Canada's Oil Sands Drilling a 'Slow-Motion' Gulf Spill

Out of the frying pan and into the fire? Offshore oil drilling, meet Canada's oil sands.

Proponents of this vast alternative oil source in Canada have wasted no time loudly pitching themselves as the great North American alternative to risky deepwater drilling in the Gulf of Mexico. Not a sheik in sight, and no oily sea turtles to boot, right?

Not so fast. Just two days ago my coalition of major investors and environmentalists, Ceres, released "Canada's Oil Sands: Shrinking Window of Opportunity." The report's lead author, Doug Cogan of RiskMetrics Group, calls oil sands production in Alberta's pristine boreal forest "kind of like the Gulf oil spill, but playing out in slow motion."

Heed the message: This is a risky undertaking on a scale with offshore drilling. Take it from a very large investor, CEO Jack Ehnes of the nation's second largest public pension fund, the California State Teachers' Retirement System (CalSTRS). Ehnes' fund is heavily invested -- at close to $2 billion -- in major oil sands players like BP, Shell, Exxon and ConocoPhillips. He's got to be there - a fund the size of CalSTRS invests across the entire global economy - but Ehnes says these companies "must do more to analyze the far-reaching risks from current and future production in Alberta."

Those risks include regulatory, environmental, permitting and distribution challenges that could undermine long-term revenues and profits from this mega project that already churns out 1.3 million barrels of oil a day.

One risk: emerging low-carbon fuel standards for transportation fuels - already in place in California and threatening to go national - makes this high-carbon brand of oil very risky, especially as oil sand producers look to double or triple production by 2030.

Another red flag: oil sands extraction is itself energy- and water-intensive. This makes it expensive and highly vulnerable to volatile energy markets and environmental regulations. In fact, water withdrawals for oil sands are already being restricted in the winter months. Alberta's government is also requiring oil sand miners to speed up remediation of highly polluted tailings ponds that already cover an area the size of Washington DC.

I'm not trying to turn off the oil sands investment spigot - which, at $200 billion committed already, makes this the world's largest energy project.

But a little common sense is in order - like, for instance, having oil companies evaluate each of these challenges much more closely, and sharing the findings with investors. Leading investors like CalSTRS requested such information in formal shareholder resolutions filed this year with ConocoPhillips, BP and Exxon.

They should also be pushing harder for new technologies to reduce the industry's goliath environmental footprint.

Lastly, they should be working closely with biofuel producers to develop commercial-scale advanced biofuels that they can blend with their high-carbon fuel in order to comply with low-carbon fuel standards. Failing to do so could leave the oil sands industry without its biggest customer - the United States.

So let's not jump from offshore drilling's frying pan into the oil sands fire without first getting a handle on the very real risks involved. After all, a "slow-motion" Gulf oil spill is still a disaster.

This article originally appeared at Huffington Post. Mindy S. Lubber is president of Ceres, a coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change.

Image CC licensed by Flickr user species_snob.