MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, MARCH 20, 1998 (4)
Public Perception Persists On Global Warming Threat
A lack of scientific consensus will not alter public perception of global warming as an environmental threat, a greenhouse gas panel concluded yesterday.
Although the existence of global warming may not be confirmed, approximately 50% of the population believes it is a fact, according to Dave Luff, vice-president of environment and operations for the Canadian Association of Petroleum Producers.
Speaking at the Society of Petroleum Engineers' annual gas technology symposium in Calgary, Dr. Robert Balling Jr., director of the climatology office at Arizona State University, told the audience no one knows exactly where the earth is headed in terms of climate change.
Balling criticizes the media for distorting the true global warming picture, blaming everything from blizzards to hurricanes on the greenhouse effect. He believes those who have studied climate change would conclude that there is no mandate for action at the present time.
"The climate is projected to heat up one per cent by the middle of the next century if business-as-usual continues, or one tenth of one per cent if emissions are stabilized at 1990 levels," he said. The difference would be imperceptible, Balling added.
However, environmentalist Mike Sawyer, noted that at this juncture, science has become a moot point. "It almost doesn't matter any more," said the president of the Rocky Mountain Ecosystem Coalition. "There's significant social and international consensus to move forward on the issue of global warming."
Regardless of the state of scientific debate, CAPP is sticking to the federal government's Voluntary Challenge and Registry program, which has commitments from 100 top companies that represent more than 96% of domestic oil and gas production.
Since 1995, industry has already reduced emissions by approximately nine million tonnes, Luff said.
Currently CAPP is lobbying the government for a transparent and collaborative process to establish credits for early action. "We need clear direction from the government that early action will not be penalized and will receive positive return on investment," he added.
One future challenge to meeting emissions reduction target will be the complexity of implementing a credit trading system, said Rod Sikora, pollution control coordinator for Gulf Canada Resources Limited.
Gulf is a participant in the VCR program and has helped to plan the strategy for dealing with the issue.
Although Gulf's goal is to stabilize emissions at 1990 levels by 2000, Sikora said that target is a lot tougher to reach than it sounds. "It's hard for a company of our size because strategies are constantly changing," Sikora exlained.
RMEC's Sawyer doubts the Kyoto target of a national six per cent cut from 1990 levels by 2008-2012 can be achieved.
Managing climate change from a public policy point of view requires setting thresholds, but thresholds can not be set without imposing social constraints, he said.
"There's not enough consensus in North America to achieve societal change. I don't believe society is prepared to incur the costs," Sawyer said.
Corporate Green Turns Red
Globe & Mail
Nobody even raised an eyebrow here this week at the Globe 98 environmental conference and trade fair when, before an audience of maybe 2,000 delegates, the CEO of one of Canada's leading energy companies endorsed the latest version of sustainable development, a radical interpretation that drags business even further to the left. In a speech that waffled through the big environmental issues of climate change and resource depletion, Michael Phelps, chairman and CEO of Westcoast Energy, veered off into a favourable interpretation of something called "The Triple Bottom Line."
If shareholders think Yves Michaud is a threat to the profit-making objectives of corporations, wait till they get a fix on The Triple Bottom Line. As Mr. Phelps tells it, there are more ways to measure business success than the old financial indicators of profit and loss. Indeed, one of the underlying premises of sustainable development -- the fuzzy socio-political theory created by a United Nations commission in 1987 -- is that the standard corporate and market measures of achievement were leading to environmental destruction and were therefore unsustainable. Sustainable development essentially said that profits needed to be supplemented with an environmental bottom line that would allow corporations to identify good corporate environmental behaviour. The result would be continued growth, but now it would be sustainable by making sure the environment was somehow preserved for future generations.
A lot of corporate executives publicly bought into the environmental branch of sustainable development. An industry grew, along with a lot of careers. Many corporations today even have managers or executives with sustainable development rolled into their titles. They also conduct environmental audits and hire consultants to noodle away over theories for a system of environmental accounting that would allow companies to calculate their environmental bottom line.
Whatever the merits of this effort, aside from creating careers for thousands in corporate environment departments, it is now considered inadequate. Two bottom lines are not enough. According to Mr. Phelps, there are in fact three ways to measure business success: the traditional bottom line of profits, the environmental bottom line and the "social equity" bottom line. "A balance must be found to link the triple bottom lines." He didn't explain how, but he said bridging the three bottom lines offered the solution to sustainability.
The idea that corporations need to be chasing three bottom lines did not originate with Mr. Phelps. Also appearing at Globe 98 was John Elkington, a British environmental consultant and one of a group of influential sustainable development gurus who are dedicated to conscripting corporations into becoming branch plants of the welfare state. At a seminar, Mr. Elkington outlined the themes of his new book Cannibals With Forks: The Triple Bottom Line of 21st Century Business.
The cannibals are the corporations that are constantly engaged in takeovers. This "corporate cannibalism" is disruptive, says Mr. Elkington, because it distracts business from pursuing its new role of carrying out its sensitive social mission. "The sustainability agenda, long understood as an attempt to harmonize the traditional financial bottom line with environmental objectives, is more complicated than some early business enthusiasts imagined. Today, we think in terms of a triple bottom line, focusing on economic prosperity, environmental quality and -- the element which many in business have preferred to overlook -- social justice."
The idea of "triple bottom line accounting," Mr. Elkington admits, is still embryonic. But he sees a time when corporations will be measuring performance on the basis of "social-value-added indicators," not unlike the measures developed by the business ethics movement in Canada. Corporations will audit their social justice performance by measuring whether they are fostering "community co-management," equality, tolerance, female board members, spirituality and even religious satisfaction.
How did green corporations, supposedly aiming to make a buck by bringing their profit-making drive to save the environment, end up on this third track and as the main theme of a leading CEO speech? The answer is in sustainable development. Supposedly an approach to saving the environment, sustainable development is in fact a blueprint for a transformation of global governance. Since its creation back in 1987 by a special United Nations commission, sustainable development has always been about transforming the world through an extensive global system of centralized economic planning and reduced reliance on markets and freedom. For some, it is more importantly about redistributing wealth from developed to developing countries, and increased use of government and centralized economic planning. The extent to which the environment is becoming less relevant to sustainable development was evident at Globe 98. Even climate change, which dominated much of the sessions, is seen by some as merely a vehicle for a larger social agenda. At an early session, Maurice Strong, who looms over the global machine driving out of the United Nations, said all the efforts to reduce emissions and save the environment efficiently should not lose sight of the main objective, the "overall goal." And that goal, he said, is to create a "new economic basis for flows of money to the developing countries."
But buying into sustainable development, Canada's business sector has set itself up for a takeover by an ideology that is completely at odds with its own best interests.
Companies Accept $143 Million Deal On Oil Royalties
Houston Chronicle
Several major oil companies have agreed to a $143 million partial settlement of a royalty underpayment suit filed by royalty owners, including the Texas Permanent School Fund, attorneys said Friday.
The agreement between major oil companies and royalty owners has been submitted to a federal judge in Corpus Christi for approval.
The class-action suit accuses the oil companies of conspiring to fix prices and underpay royalties. In the settlement agreement the oil companies do not admit guilt, lawyers for the oil companies said.
U.S. District Judge Janis Jack in Corpus Christi will review the deal. She has not indicated when her decision might be handed down, said Houston attorney Charles Kipple, who filed suit on behalf of royalty owners and others.
The settlement was reached before the class action went to trial in federal court. It is the result of several suits, including state actions, filed against oil companies for underpayment of royalties on oil production.
The suit's central allegation is that the oil companies calculated their payments on the posted price they set, which was lower than the fair market price.
The Texas General Land Office estimates that oil companies underpaid royalty owners anywhere from a few cents to $1.93 a barrel, based on a 1995 study of royalty payment structuring.
If the settlement is approved, hundreds of thousands of royalty owners across the United States will receive additional checks from oil companies.
"We believe it is a very handsome settlement," said Richard Carrell, a Houston attorney who represented Phillips Petroleum Co., Conoco and Kerr-McGee Corp.
If the judge approves the settlement, class members will receive letters asking them to notify the court whether they want to be included in the settlement, or opt out and continue to pursue their cases against the companies.
The Texas Permanent School Fund, which owns 18,000 wells, could be a big winner. The fund is estimated to receive about 10 percent of Chevron's $17 million settlement.
Several defendants have agreed to the settlement, including Amoco Corp., Shell Oil Co., Texaco and Chevron Corp.
Not all of the oil companies have agreed to the settlement, most notably Exxon Corp. and Koch Industries. They and others are expected to have their cases tried separately in Jack's court.
This latest settlement is not related to a previously announced settlement Chevron reached with the Texas General Land Office over alleged underpayment of royalties.
INTERNATIONAL
Nigeria to Commission New Oil Field
LAGOS (March 20) XINHUA - A new oil field with a daily production of
60,000 barrels will be commissioned in southeast Nigeria next Wednesday, media reports said Friday.
The developer, Elf Petroleum Nigeria Limited, said the Ofon oil field, located 60 kilometers off the coast of the Akwa Ibom state, has a reserve of about 160 million barrels.
Development of the field was launched in 1995 and has cost 300 million U.S. Dollars, said Francois Viaud, the Managing Director of the Elf Petroleum Nigeria Limited.
Nigeria is Africa's top oil producer and a member of the Organization of Petroleum Exporting Countries, with a daily crude oil production of over two million barrels.
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