July 25, 2005

Many environmental targets met or surpassed, Shell Canada reports in 14th progress summary

Achievements in reducing emissions, managing resources efficiently and maintaining regulatory compliance are presented in Shell Canada's latest (14th) Progress Toward Sustainable Development report for 2004. This year for the first time, the company has based its reporting, both in this document and other reports as well as on its Web site (www.shell.ca), on the 2002 Global Reporting Initiative (GRI) guidelines.

As both a producer and user of energy, Shell faces a major challenge in reducing greenhouse gas (GHG) emissions. Much of its strategy for meeting its reduction target (6% below 1990 emission levels for base businesses) is based on continuing improvements in energy efficiency. The main challenge here, notes the report, "is to implement energy efficiency measures while meeting other environmental commitments, when meeting those environmental commitments consumes more energy."

Shell's base businesses emitted a total of 7.9 million tonnes in 2004, a reduction of 145,000 tonnes since 1990 (1.8%). This was achieved through a series of aggressive energy efficiency projects at the company's refineries and gas plants.

Offsetting this accomplishment, however, were emissions resulting from growth in Shell's exploration and production businesses. Continuing growth will make achievement of the 2008 GHG reduction target (approximately 7.6 million tonnes) more challenging, notes the report.

A reduction target of 50% by 2010 has been set for the company's oil sands operations, which will make its emissions less than those associated with imported oil. In addition to energy efficiency measures, Shell plans to achieve this target by purchasing offsets and potentially through carbon sequestration.

The company reports its GHG emissions and emission reduction activities in more detail in its annual Managing Greenhouse Gas Emissions report, which may be viewed on its Web site (noted above).

At a total of $278 million, Shell's environmental expenditures for 2004 were the highest in recent years, taking into account a $132-million capital investment required to prepare its refineries for ultra-low-sulfur diesel fuel production. Environment-related operating costs, at $70 million, were somewhat lower than in 2003, as were restoration and reclamation costs ($40 million).

Goals and targets in a number of environment-related areas were met or surpassed during 2004. In energy use, for example, Shell surpassed its overall target (expressed as the Solomon Energy Intensity Index) with a rating of 87.1 for its refineries, well below the 92.5 target.

Energy use in its exploration and production businesses declined by 1.8%, surpassing, even if only slightly, the 1.7% target. During 2004 as well, Shell established an energy use baseline and an energy reduction plan for its oil sands operation, and has also set a waste management baseline for this operation.

The report notes that, as part of a water conservation initiative, Shell began tracking water consumption across its exploration and production and its products operations in 2003 and in its oil sands operations in 2003. This has enabled a baseline to be established, and the 2004 SD report is the first to include water consumption data: in all of these operations, Shell used a total of 31.1 million cubic metres (m3) of water, about four million m3 less than in 2003.

Other 2004 achievements included:

reducing benzene emissions from downstream operations to 37.4 tonnes in 2003 (the latest figures available), down from 42 tonnes in 2002;

reducing emissions of volatile organic compounds (VOCs) to 9.3 million tonnes in 2003 (also latest figures available), down from 9.9 million in 2002;

zero water effluent quality incidents with more than minor impacts;

no charges or orders received resulting from environmental incidents;

registration of oil sands facilities to the ISO 14001 standard for environmental management systems; and

completion of three-year re-registration of all ISO 14001-registered sites and businesses.

One area which will be the focus of concentration for future improvement is spills: the company recorded a higher-than-usual number of spills, although the total volume of spills decreased. In 2004, there were 53 spills one m3 or more in size, for a total spill volume of 444 m3, or 440,000 litres.

Most of these spills were contained on-site and recovered, resulting in little or no environmental impact, notes the report. There were no "priority" spills in 2004; these are defined as localized spills large enough to affect the environment.

With 27 spills recorded in its products business, Shell is focusing on reducing this figure in its 2005 plan for this part of its operation. Improved leak or spill detection capability has an important role to play in controlling spills, and Shell is implementing a program called "daylighting" at its terminals. This involves upgrading storage tanks and lines, moving them above ground and, where appropriate, making storage tanks double-contained.

The report notes that Shell's Sarnia facility was among those targeted by the Ontario Ministry of Environment's SWAT inspection sweep. Although the company was issued a provincial officer order, the team's inspection of the facility did not reveal any significant environmental issues. It did, however, single out adminstrative issues related to certificates of approval and required the site to improve facilities for handling laboratory product testing samples.

The 2004 Progress Toward Sustainable Development report, along with supplementary information, may be viewed on the Shell Canada Web site.

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