Friday, April 16, 2010

Canadian Government Forms Group To Make Heavy Oil Greener

OTTAWA -(Dow Jones)- The Canadian government said Friday it created a new multinational organization to research ways to make heavy oil production more environmentally friendly.

Several countries that produce heavy oil will participate in the Heavy Oil Working Group, officials said, including Canada, Brazil, Colombia, Mexico and Venezuela, as well as the U.S., which is a major consumer of heavy oil.

"This working group will provide a forum for Canada to demonstrate its expertise and share knowledge on oil development and technologies, including the oil sands," Natural Resources Minister Christian Paradis said. "We can keep this process viable with responsibility for the environment."

The creation of the group comes as the Canadian government and oil companies working in Canada are under increasing pressure from environmentalists to limit the growth of oil sands production. Heavy oil poses more environmental issues than conventional light oil due to potential contamination of water supplies and a higher level of greenhouse gases released during production. Oil sands is a particularly heavy type of heavy oil produced in northeast Alberta, and releases between two and three times as much greenhouse gas during production as conventional light oil.

Oil giants BP PLC (BP) and Shell (RDSA) are under pressure from shareholder resolutions demanding they scale back their operations in Canada's oil sands industry. One such resolution at BP was voted down by a large majority during the company's annual meeting Thursday, but activists have vowed to ramp up their campaign nonetheless.

Canada's new working group is also designed to help countries share techniques for heavy oil development; Canada is considered to be a pioneer in heavy oil production.

-By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@

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