A Strike Against Suncor and other Oil Sands Players (SU, CNQ, IMO)

Canadian Oil Sand companies such as Suncor Energy (NYSE:SU), Imperial Oil Limited (AMEX:IMO), Syncrude Canada Ltd. and Canadian Natural (NYSE:CNQ) not only have to worry about the volatile price of oil -- negative press and environmentalists could be the larger hurdle for them to conquer.

International Energy Agency (IEA) executive director Nobuo Tanaka noted that “world leaders gathering in Copenhagen next month for the UN Climate Summit have a historic opportunity to avert the worst effects of climate change” in a statement released following the publication of the 2009 World Energy Outlook.

This analysis also concluded that, if more efficient methods of production can be implemented on a large scale, Canada’s carbon-intensive oil sands will prove critical to satisfying global energy demand in coming decades.

At this point, oil sands production of 3.2 million barrels a day by 2020 seems more inevitable than a United Nations-brokered agreement on climate change. Global leaders managed expectations for a treaty down to zero even before they got to the Copenhagen Climate Summit, while Suncor Energy (SU), after its recent acquisition of Petro-Canada one of the biggest players in the oil sands, accelerated its efforts to reorient toward Athabasca.

This might sound like great news for Canadian oil sand companies but then there's the dark side of what the oil sands may be producing, worse yet is the media coverage.  Take this report on "an environmental disaster unfolding in northwest Canada." The region is rich in fossil fuels, but its so-called tar sands require energy-intensive -- and polluting -- processes to turn them into fuel. 

But wait, there's more.

Last February, the Alberta Cancer Board released a study that found higher-than-expected rates of some rare cancers among residents in Fort Chipewyan, about 700 kilometres north of Edmonton.

The study said the increases could be due to chance but could also be caused by environmental factors. The study suggested ongoing monitoring for the next five to 10 years.

Five to ten years, that's plenty of time to bank coin from the oil stocks and not worry about the impacts, right? 

Big Oil wins again.

Disclaimer: No positions in any of the securities mentioned in this publication.