BP feels oilsands heat from shareholders

BP PLC is facing a rebellion from major shareholders over its involvement in Canada's oilsands, with campaigners demanding more detail on the environmental impact from tapping the huge energy resource.

Institutional and individual investors proposed a resolution at the company's annual general meeting Thursday in London, England, calling for a review of the company's plans to extract oil from the vast oilsands in northeastern Alberta.

A British shareholder rights group called FairPensions is leading the charge and expressing skepticism about BP's assumptions on future oil demand and carbon emissions.

"Oilsands are something that is a big concern with environmentalists, but it's also a big financial concern too," FairPensions spokesman Duncan Exley told the CBC when the group launched its campaign against BP in February. "The investors are very concerned that BP has not reassured them about the costs of carbon capture and storage, or about the costs of expected emissions.

"It is looking at some of the events in the future which is only right for long-term investors," Exley said.

Project plagued by delays

BP says the Sunrise project — a joint venture with Calgary-based Husky Energy about 60 kilometres northeast of Fort McMurray, Alta. — has the potential to sustain production levels for many decades.

But the project has been plagued by delays. On Thursday, the company again vowed to make a final decision on whether and how to proceed before the end of 2010.

The U.K.-headquartered petroleum giant adds that it will mitigate some of the harmful environmental effects and emissions from the oilsands.   

Compared to other major global oil companies, BP hasn't been a major player in Alberta's oilsands, which has one of the world's largest known reserves — albeit in a form that requires extra processing than conventional oil.   

Last month, BP announced it would sell a 50 per cent stake in its Kirby leases for $500 million US to Devon Energy Corp., an Oklahoma-based company that already has an oilsands project in the same area.   

Devon said it has committed to fund an additional $150 million US of capital costs for the Kirby project and operate it on BP's behalf, said it plans a multi-stage development that will use steam to soften and extract the bitumen.   

The BP-Devon oilsands deal was a small part of a much larger deal between the two companies in which BP agreed to pay $7 billion US to buy exploration rights in several countries from the American company.