Oil sands are deposits of clay, sand, water and bitumen – i.e. oil in a solid or semisolid state. Bitumen requires unconventional extraction methods to get it to thesurface, and ‘upgrading’ to convert it into synthetic crude oil. Most of the world’s oil sand resources (about 80%) are located in Alberta, Canada1.
The oil sands industry receives much international criticism because of its heavy social and environmental impact, which can in turn generate complex legal, regulatory and social risks to shareholder value.The future of the oil sands industry remains uncertain. While the low price of oil has pushed some energy companies out of Canadian oil sands, and controversies surrounding the resource have also affected banks, fossil fuels and oil sands in particular remain an important source of revenue and energy for Canada.
This paper examines the social and environmental impact of oil sands production, providing insights from Vigeo Eiris’ research and analysing different perspectives on future industry developments.23 out of 161 oil & gas companies included in Vigeo Eiris’ research universe were identified as having involvement in oil sands operations. An observation that might seem paradoxical is that companies in Alberta demonstrate particularly well formalised commitments backed by a wide range of KPIs. This behaviour is explained by a close public scrutiny and Alberta’s strong regulatory system and compliance requirements.