Oil Giants Demand Open Market for World's Dirtiest Fuel

A lobby group that includes BP and Shell in its membership has launched a legal challenge against low-carbon legislation in California that in effect rules out the use of oil from Canadian tar sands.
The action by the National Petrochemical & Refiners Association
(NPRA) comes amid growing political, investor and consumer pressure on
US oil companies not to participate in the carbon-intensive tar sands
of Alberta.

A NPRA statement
said the legislation was unlawful for a number of reasons, including
the imposition of "undue and unconstitutional burdens on interstate
commerce".

It claimed the legislation would also have "little or no impact" on greenhouse gas emissions nationwide and would harm US energy security "by discouraging the use of Canadian crude oil and ethanol produced in the American midwest".

The
refiners are joined by the American Trucking Associations and the
Centre for North American Energy Security in their attempt to overturn
legislation from California's governor, Arnold Schwarzenegger, who wants to cut C0₂ emissions from transport by 10% by 2020.

Shell's
chief executive, Peter Voser, recently announced plans to slow
investment in Alberta, though he denied this was anything to do with
environmental issues, saying it was a reaction to lower oil prices and a reduction in Shell's profitability.

The
company distanced itself from the NPRA legal action but did not express
its opposition to it. "Shell is not represented on the committees of
the National Petrochemical and Refiners Association that made the
decision to legally challenge the rules," said a spokesman in The
Hague. "We continue to work with the California Air Resources Board as
they refine rules and address outstanding issues."

BP also
claimed it was not associated with the court challenge. A spokesman for
the oil company in London said: "BP's membership in NPRA is limited to
specific issues related to the chemical industry."

BP has started
to spend tens of millions of dollars restructuring two US refineries so
that they can process tar sands crude imported from its operations in Canada.
There were reports over the weekend that BP is in $1.2bn talks to buy a
Canadian company called Value Creation, which has substantial tar sands
reserves.

Tony Hayward, chief executive of BP, told the Guardian in an interview this
month that he was confident tar sands would play a major role in future
US energy security. He played down suggestions that the US army, one of
the biggest single users of oil products in the world, might be
prevented by politicians from using fuel derived from tar sands.

Tar sands have risen fast up the political agenda since the Copenhagen climate change conference last December.

The
issue will also be discussed at the forthcoming annual general meetings
of Shell and BP. On the agenda are resolutions from the Co-op and other
investors questioning the wisdom of continuing their controversial tar
sands operations in Canada.

John Sauven, executive director of
Greenpeace UK, said he was pleased that investors were putting the oil
company on the spot, adding that exploitation of the tar sands would
become "a campaign battleground for years to come".