Implementing Conservation Offsets in Canada: One Company's Perspective

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Information about Implementing Conservation Offsets in Canada: One Company's Perspective

Published on February 19, 2014

Author: IEUO



Written by Lorraine Brown, Emerging Regulatory Policy and Issues Advisor


OUTLINE 1. Introduction to Shell Canada 2. Business context for Sustainability 3. Business context for Conservation Offsetting in Canada 4. Shell’s Approach 5. Shell Canada Conservation Projects 6. Implementation Issues


SHELL IN THE WORLD  Headquarters: The Hague, the N etherlands  Parent company: Royal Dutch Shell plc  O perates in over 80 countries  Approximately 90,000 employees  43,000 Shell service stations worldwide  50% of production is natural gas  W e produce 2% of the W orld’s oil and 3% of its natural gas 4

THE CANADIAN UPSTREAM BUSINESS M a ck e n z ie G a s P r o je ct LIQ U ID R ICH S H A LES (LR S )  Exploration   Frontier/ emerging growth opportunity  Heavy O il (In Situ) Heavy O il (Mining) Unconventional G as/ Liquid Rich Shales Foothills Sour G as Frontier G as Monetization P EA CE R IV ER Co-venturer in 1220 km pipeline from Mackenzie Dellta. 100% interest in N iglintgak natural gas field,, one of the gas fields anchoring the MG G P.  Thermal and cold in situ production  Carmon Creek 80 kbpd thermal project in regulatory process G RO SM O N T W ES T CO A S T  N o current activity Technology is key Moratorium since 1970s  Major in situ opportunity  Major acreage position   A O SP  Mining JV (60%, Chevron 20%, Marathon 20%)  255 kbpd capacity on line K LA P P A N (cb m )  Moratorium O R IO N  O R P H A N B A S IN (CH EV R O N ) SAG D in situ S CO TFO R D U P G R A DER Uses hydrogen-addition technology to upgrade bitumen into synthetic crude oil Q uest carbon capture and storage project 20% SCAN position Deep water, harsh environment Located next to Scotford Refinery  Project in Select phase with FID in Q 1 2015     N on-operated exploration   LN G CA N A DA (Ex p o r t)  First phase - 12 mtpa S A B LE (EX X O N )  GRO UN DBIRCH    Large contiguous land base with existing infrastructure  Tight G as CA N A DA G R EEN CO R R IDO R (G fT) FO O TH ILLS  Market development underway  Deep tight gas  Four sour gas plants  Major growth opportunity  Mature operations  Distributed through Flying J  Four 100% (operated) deepwater exploration blocks, located 220 km SW of N ova Scotia coast  Deepwater, harsh environment LN G for Transport (truck)  Very mature N O V A S CO TIA O FFS H O R E / S H ELB U R N E B A S IN 0.3 mtpa LN G facility being built at JP  DEEP B A S IN G A S (B CG ) LN G for Transport (truck, rail and marine) Liquid rich  Market development underway  31.3% SCAN position  0.25 mtpa LN G facility onsite at Sarnia Manufacturing Centre N on-operated exploration  G R EA T LA K ES CO R R IDO R (G fT) 5

THE CANADIAN DOWNSTREAM BUSINESSES K EY S TR EN G TH S  Integrated “mine to motorist”  Leadership in cleaner fuels & biofuels  Sustainable Development focus (neighbours; compliance) R ETA IL  1,300 branded stations LUBRICA N TS  PQ S and Shell – Burlington, O ntario P LA N TS  Calgary (aviation greases)  Brockville (largest pmo) CH EM ICA LS  Scotford Chemicals Plants  Sarnia (Basel Energy IPA Plant) DIS TR IB U TIO N  14 Shell terminals across the country R EFIN ER IES  Sarnia (1952) bpd  Scotford (1984) bpd Retail Locations Refineries Lubes and G rease Plants Chemicals Bulk Fuel Terminals TR A DIN G  N atural gas, Power & Environmental Products  Crude O il  Refined Products 71K 92K B2 B  Aviation  Commercial Fuels  LPG  Marine  Sulphur LABRADO R CITY EDMO N TO N SCO TFO RD CHEMAIN US SAULT STE MARIE BRO CKVILLE MO N TREAL (2) BURN ABY (2) O TTAW A W IN N IPEG CALG ARY SARN IA HAMILTO N TO RO N TO KIN G STO N 6


THE NEW ENERGY FUTURE BY 2050 Rising energy demand, supply pressure, climate change 9 billion people, 75% living in cities (2 billion more than today) 2 billion vehicles (800 million at the moment) Many millions of people will rise out of energy poverty; with higher living standards energy use rises Energy demand could double from its level in 2000.. .. while CO2 emissions must be half today’s to avoid serious climate change Twice as efficient, using half the energy to produce each dollar of wealth 3 times more energy from renewable sources 8

THE ENERGY LANDSCAPE PROJECTED GLOBAL ENERGY DEMAND TO 2050 million barrels of oil equivalent a day 500 400 300 200 100 0 1980 Crude oil 1990 N atural gas 2000 Coal 2010 N uclear 2020 Biomass 2030 W ind 2040 Solar 2050 O ther renewables Source: Shell analysis, January 2012 9

INTEGRATED NATURAL GAS LEADERSHIP EX PLO RA TIO N & PRO DUCTIO N O n e o f th e w o r ld ’s la r g est g a s p ro d u cer s LIQ UEFA CTIO N LN G SHIPPIN G La r g est LN G su p p lier La r g est sh ip o p er a to r REGA S, PIPELIN ES, STO RA GE Str a teg ic p o sitio n s, a ctiv e p o r tf o lio m a n a g em en t M A RKETIN G & TRA DIN G Glo b a l p o sitio n s a n d ca p a b ilities TECHN O LO GY Lea d er in LN G a n d g a s co n v er sio n tech n o lo g ies Among International Oil Companies. 10

CONSIDERING NEW ‘BOUNDARIES’ 1. We risk taking the planet to a biophysical state of which there is no historical experience 2. There are non-negotiable (quantified) boundaries we should not exceed 3. Can we live within the planetary boundaries without any impact on development or well being? Rockstrom, J et al. A Safe Operating Space for Humanity (Nature 46, September 2009)

SHELL ROLE IN THE PROTECTION OF BIODIVERSITY ’S We all share the responsibility: Governments, corporations, organizations and individuals Increase in agricultural and residential footprints is the biggest problem, but energy plays an important role Recognizing these pressures, we look for ways to minimize our impact


MINEABLE OIL SANDS VS IN SITU OIL SANDS • Majority (~ 80%) of oil sands will be recovered using in situ methods • Involves drilling and recovering the bitumen “ in place” • Usually involves the addition of heat or steam to make the bitumen flow • Other 20% of bitumen closer to the surface is mined • Usually involves hot water to separate the oil from the sand 14

SHELL ALBIAN SANDS AT A GLANCE  Albian = Muskeg River Mine (MRM) + Jackpine Mine (JPM)  2,500 employees + thousands of contractors each month  MRM 155,000 bbls/ day capacity; officially opened June 2003  JPM 100,000 bbls/ day capacity; officially opened 2011  ~40 years production  Jackpine Mine Expansion just approved  Pierre River Mine undergoing environmental assessment AOSP = 60% Shell and 20% each Chevron & Marathon. Volumes on100% basis.


IN-SITU OIL SANDS PRODUCTION Pump Jacks MCC Manifold Building Well Heads

ENVIRONMENT IMP AL ACTS - LAND  Mining operations have bigger “footprint” than in situ beacuse the bitumen separation happens underground  Reclamation is done in stages but it takes several decades to complete  Reclamation work is constantly being done and we work with local Aboriginal people to ensure that once mining ends, the land will meet their needs as well  W e purchase lands elsewhere to offset our impact 18

ENVIRONMENT PERFORMANCE IMPROVEMENT PLAN AL Shell began its Environmental Performance Improvement (EPI) Program in 2011. We focus on the areas of CO 2, land and water. GOAL CO2 Fresh Water Land Equivalent intensity to average barrel refined in US No use of river water Net neutral land disturbance  Energy efficiency  O ptimize current use  Interim reclamation  Lower carbon energy  Brackish H2 O for insitu  Conservation offsets  Q uest CCS  Technology R&D  Tailings management  Business related offsets  Facility integration  O re recovery R&D 19

OUTSIDE ENVIRONMENT  Multiple agencies with policies and requirements  Changing environment for approval of major projects  Greater scrutiny of both the regulator and the regulatees  Litigation by Aboriginal and environmental groups November 2013 20

GOING “ GREEN” IS BECOMING THE ST ANDARD N et Loss/ G ain - Biodiversity Value + The old way – some level 2: impact was Requirement of Mitigation acceptable Impact recognized but Requirement 3: deemed in the Q“public interest” uantification The future – no net loss or net Requirement 3: C ompensation positive impact Additional C onservation Actions Biodiversity O ffsets Biodiversity and ES Impact Biodiversity and ES Impact Residual Biodiversity Impact Reinstatement Reinstatement Reinstatement Reinstatement Minimisation Avoidance Biodiversity and ES Impact Biodiversity O ffsets Minimisation Minimisation Minimisation Minimisation Avoidance Avoidance Avoidance Avoidance Avoidance Adapted from Rio Tinto

4. SHELL APPROACH ’S November 2013 22



SHELL CANADA AND CONSERVATION OFFSETTING Shell assesses and manages the environmental impact of our activities, including impacts to biodiversity and ecosystem services Shell follows the Mitigation Hierarchy in new projects Shell Canada has a significant portfolio of conservation projects dating back 20 years Shell supports the concept of Conservation Offsets as compensation for residual impacts in Critical Habitat Aspiring to Land Footprint Neutrality in Heavy Oil Upstream Business Actively leading advocacy to support implementation of CO in Alberta




6. ISSUES AND CHALLENGES November 2013 29

CHALLENGES TO ADDRESS  Service area – need for Government leadership  Landscape level or project specific  No Net Loss of what?  Agriculture and housing impact more than oil and gas  NGOs not aligned and/ or getting message across in support of CO  Policy development takes time… and investment is very dynamic  Alignment and cooperation between different levels of government November 2013 30

Q &A Footer Month 2010 31

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