Posted by: Dr Pano Kroko Churchill | March 22, 2011

Light fighting the Darkness of Energy Finance in Tar Sands smeared Banks

Light fighting the Dark Ages of Energy Finance in Tar Sands and the smeared Banks is a story of hope and despair at the same time…

In a Leviathan struggle of the ages, Light vs Darkness still duke it out daily.

But where your money and future is involved, nowhere is this more clearly expressed than in the fight between fossil fuels’ dark Lords and the princes wanting to usher in a new age of Enlightment.

Because here are clearly the forces of Enlightenment fighting the Dark Ages of Energy insecurity of Stupid Finance and the gloom and doom of the oilers… bringing us to cook in a warming planet.

But we can focus o the upside too:

As an example take the new equity stake raised by Google in a new biofuels start up and on the other hand; the dirty oil money bets placed by RBS, RBC and many others to support BP and Shell in the tar sands of Canada.

Google has strengthened its position as one of the world’s leaders in innovative renewable energy technologies investment, shelling out an undisclosed sum as part of the latest funding round for California-based start-up CoolPlanetBiofuels.

This equity stake, which follows an $8m funding round last year led by North Bridge Venture Partners an including GE Energy Financial Services, will support CoolPlanetBiofuels efforts to produce a biofuel made from biomass such as grass and wood chips, which the company claims will result in a “negative carbon fuel” that removes carbon from the atmosphere.

“The company has come up with an innovative solution to one of the world’s biggest problems,” said Wesley Chan, partner at Google Ventures. “The technology is a win-win as the company is developing a sustainable and renewable energy source that also helps reduce the amount of carbon in the atmosphere.”

According to CoolPlanetBiofuels, its N100 fuel technology utilises a “revolutionary thermal/mechanical processor” to turn non-food crops such as grasses and crop residues to produce gas streams that can then be upgraded using catalytic processes to produce a hydrocarbon fuel suitable for use in conventional vehicles.

Significantly, this turns excess carbon into a high purity solid that can then be buried as a soil enhancer, sequestering the carbon for hundreds of years.

“Our process yields about the same amount of carbon as gasoline so, if we sequester this carbon as a soil enhancer, or simply bury it as coal, the associated fuel has a N100 negative carbon rating,” the company says on its web site.

CoolPlanetBiofuels president and chief executive, Mike Cheiky, said the latest funding from Google would now allow the firm to accelerate plans to scale up its team and operations.

The deal is the latest in a long line of clean tech early stage speculative equity investments from Google Ventures and follows the firm’s investment last month in energy efficiency company Transphorm and many others prior to this.

On the other end of the spectrum we’ve got the investments by RBS and all other old fashion and antiquated thinking banks into the Dark Ages of the Canadian Tar Sands. Talk about looking backwards and financing the past and death.

Still this RBS and RBC banking frenzy of tar sands enabling investment is what really causes the Tar sands rumored comeback. Same like Michael Jackson was wooed by Pepsi before his hair caught on fire and ascended to St Peter’s domain, self medicated with expensive black drug juice. Same black drug juice like the oil wringed out of the stones in Alberta Canada. Addictive stuff… since with the expensive oil generated these last few months, because at the trough of the last oil price cycle two years ago, with crude briefly below $33 a barrel, the Canadian oil stones or tar sands seemed in danger of being written off as a failed experiment and now – Oh baby – they rock again.

How times change is evident from the construction costs for new projects that had soared, as a consequence of trying to bring too much investment into a constrained area around the hub of the oil sands in Fort McMurray, Alberta Canada’s vast  pollution province headquarters.

While existing tar sands projects that had sunk their start-up costs long ago – the earliest goes back to the 1960s – were still commercially viable, new projects that had to put in place expensive facilities seemed utterly uneconomic. Some were said to need oil prices of $90 a barrel or more to show a profit.

The International Energy Agency of the UN, reported in 2009 that 15 planned developments in the Canadian oil sands had been put on ice, as a result of the economic downturn and the collapse in the price of crude, and there were signs, that the hiatus could be prolonged for a while.

Peter Voser, the chief executive of Royal Dutch Shell, which had been one of the most enthusiastic investors, said that the company’s expansion in the region would be “very much slower”, once its latest investment phase was over, as the group made a strategic shift away from high-cost “unconventional” oil.

Today, with the price of US crude three times that low of two years ago, the outlook for the Canadian industry looks brighter.

Without much fanfare, projects that were already under way when the downturn hit are coming to completion, and projects that were put on ice are being warmed up again.

Analysts at IHS Cera, the research group, estimate that at the height of the boom, in the summer of 2008, there were projects planned or already under way to add 2m barrels a day of production to last year’s total of about 1.4m-1.5m b/d. Today, those projects that are set to go ahead will add about 1.5m b/d, suggesting that only about a quarter of previously planned investment remains on hold.

After a couple of years of being embarrassed to talk to their investors about their Canadian commitments, leading international oil companies are once again promoting them as a source of strength.

ExxonMobil, the world’s largest private sector oil company by market capitalisation, has faced concerns that it is becoming excessively reliant on low-value US gas, following its $41bn acquisition of Texas-based XTO. It is answering that criticism in part by pointing to its Kearl oil sands project, which is due to come into production by the end of 2012.

Even Shell, which has its costly expansion of its Athabasca Oil Sands Project coming onstream this year, looks likely to commit itself to further investment in “debottlenecking” the project: installing new equipment to make maximum use of capacity.

The expansion is adding 100,000 b/d of production to take output to 255,000 b/d; the first phase of debottlenecking will add a further 35,000 b/d.

Shell’s move to spend its money more carefully on lower-cost adjustments to existing projects, rather than a grandiose development, is typical of the industry’s new approach.

The revival of the oil sands is being driven not only by the upturn in oil prices, but also by a smarter attitude to costs.

Fort McMurray remains a very expensive region in which to operate, but companies are now doing more to get round that problem.

“The industry has realised there is a limit to how much new capacity it can bring on at once,” says Jackie Forrest, the Calgary-based director of global oil at IHS Cera.

“Today we are seeing an upturn in investment in projects where the break-even oil price is about $60-$70 per barrel. So the economics make sense.”

Among the examples of this new carefulness about costs, she says, have been decisions over upgraders, the expensive facilities needed to convert the sludgy bitumen extracted from the oil sands into a saleable form of crude.

At one point, as many as eight of these multibillion-dollar upgraders had been proposed, and five looked likely to go ahead. Now just two such projects are under development.

Last December, Suncor of Canada and Total of France agreed a deal that reflected this new spirit, pooling operations in a range of oil sands developments and in Suncor’s planned Voyageur upgrader.

A joint venture between Britain’s BP and Husky Energy of Canada is another example. In 2007, Husky abandoned its plan for an upgrader, and signed up for a joint venture with BP that will pipe the bitumen (diluted with lighter liquids so it will flow) to the British company’s Toledo refinery in Ohio, to be processed into fuels there.

With the economics looking more favourable, environmental arguments may now return to the fore.

Opponents of tar sands development, need now to redouble their fight against the tar sands economic as well trying to figure out the economic additionality. Because if we are to discredit the financial basis for building more and more tar sand extraction plants in the Canadian territories, and stop investment flows there, we must make the case to the asset managers and the few remaining smart bankers of the nonsensical economics of the tar sands.

We must simply add up the costs of the Environmental damage, the CSR costs, the long term capital exposure from environmental disasters, to those existing overall costs of the tar sands. Then the prospects for Tar sands development stop looking rosy all of a sudden no matter what colour tinted glasses the oil cos executives and their friendly bankers wear…




And in the interest of elucidation, transparency and confident investor direct action, we are shedding some light Fossil fuel Energy Finance.

Here are the offending banks. let tham know what yiu think of their practices at their Annual Shareholders Meetings and every day emailing the CEO and the Bank’s executive board of governance.

You never know when You might break the net with your missives or tip the balance and shame them into doing the right thing and letting the tar sands alone…

Worth while investigating the end point too.

The shaming list for the Perps works well too.

And as an ode to the  “rank ‘em and spank ‘em” strategy, by RAN, we present the following illustration by Stefan Loren:


Here follows the roster of international banks backing expansion in the Canadian tar sands.

Each of these banks received letters from RAN, IEN and BankTrack late last year requesting information about how they are addressing the damage caused by tar sands development.

Responses (or lack thereof) will help us identify which banks are serious about responsible banking, and which may need more convincing.

Responses received to date are also linked in the table after the jump.

UPDATE: There’s been some questions about how these numbers are derived.  We have answers, following the table.

Rank Bank
Loans (Million USD)*
2 JP Morgan Chase
3 Citi
4 TD Securities
6 Bank of America
8 Scotia Bank
10 Wells Fargo
11 Barclays
12 Société Générale
14 BNP Paribas
15 Intesa Sanpaolo
16 Sumitomo
17 Calyon
18 ING
19 KBC
20 Mizuho
21 Credit Suisse
22 ANZ
23 Mitsubishi UFJ
24 Rabobank
25 WestLB
26 Standard Chartered


The table below is based on credit extended and underwritten by each bank to companies operating in the business of Canadian tar sands since 2007 according to Bloomberg.

Restrictions at Bloomberg prevent us from publishing deal-by-deal details to the web, but are available upon request if you leave your email in the comments.

The totals are based on underwriting league tables reported by Bloomberg.

Totals are derived only from loans to companies with significant operations in the tar sands.

Specifically the companies listed below. Totals may not reflect actual lending.

Totals represent the full value of loans where the bank acted as lead book-runner (also called managing underwriter, lead manager, etc…).

Where the bank was one of multiple lead book-runners, value is awarded pro-rata.

Here are the details from Bloomberg.

Please look under “fixed income eligibility criteria.”

And here are the perps doing the perp walk albeit without cuffs…,  yet.

Athabasca Oil Sands Corp
Baytex Energy Trust
Bonavista Energy Trust
BP plc
Bronco Energy Ltd
Canadian Natural Resources Ltd
Canadian Oil Sands Trust
CanWest Petroleum Corp
Cenovus Energy Inc
Chevron Corp
China National Petroleum Corp
Connacher Oil & Gas Ltd
Devon Energy Corp
Enbridge Inc

EnCana Corp
Enerplus Resources Fund
Exxon Mobil Corp

Harvest Energy Trust
Husky Energy Inc
Imperial Oil Ltd
Inter Pipeline Fund
Kinder Morgan Energy Partners LP
Koch Resources LLC
Korea National Oil Corp
Marathon Oil Corp
MEG Energy Corp
Mocal Energy Ltd
Murphy Oil Corp
Nexen Inc
Nippon Oil Corp
Occidental Petroleum Corp
Oilsands Quest Inc
OPTI Canada Inc
Paramount Resources Ltd
Pembina Pipeline Income Fund
Pengrowth Energy Trust
Penn West Energy Trust
Petrobank Energy & Resources Ltd
Royal Dutch Shell plc
Sinopec Group
StatoilHydro ASA
Suncor Energy Inc
Syncrude Canada Ltd
Total SA
TransCanada Corp
UTS Energy Corp

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