energy investor and majority SPP shareholder, Jeff Sandefer, has threatened to place SPP into receivership within days unless it finds the extra cash it requires or hands over total control of the company to him for A$50 million. Papers also reveal that Robert Ziff of Ziff Brothers Investments is working with Sandefer. It is most likely that it is Ziff's money Sandefer is investing.

2004 In July 2004, Queensland Energy Resources announced an end to the Stuart Shale Oil Project in Australia. Greenpeace campaigned against the project, which would have produced oil with four times the greenhouse impact as oil from the ground, since 1998. The project cost millions of dollars in government subsidies, which should have been spent on renewable energy.

Source: Greenpeace Australia Pacific. (2004) Climate Change Overview. http://www.greenpeace.org.au/climate/overview/

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Documents

Greenpeace, the Oil Industry and the Stuart Oil Shale Project in Australia