U.S. Exxon lawsuit takes aim at Alberta oilsands over climate risks

The lawsuit charges that Exxon deliberately lowballed by $30 billion the carbon costs faced by 14 different Alberta oilsands operations it runs through its subsidiary Imperial Oil.

A lawsuit filed this week in a U.S. court says ExxonMobil has dramatically underestimated the risks its oilsands assets face from efforts to reduce carbon emissions.

The lawsuit, filed after a three-year investigation by the New York attorney general’s office, charges that Exxon deliberately lowballed by $30 billion the carbon costs faced by 14 different Alberta oilsands operations it runs through its subsidiary Imperial Oil.

“For one of these projects, an investment at Kearl (oilsands project near Fort McMurray), a 2015 economic forecast shows that the company understated projected .. costs of (greenhouse gas) emissions by as much as 94 per cent — approximately $14 billion,” the lawsuit states.

The legal action is a civil suit arguing Exxon defrauded investors by disguising its carbon liabilities. None of its statements has been proven in court and a statement of defence has not yet been filed.

In a statement, Exxon said it will seek to have the lawsuit dismissed.

“These baseless allegations are a product of closed-door lobbying by special interests, political opportunism and the attorney general’s inability to admit that a three-year investigation has uncovered no wrongdoing,” the company said.

The lawsuit alleges Exxon has for years told investors it was accounting for risks such as increasing carbon taxes and other regulatory measures meant to reduce oil demand and fight climate change. However, Exxon has proceeded using much lower estimates of such risks, called proxy costs, the claim says.

Exxon has also continued to count reserves as assets that are likely to become uneconomic as carbon prices rise, the lawsuit alleges.

It says Exxon told investors it was using a proxy cost of up to $80 a tonne by 2040 for countries such as Canada.

Related: Trans Mountain pipeline: The economics of oil

Related: Selected oilsands projects may avoid new environmental assessment rules

Meanwhile, management told employees not to apply the public proxy cost to projected emissions for planning and decision-making at oilsands projects in Alberta.

The attorney general quotes an Exxon planning supervisor, who noted in 2013 that the company based its decisions for Alberta’s Aspen mine on a carbon cost of $40 a tonne. The lawsuit alleges the company publicly said it was using a cost that reached $80 by 2040.

The lawsuit argues that after 2016, the company used proxy costs based on Alberta regulations existing at the time, which were closer to $5 a tonne. That cost was projected not to change indefinitely, despite the province’s current $30-a-tonne carbon tax.

The difference between the two figures adds up to $30 billion by 2040.

The lawsuit alleges Exxon also ignored the impact of carbon costs on the viability of its oilsands assets which the documents say make up a quarter of its oil reserves.

“In September 2015, an Imperial employee observed internally that applying the publicly represented proxy cost to evaluate company reserves at Cold Lake would ‘result in enough additional (operating expense) to shorten asset life and reduce gross reserves,’” says the lawsuit.

It claims the company’s analysis suggests applying the $80 standard that it was telling investors it was using would cut the economic life of Imperial’s Cold Lake facility by 28 years.

In an earlier court filing, Exxon said proxy costs aren’t the only way it factors carbon risks into project planning. It said it also adds how existing or expected climate policies affect operating expenses.

“ExxonMobil applies two related — but distinct — metrics to account for the impact of (greenhouse gas) regulations in business and investment decisions: proxy costs and GHG costs,” it said.

The company accuses the attorney general of misrepresenting and confusing the two figures.

“(The attorney general) persists in distorting key facts,” it said.

The lawsuit does not seek specific damages. It said Exxon should be forced to return money invested based on false representations.

Bob Weber, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

RCMP resort to spike belts to stop vehicle on Highway 5 near Barriere

After numerous complaints were received regarding driver’s behaviour behind the wheel Barriere and Kamloops RCMP use spike belts to stop vehicle

Police search for missing couple in Barriere area

A senior couple from the Lower Mainland have been reported missing

Barriere Secondary School holds Remembrance Day ceremony

Remembrance Day Ceremonies took place at Barriere Secondary (BSS) on Friday, Nov.… Continue reading

Bill Kershaw elected vice-chair of Thompson Nicola Regional District

Barriere resident Bill Kershaw was re-elected in October as the Thompson Nicola… Continue reading

Karpuk is the new chair of the Kamloops-Thompson school district

Veteran trustee acclaimed after no challengers emerged at inaugural meeting

Fashion Fridays: 5 coats you need this winter!

Kim XO, lets you know the best online shopping tips during Fashion Fridays on the Black Press Media Network

California wildfire death toll hits 63

Sheriff says hundreds still missing in nation’s deadliest wildfire

Harsh storms have nearly tripled power outages in last five years, BC Hydro says

More frequent and severe storms have damaged Hydro’s electrical systems since 2013

Trudeau to meet key Pacific trade partners at APEC leaders’ summit

Canada became one of the first six countries to ratify the CPTPP

Judge orders White House to return press pass to CNN’s Acosta

U.S. District Court Judge will decide on White House press credentials of CNN reporter Jim Acosta

WikiLeaks chief could see charges, US court filing suggests

Charges against Julian Assange could help illuminate the question of whether Russia co-ordinated with the Trump campaign

Federal MPs denounce controversial Facebook post targeting Sajjan

Okanagan Conservatives apologize for controversial Facebook post

Canada has enough pipelines to get the moon

Pipelines totalling 840,000 kilometres run across Canada

Migrants streaming into Tijuana, but now face long stay

U.S. border inspectors are processing about 100 asylum claims a day at the main border crossing with San Diego

Most Read