28th July, 2008

Rising oil prices have led to a boom in investment in the oil sands industry, which is 3-4 times more carbon intensive than conventional oil production. Despite Canadian regulations designed to reduce carbon emissions at oil sand production facilities, even high carbon costs will do little to dent the profitability of extraction from oil sands at prevailing oil prices.

The carbon intensity of the oil sands industry reflects the large amounts of natural gas and other fossil fuels burned during the production process. Oil producers which use more energy to produce oil from oil sands are more exposed to rising energy costs.

Trucost Plc, an environmental research company, has analysed carbon data from oil sands projects to identify which oil producers are more exposed to financial risk from energy and carbon costs. The research note, published today, highlights which oil & gas companies operating in carbon-intensive oil sands projects face a competitive disadvantage compared to peers that are more carbon efficient.

While energy and carbon efficiency is improving in the oil sands industry, carbon intensity varies widely among projects. The carbon intensity of eight projects analysed by Trucost ranges from 9kg CO2e per barrel of oil produced up to 106 kg CO2e per barrel. This intensity correlates with energy costs and potential profitability of each company’s oil sands operation.

Findings show the most carbon-intensive project to be at Syncrude Canada Ltd.’s Mildred Lake and Aurora North Plant. The project’s carbon intensity rose between 2004-2006, reflecting a rise in energy intensity. This indicates a reversal of its improving carbon performance with a reported 14% fall in GHG emissions per barrel between 1990 and 2004.

Muskeg River Mine extraction project, a joint venture between Royal Dutch Shell, Marathon Oil Corporation and Chevron, was ranked as the least carbon intensive.

Trucost CEO Simon Thomas notes that “higher energy costs for the oil sands industry can pose a risk to profitability. Projects with high and rising carbon intensity indicate that producers are not operating with optimum energy efficiency. Using Trucost data and analysis, investors can gain a better understanding of which projects are most carbon and energy efficient, and potentially offer greater profit opportunities.”

NOTES FOR EDITORS

About Trucost

Trucost Plc is a world-leading environmental research organisation which helps companies and investors understand the environmental impacts of business activities. Trucost provides data and analysis on company emissions and natural resource usage in financial as well as quantity terms to help investors, fund managers and analysts understand how environmental issues could affect companies' future earnings. Institutional investors use the information to assess the carbon or environmental footprints of their portfolios, to identify differences in performance, to address environmental risks and create structured products with lower carbon or environmental impacts.

Trucost tracks data on the environmental impacts and disclosures of over 4,000 companies and has the world’s largest record of greenhouse gas emissions. Coverage includes the FTSE All-Share, S&P 500, Russell 1000, Nikkei 225, DJ STOXX 600, MSCI World Developed, MSCI Europe, MSCI Asia ex-Japan and ASX 200 indices.

Trucost has offered expert advice and research to major corporations, institutional investors and to Government departments and associated agencies since its launch in 2000. Trucost’s investor clients include BlackRock, CCLA Investment Management, Crédit Agricole Asset Management, Environment Agency Pension Fund, Fond de Réserve pour les Retraites (FRR), Fortis Investment Management, GLG Partners, Henderson Global Investors, Hermes Pensions Management Ltd, Morley Fund Management, VicSuper and Merrill Lynch.

For more information on Trucost please contact:

Theo Moore, Brunswick Group
Matt O’Leary, Brunswick Group
Tel: 0207 404 5959
Email: Theo Moore