Cameron Wigmore, Green Party Member: Oilsands: Burning Energy To Produce It

September 21, 2006

Oilsands: Burning Energy To Produce It

This image of the oilsands in northern Alberta links to an interesting video on oilsands development.


I wrote the following letter as a submission for the oilsands consultations that are taking place around Alberta. If you wish to make your voice heard, now's the time. Contact oilsandsconsultations@gov.ab.ca or call 1-877-644-4695 or go to http://www.oilsandsconsultations.gov.ab.ca/ for more info.

I want to add that in the 2006 Green Party platform it stated that
the GPC would create thousands of new "Green collar jobs" by encouraging the development of low-emission industries in areas most affected by the shift away from natural resource sectors. Yes, my friends who work in the patch can vote Green knowing that they won't be out of work under a Green government.

- - -

To whom it may concern,

My name is Cameron Wigmore and I am writing this letter to you as a concerned Canadian. If it's possible, I would like to request for this to be read aloud by someone during the consultations please. I would be pleased to know that you have a system in place that allows people to be easily and readily heard.

It is my opinion that we are doing too much too quickly. What's the rush? If I were to ask the oil companies this question I imagine their answer would be profit related. It would be nice to see companies in the oilpatch taking the social and environmental implications of their business into consideration, but since the government says they don't need to do so, the companies don't worry about it. Why would they? To be fair, I realize that doing so would cut into their profits, and as a small business owner myself I can understand why a company would want the regulating bodies to stay out of their business so they can do what they want as quickly as they see fit. Sustainability doesn't fit in their equations. But it is in our best interests to regulate this industry properly. In this case it is my opinion that we can strengthen our economy by conserving our ecology.

This brings me back to my question. What's the rush? If I asked the city councillors in Fort McMurray or other negatively affected communities I'm sure I'd get an earful about how the government has been irresponsible in allowing, even promoting, such development and damage. I'd hear that many other people agree that we're doing too much too quickly. I remind everyone that recently the Regional Council for the Municipality of Wood Buffalo, which includes Fort McMurray, voted unanimously to apply for intervener status on any and all new oil sands projects coming before Alberta’s Energy Utility Board. Their infrastructure, police and social services are overstrained and woefully inadequate in the wake of this boom. They can't keep up with the pace set by the provincial government and this is a case where a municipality has taken matters into their own hands.

So let's ask the provincial and federal governments. What's the rush? Why are we doing so much so fast? Why are we moving forward with inadequate environmental impact studies being done? Why are vast areas of boreal forest being eliminated with no indication that we can ever restore this land? Yes, we can reclaim it, but I urge everyone to research what qualifies as land reclamation. Why are we allowing this extremely financially profitable activity to occur while we reduce royalties and taxes on oilsands development? Why should I believe that the companies, the government or even the organizations charged with ensuring public safety and proper activity regarding the oilsands share my concerns and wishes? To be clear, my wish is for no further leases to be issued and for current development to be properly examined for environmental impact.

To paraphrase James Howard Kunstler in his book entitled The Long Emergency, "The profits of a generation of speculators will be converted into costs passed along to future generations in the form of lost jobs, squandered equity, and reduced living standards. This is a convoluted liquidation sale of the wealth of the Earth for the benefit of a few people, with the average family sentenced to a race to the bottom as the economic & environmental assets are dismantled and sold off and livelihoods are closed down." Think about this. This is happening.

The economy is a wholly owned subsidiary of the environment. In other words, ecology isn't a subset of the economy; it's the other way around. We need to transform our economy so that it respects ecology and gives us a healthy country with healthy Canadians. If we continue business as usual without accounting for and charging for the irreparable ecological damage that is occurring then we are practicing bad government and bad business.

I'll close this letter with a few quotes. My favourite and probably the most relevant is last.

"What many now call 'growth' will soon be seen as accelerated decay."

"Anyone who thinks that an economy can be expanded forever, within the confines of a finite planet, is either a madman or an economist"
Economist Kenneth Boulding

"Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all."
Economist John Maynard Keynes

"Environmental injury is deficit spending. It’s a way of loading the cost of our generation’s prosperity on to the backs of our children."
"To waste and destroy our natural resources, to skin and exhaust the land instead of using it so as to increase its usefulness, will result in undermining in the days of our children the very prosperity which we ought by right to hand down to them."
"Where there is no vision, the people perish."
Proverbs 29:18

Sincerely,
Cameron Wigmore
Drumheller, AB
CEO, Crowfoot EDA
403-770-2962

9 comments:

Anonymous said...

Another good letter.

JEFFREY SIMPSON

FORT McMURRAY, ALTA. -- All three levels of government are running to catch up with the explosion of Alberta's oil sands.

The municipality of Wood Buffalo can't cope with the burgeoning population that requires more roads and housing. The federal government, now operated by the Harper Conservatives, is asleep at the switch on greenhouse-gas emissions, a global problem to which the oil sands make a contribution. And the Klein government, soon to be run by someone else, is behind on almost every aspect of managing the oil sands, except approving more projects.

Alberta needs better approaches for environmental regulation, reclamation requirements for land devastated by oil sands mining, water use, municipal infrastructure, social services and royalties.

The Klein government indirectly recognized that the oil sands explosion had caught it by surprise by establishing an advisory group on the oil sands, including a panel touring northern Alberta to hear what residents and companies think should be done. The group's report will be given to the government in June of 2007.

This week, the panel heard evidence in Fort McMurray. Not many citizens attended, but representatives of the major companies did, as well as a few environmental activists and local organizations.

The cleavage between the oil sands companies and many of the other intervenors was obvious. The oil sands companies essentially said: Let's carry on. Environmentalists replied: Whoa. And the municipality, burdened with the costs of growth, largely sided with the environmentalists, saying: Enough for the time being unless the province heaps more money on us.

The panel is supposed to develop a "vision" for the oil sands future. Like all vision exercises, the report risks bathing in a sea of platitudes, because every intervenor applauded "sustainable development," aboriginal participation in the oil sands work force, and a predictable investment climate.

What business fears are shifting requirements and tougher regulations. Every business representative lauded technological advances that sprang from research and experience. These experiences had improved the environmental performance (and bottom lines) of companies.

There were the usual red herrings, including that capital was mobile and might shift somewhere else if excessively burdened in Alberta. So much money has been committed in northern Alberta that it's not going anywhere, especially when current and projected oil prices, combined with improvements in technology, have made the oil sands quite profitable.

What might slow projects (some have already been delayed) are soaring costs for labour and materials, a reflection of an overheated economic sector. These costs have nothing to do with regulation and everything to do with shortages caused by hell-bent development.

But the oil sands companies, judging by their presentations to the panel, fear further regulations, especially environmental ones. Only one, Suncor, spoke positively about getting more serious about greenhouse-gas emissions through a carbon cap and trade system.

They all agreed that a pause in oil sands development would be bad for them, the province and the country. "Make hay while the sun shines," advised the Petro-Canada spokesman. As for environmental concerns, each insisted that his company was making progress, using less energy to produce a barrel of oil, introducing new scrubbers for smokestacks, taking more care with tailing ponds.

This being Alberta, these arguments might ultimately sway the panel -- and if not the panel, then a provincial government that is politically thick with the oil patch.

Cynics might say the panel's very creation was a calculated political move to channel public concerns about the costs of oil sands development onto a consultation process that will produce a report quickly forgotten. But there are legitimate concerns that Alberta has let oil sands development rip, rubber-stamping just about every project, and selling leases with merry abandon, without figuring out how to manage the boom. It's true that the province needs a better strategy for coping with the pressures of the oil sands developments, but it also needs a vision of how to use the money these developments are producing. The lack of such a vision was among the reasons the Conservative Party is getting rid of Ralph Klein.

Alberta could become, under different leadership, a worldwide leader in sustainable development, using the oil sands as a catalyst. Little of what the panel heard this week suggests that kind of creative thinking is framing public debates.

The Anonymous Green said...

Hi,

I note you are in Alberta. Can you make the case for me why the Green Party should pull out of NAFTA?

I've made a few notes ghere:

http://theanonymousgreen.blogspot.com

Thx - and feel free to invite strong proponents - I'd like to understand what the rationale is.

Cameron W said...

I've noticed that the Globe & Mail has been very unfriendly and biased against the Green Party.

I'll make a case for the renegotiation of NAFTA, which is what the resolution called for.

These are the two relevant resolutions that passed at the GPC AGM (they still have to be ratified by the general membership by mail in vote)...

Fair Trade, Not Free Trade
BE IT RESOLVED THAT the Green Party of Canada recommits to the general international Green principle of fair trade and not free trade, a central focus of the international World Social Forum to which Greens and environmental movements have been strongly committed.
BE IT FURTHER RESOLVED THAT the Green Party of Canada recommits to its historic policy of promoting new international trade and investment agreements that promote human rights, labour rights, social justice, peace and protection of the environment and recognizes the right of less developed countries to use protective tariffs to advance self-reliance.

BE IT FURTHER RESOLVED THAT the Green Party of Canada recommits to the cancellation of the debt of less developed countries and the restriction on continued wealth transfers from less developed countries to the rich countries

NAFTA
BE IT RESOLVED THAT the Government of Canada should immediately provide the required six months' notice of its withdrawal from NAFTA. If negotiations ensue, the minimum necessary terms for Canada are: elimination of the chapter 11 clause; the removal of the proportionality clause on energy exports; a guarantee that bulk water transfers are exempt; and inclusion of binding social environmental standards within that agreement.

- - -

From the GPC 2006 platform...

Fair Trading with our Global Neighbours
http://main.greenparty.ca/article101.html
Green Party MPs will work to:

* Renegotiate our multilateral trade agreements, such as NAFTA and the upcoming FTAA, to include fair trade tariffs that work to protect human rights and our ecosystems, as well as terminate investor-state dispute mechanisms that erode Canada's sovereignty and environmental laws.
* Propose a reform of the WTO, the IMF and the World Bank, placing these institutions under the authority of the UN general assembly, and shift the direction of international trade away from "free trade" to "fair trade" focusing on the global protection of human rights, labour standards, cultural diversity, and ecosystems.

A media release from a year ago...
Re-negotiate NAFTA or exit deal
http://www.greenparty.ca/announcement54.html

- - -

FROM THE WINNIPEG FREE PRESS

Harper falls in line behind U.S. interests

Wed Sep 6 2006

FRANCES RUSSELL

PRIME Minister Stephen Harper is moving at warp speed to integrate
Canada's security, defence and foreign policies with the U.S. and
shred our competitive advantage over the U.S. in lumber and wheat.

Days before Ottawa bludgeoned Canada's lumber industry into the
deeply flawed softwood lumber agreement, The Vancouver Sun published the details of a "leaked" letter from the Bush administration to the U.S. lumber lobby. In it, the American administration confirmed that its objective was to hobble the Canadian industry for seven years.
Nor does it end there.

Fully $450 million of the $1.3 billion in illegal duties the
Americans will get to keep will grease re-election wheels for
protectionist Republicans facing tough fights in upcoming midterm
congressional elections. Canada's timber industry will thus be forced
to subsidize an ongoing, illicit, attack on itself. All with the
explicit consent of the Canadian government.


There is more. When the industry balked, the Harper government used
intimidation -- a now-familiar tactic of our new prime minister. On
Aug. 4, The Globe and Mail quoted a senior government official
warning that opponents "... should prepare themselves for the
consequences of rejecting it and might want to start contemplating a
world where Ottawa is no longer in the business of subsidizing
softwood disputes."

The softwood deal is trade managed of, by and for the American lumber
lobby. A supposedly sovereign nation signed on to an unprecedented
clause requiring provinces to first vet any changes in forestry
policy with Washington.

Ignored in all the hype about "how thankful we should be that
Conservatives get along so well with Americans" is this reality.
Canada tossed away a significant victory, won, not before the useless
North American Free Trade Agreement panels, but from the U.S. Court
of International Trade. On April 7, it ruled U.S. duties on Canadian
softwood were illegal.

This is the second time a Conservative government has snatched defeat from the jaws of victory on the lumber file. In 1986, the GATT, the World Trade Organization's predecessor, issued a preliminary finding on the legality of U.S. lumber duties against Canada. Brian
Mulroney's government, bent on negotiating a free trade agreement
with the U.S., abruptly aborted it, with the eager acquiescence of
the Americans. The finding was never published. It doesn't take a
suspicious mind to assume that GATT had ruled for Canada. Mulroney
foreclosed on the GATT ruling because it would have wiped out his
entire argument about the "necessity" of a bilateral free trade deal.

(edited...)

The first agricultural casualty was the prairie wheat pools. They
corporatized, hoping to surf on the private American market. Instead,
they surfed on losses and put the Canadian Wheat Board on a timeline.
The Americans began gunning for it before the ink was even dry on
their signature to the initial FTA in 1989.

Since then, the wheat board has been subjected to 11 separate U.S.
trade attacks. The cry, as with lumber, has been unfair subsidies.
The U.S. doesn't just want to eliminate a formidable competitor on
the world wheat market for its multinational agribusiness. It wants
that agribusiness to capture the price advantage enjoyed by superior
Canadian wheat.

Despite polls showing 73 per cent of western wheat farmers support
the board, the Harper government is, as in lumber, preparing to do
the Americans' dirty work. It has begun the process to abolish the
board's monopoly. All that is stopping it is the fact it lacks a
majority and couldn't amend the current CWB Act. It requires a farmer plebiscite for any changes to the board's status.

Terry Pugh, spokesman for the National Farmers' Union, says a dual
market kills the CWB because its monopoly seller position is precisely what earns farmers premium prices in global markets. The
CWB's demise wouldn't just affect farmers but also have a ripple
effect across the Canadian economy, closing the Port of Churchill,
seriously impacting Thunder Bay and even the ports of Vancouver and
Prince Rupert, he continues. Canadian grain would go south, be mixed with American grain and shipped through American ports. Canadian wheat, as a distinct commodity, would disappear.

John Morriss, editor and publisher of the Farmers' Independent Weekly, says a dual market is a chimera. He asks farmers to recall the voluntary Central Selling Agency run by the pools in the 1920s and the voluntary CWB which began in 1935. Both had spectacular bankruptcies, likely the two biggest business failures in Canadian history. The voluntary CWB lost $62 million in 1938-39 -- an enormous sum at that time.

(edited...)

It's said the beaver bites off its testicles when threatened. If
true, the beaver is certainly an apt symbol, if not for Canada,
certainly for a succession of governments which, when faced with
ceaseless bullying, react by carving off pieces of the nation.

- - -

Cameron W said...

The link to the above article is:

Harper falls in line behind U.S. interests

http://www.winnipegfreepress.com/westview/story/3667863p-4240686c.html

Cameron W said...

Oilsands blamed for record low Slave River

http://www.cbc.ca/canada/north/story/2006/10/04/slave-low.html

"...Historically low water levels on the Slave River have some Fort Smith, N.W.T., residents pointing fingers at all the development that's taking place upstream in Alberta's oilsands.

The 434-kilometre Slave River flows from Lake Athabasca in northern Alberta to Great Slave Lake in the Northwest Territories.

Environment Canada says the record September low results from a lack of precipitation.

(snip)

Some people are blaming the industrial development taking place upstream.

Sonny Macdonald, a member of the Salt River First Nation and the aboriginal representative on the Mackenzie River Basin Board, said he is especially worried about the excessive amounts of water required by Fort McMurray's expanding tarsands operations.

"Slow down the process," said Macdonald. "Look at Fort McMurray and the tarsands. There's billions being spent and they're saying, 'Yes, go ahead, do it, do it.' There's no slowing down. It has to be slowed down, and if we don't, we're going to be in trouble."

There is a transboundary water agreement which requires consultation between jurisdictions where upstream development will affect land and water levels downstream.

However, it might not be much use in this case because the agreement has no provision to alter or halt development..."

Cameron W said...

http://www.sierraclub.ca/national/programs/atmosphere-energy/energy-onslaught/tar-sands-fly-over.html

The link above is to some other recent images of the tarsands, taken by Sierra Club Prairie Chapter Director Lindsay Telfer.

Anonymous said...

A recent article for you.

Alberta's runaway train
Andrew Nikiforuk

From the December 25, 2006 issue of Canadian Business magazine
According to Alberta's new premier, Ed Stelmach, "there's no such thing as touching the brake" on the aggressive expansion of the oilsands. Although the irrational approval of $90-billion worth of projects in the past decade has created labour shortages and inflated construction costs across the country, Stelmach refuses to stop, let alone slow, this tarry vehicle.

However, the good city of Fort McMurray and the Regional Municipality of Wood Buffalo, the largest such entity in Canada, have better ideas. In fact, the RMWB has contested three applications for multibillion-dollar oilsands projects this year on the grounds that the whole boom "has tipped the scale away from the public interest" and is beginning to look more and more like drunk driving.

The facts simply defy belief. Since 1996, the population of Fort McMurray has almost doubled to about 65,000. (Depending upon the season, as many as 20,000 single men live in work camps.) With sustained growth rates of 12%, the region could hit 107,000 by 2010. Without some strategic braking, these people will have no affordable place to live, precious little water to drink and almost no one to treat their ills or teach their children. Meanwhile, $3-billion projects will become $7-billion ones thanks to preventable cost overruns.


Although the region generates approximately $5 billion in revenue for the federal and provincial governments every year, little has been reinvested. Melissa Blake, Fort McMurray's mayor, bluntly defined the scale of abuse to the House of Commons Standing Committee On Finance last October: "Our wastewater treatment needs exceed capacity....Our water treatment plant will be at capacity next year....Our recreational facilities are over-taxed....Our landfill site is full....Fort McMurray is 2,800 housing units short of current demand....Our health-care system needs a 100% increase in on-site doctors." And on it went.

Every key indicator of community health is worsening. Rates of drug and alcohol abuse are breaking provincial records. Stressed-out physicians and nurses are leaving due to lack of provincial support and the high cost of living. As a consequence, the region's residents now have the embarrassing distinction of having fewer family doctors per capita than Nunavut (population 30,000). Dr. Michel Sauvé, a local internist, recently summed up the crisis this way: "We have the dubious honour of having now achieved ghetto status for health-care access, ironically in the heart of Alberta's economic engine."

Last summer, the RMWB forcefully raised these issues before Alberta's oilpatch regulator, the Energy and Utility Board, as it heard arguments for and against Suncor Energy Inc.'s $7-billion expansion project, Voyageur. The RMWB highlighted the negative impacts on infrastructure, housing and community.

However, the board, an inveterate rubber stamper, predictably ruled that risks to air, water and human health were "acceptable" and that everyone should "adaptively respond" to the region's corporate anarchy. In a moment of sobriety, however, it admitted that "the capacity of existing infrastructure, which in effect has facilitated the expansion of the oil sands industry to this point, has been depleted." It also found an "apparent lack of a co-ordinated response among government departments and the various levels of government," or no planning.

Although the EUB is supposed to be responsible for the "orderly, efficient and economic development in the public interest," it has yet to explain to the RMWB or Mayor Blake in any decision how bad air, poor water quality, unaffordable housing, astronomical rents, hellish roads, gambling addictions and chronic shortages of teachers, police officers and doctors constitute "orderly" or "efficient" development.

Solving the problems of destructive growth does not require a degree in particle physics. First and foremost, the province's dysfunctional regulator needs to retire its rubber stamp, think outside the box and purposely delay a project or two. Then, government and industry both need to responsibly address the $2-billion infrastructure deficit. If this sort of sane braking does not start in 2007, the oilsands, already a growing environmental liability, will soon become a global symbol of how not to run a megaproject.

Anonymous said...

Over a barrel
Andrew Nikiforuk
From the February 12, 2007 issue of Canadian Business magazine

Within 10 years, Alberta's tarsands could become the single largest source of new oil in the world. Given rising political unrest or aggressive state capitalism in Russia, Nigeria, Venezuela and the Middle East, the tarsands have simply become the globe's safest oil investment. Even a U.S. congressional committee recently called the oilsands "a new force in the world oil market" and concluded that they offered two investment rarities: large volumes and "secure access."

Boasting reserves (174-billion barrels) second only in size to Saudi Arabia, the tarsands have placed Canada in the remarkable position of holding nearly 60% of the investable oil reserves in the world. This explains why Imperial, ExxonMobil, Shell, Total and other energy multinationals have committed nearly $100 billion in a feverish rush to build as many as 51 projects in the sands over the next decade. Not surprisingly, stocks in 10 major firms with key tarsand investments gained a whopping 370% in value between July 2003 and April 2006. "In the big picture, deepwater oil and the oilsands are the only game left in town," says CIBC chief economist Jeffrey Rubin.

As a consequence, this powerful industry now produces nearly half of the nation's oil supply, provides the U.S. with nearly 16% of its oil imports--and will soon crown Canada as the world's fifth- or even fourth-largest oil producer. In the process, the tarsands will generate nearly $51 billion in income for the federal government and $44 billion for the province of Alberta between 2000 and 2020. No wonder Prime Minister Stephen Harper happily refers to Canada as an "energy superpower" and U.S. Energy Secretary Samuel Badham contentedly reports that "the hour of the oilsands has come."

But how long will that hour last? Certainly, the world's largest capital project will not only alter the course of Canada's economy, but will dominate business news for years to come. And yet, as global interest in the resource heightens, investors and taxpayers alike have begun to ask hard questions about costs, carbon emissions, infrastructure and other hidden liabilities. The following key issues may dramatically alter or slow the pace and scale of the tarsands.

The World's Most Expensive Oil

Although industry marketers prefer the term oilsands, bitumen is not oil. This heavy, viscous hydrocarbon, which according to the Book of Genesis helped glue the Tower of Babel together, is really tar trapped in sand and clay. As a heavy chain of carbon-rich atoms that are high in sulphur content, bitumen takes a lot of money and energy to upgrade to synthetic oil. In fact, raw bitumen can't even be moved in pipelines without using expensive light oils as a transport fuel. "You know you are at the bottom of the ninth when you have to schlep a tonne of sand to get a barrel of oil," says the CIBC's Rubin.

The cost of extracting the gooey stuff continues to unsettle rational economic minds. Neil Carmata, Petro-Canada's senior vice-president for oilsands, recently opined that the price tag for an open pit mine plus an upgrader climbed from $25,000 to between $90,000 and $110,000 per barrel in the past decade. Given that investors used to spend no more than $1,000 on infrastructure to remove a barrel of conventional oil a day, Houston-based energy investment banker Matthew Simmons of Simmons & Co. International observes that "energy's pricing committee" has truly flunked in the tarsands.

Chronic labour shortages combined with persistent government failure to sequence projects, has led to staggering cost overruns. When Shell Canada admitted last July that its $7.3-billion expansion plans for its Athabasca project (it currently produces 155,000 barrels a day) could swell to $12.8 billion, U.S. energy analyst Bob Gillon of John S. Herold, Inc. responded with a "My Lord in Heaven....we are getting these things back to where the economics...are going to get skinny in a hurry." Estimates for Petro-Canada's Fort Hill's project--a planned 170,000-barrel-a-day mine plus an upgrader--now range as high as $19 billion. Given that the richest tarsands leases are already being exploited, the Petroleum Technology Alliance Canada, a Calgary-based research group, warned last year that declining quality of the resource means "capital intensity is likely to continue to increase."

Yet cost overruns (like carbon intensity) define the character of unconventional oil. Rubin even advises investors to get used to persistent markups. He argues that the development of non-conventional oil just means spending more money. (Gulf of Mexico drilling comes with 400% increases, for example.) "What investors have to remember is that in a world of depleting conventional supply, higher costs and delays simply equate to higher crude prices," he says.

The Infrastructure Deficit

The Alberta government has approved one tarsands project after another with nary a thought about public infrastructure in the past decade. As a result, the city of Fort McMurray and the Regional Municipality of Wood Buffalo (RMWB) face an alarming $1.9-billion infrastructure deficit. The region not only reports a dangerously critical shortage of health care and police services, but also unaffordable housing, rampant social problems and water-treatment woes. Rents are so high that most hospital staff require subsidized housing. "Our quality of life is deteriorating," Bill Newell, RMWB regional manager, reported to the oilsands Multi-stakeholder Committee, a government-appointed group examining policy options for the oilsands, last fall. While former Alberta premier Peter Lougheed calls the social chaos "a mess," John Lau, CEO of Husky Energy Inc., has repeatedly warned that the infrastructure deficit has become an impediment to further investment. "The government has not really put a thinking cap on how and what they are going to do," Lau told the Calgary Herald.

Short of a moratorium, a recession or staggered project approvals, the region's infrastructure crisis will simply accelerate. After approving another $4-billion project last December, Alberta's Energy and Utilities Board, the industry regulator and the government of Canada warned that "growing demands and the absence of sustainable long-term solutions must weigh more heavily" in future decision-making.

Reclamation Liabilities

The tarsands lie in deep and shallow deposits underneath roughly 23% of the province of Alberta. About 20% of these reserves (3,000 square kilometres, or three times the size of New York City) can be strip-mined with shovels and trucks, but the vast majority of deposits require thermal operations that drill and inject steam or heated solvents deep into the ground. The area currently leased for underground operations will create "an industrial sacrifice zone the size of Vancouver Island," according to the Pembina Institute, a Calgary-based energy watchdog.

To build a strip mine, a company must cut down hundreds of thousands of trees, uproot wildlife, change entire watersheds and drain fens and bogs. According to Alberta law, these industrial wastelands and accompanying tailings dams must be reclaimed or restored into some semblance of the original forest. But it's a policy fraught with uncertainties, unknowns and growing risks.

Although mining operations have already disturbed 42,000 hectares of land and have been active for 30 years, not one hectare has been certified as restored to its original state by the Alberta government. Incredibly, the province hasn't updated its oilsand reclamation graphs since 2003, and says its guidelines and policies are still "currently under development and review."

Nor can companies talk about reclamation without employing Orwellian rhetoric. Chris Jones, the chief operating officer of Albian Sands Energy Inc., owner of the 155,000-barrels-per-day Muskeg River Mine north of Fort McMurray, told a public meeting last year that his firm hoped to restore its moonscape to "maintenance-free, self-sustaining ecosystems with a capability that is equivalent to pre-development conditions. This does not mean that every hectare will be identical to pre-disturbance conditions."

The fact remains that no one has ever remade a boreal forest before. Even the National Energy Board doesn't know "if land reclamation methods currently employed will be successful." A 2003 scientific workshop on "Creating Wetlands in the Oilsands," held in Fort McMurray by a largely industry-based stakeholder group (the Cumulative Environmental Management Association) complained that this "entire mining process" was being allowed "to proceed with little real knowledge...of how it will be reclaimed." Alberta's Mining Liability Management Program remains a draft document, and criteria for managing mine waste still haven't been established. Last November, Alberta's Energy and Utility Board (AEUB) acknowledged that the current security program for toxic tarsands waste "does not require a deposit or the posting of security with respect to total project liabilities and that work is underway to address shortcomings of the existing program." (For more than $100-billion worth of investments, the Alberta government holds only $356 million in reclamation bonds.) The AEUB, in a joint review panel with the government of Canada, also described reclamation as a "key regional issue with uncertainties that require adaptive management for resolution." In plain English, tarsands reclamation is one big experiment, with no guarantee of success.

Production Hype

Just about everybody, from Uncle Sam to the Chinese, has bet on the tarsands to offset conventional declines. On its energy website, the Alberta government even highlights an optimistic Time magazine article boasting that the oilsands "could satisfy the world's demand for petroleum for the next century." Cold reality, however, does not support such claims.

Consider a series of popular production forecasts now being seriously hampered by the region's infrastructure backlog. Canada's National Energy Board predicts that oilsands production could jump from 1.1 million barrels a day to three million barrels a day by 2015. Prime Minister Harper is even more bullish and predicts "nearly four million" by 2015, while some Alberta groups are talking about three times that amount--or 12-million-a-day output by 2030. Both the Canadian Association of Petroleum Producers and the Canadian Energy Research Institute believe four million barrels a day might be possible by 2020 if environmental and labour challenges don't tar up the works. That's still only 4% of the world's forecasted oil supply in 2025.

At a recent Boston meeting on peak oil, Dave Hughes, a Calgary-based energy specialist with Natural Resources Canada, argued that none of these forecasts will live up to the hype due to the complex and energy-draining process of turning tar into oil. He defined the big stumbling block as a delivery problem. While noting that the oilsands are a "Great White Hope of a panacea to support business as usual," he added that "forecasts do not live up to the hype."

Given existing investment levels of $90 billion, Hughes told Canadian Business that he'd be very surprised if oilsands production could exceed 2.8 million barrels a day. To reach four million barrels a day would likely require an additional $110 billion in investment. "The oilsands should be viewed as a marginal interim supply that serves as a bridge to prepare for a less energy-intensive future," warns Hughes.

Since 1850, the world's population has increased fivefold, while per-capita energy use has increased eight times, says Hughes. The world now uses 43 times the energy used in 1850, and nearly 90% of it comes from non-renewable sources, such as oil, gas, coal and uranium. "Those levels can't continue," says Hughes.

Even the U.S. Congress has its doubts. In its 2006 report on the tarsands, chaired by Jim Saxton (Republican, New Jersey), it acknowledged that the resource can't be developed rapidly enough to achieve real energy independence for North America. Just to replace Persian Gulf imports alone would require sucking up all of Canada's projected crude production by 2016: 3.8 million barrels. "North American energy independence thus would require a dramatic ramp-up in oilsands production far beyond any of the current projections," concluded the report. Yet last January, an oilsands Experts Group Workshop directed by Natural Resources Canada and the U.S. Department of Energy supported a "fivefold expansion" of the oilsands within a "relatively short time."

The Royalty Ruckus

Ever since oil prices catapulted beyond US$50 a barrel, oil-producing nations have either raised their royalties or nationalized the resource. But not Alberta. In 1996, the provincial government introduced a standard 1% royalty regime that predictably resulted in an explosion of industry investment and corresponding infrastructure woes. The bargain-basement royalty regime, which has been roundly criticized by citizens but defended by industry, remains at 1% until a project has recovered the cost of construction. Cost overruns also delay any increases.

Even the Canadian Association of Petroleum Producers, a defender of low royalties, ranks the tarsands regime in competitiveness as 79th out of 324 world royalty regimes. (In contrast, Alberta's conventional oil royalties rank somewhere between 209 and 258 out of 324.) The CIBC's Rubin doesn't think Alberta's royalty giveaway can last much longer. He points out that Venezuelan president Hugo Chavez "had a similar subsidy for the Orinoco tarsands," but quickly abandoned it given the economics of oil prices.

Alberta's current payout also applies to bitumen rather than upgraded oil. The general price for bitumen (a product with an ill-defined market value) is generally half of that posted for West Texas Intermediate, a fact most Albertans don't recognize. "Small wonder we are seeing so many oilsands companies proposing upgraders," Ian Urquhart, a University of Alberta political scientist, noted at a public meeting on the tarsands last year. "They will pay royalties on bitumen and then sell the final product at roughly twice the price."

Although Alberta's generous royalty system has increased corporate income at an annualized rate of 42% between 1999 and 2006 for a total increase of 440%, it has not enriched provincial coffers. According to the Pembina Institute, Alberta tarsand royalties declined by 32% between 1996 and 2005.

Alberta's new premier, Ed Stelmach, has promised a full and transparent review of the outdated royalty regime this year. And few doubt that the province will eventually insist on a higher and fairer share of tarsands wealth. "But even with a more aggressive royalty structure, Alberta remains company-friendly," says Rubin. "The companies have no other place to go."

The Natural Gas Pit

At one time, the oilpatch used one barrel of conventional oil to find 100 more--a tidy energy profit ratio. The tarsands, a thoroughly unconventional product, make a mockery of such accounting and boast a net energy intensity two to three times that of conventional heavy oil. As a consequence, it now takes the energy equivalent of one barrel of oil to create two barrels of oil from the tarsands.

Much of this energy comes from natural gas, a relatively clean fuel used to steam up the tar or upgrade the carbon-heavy pitch into a marketable product. According to a 2005 report by the Pembina Institute, the industry daily consumes more than half a billion cubic feet of natural gas, or "enough to heat 3.2 million Canadian homes per day." (In 2006, industry consumption actually surpassed a billion cubic feet daily and partly accounted for falling gas exports to the U.S.) By 2012, the tarsands will burn enough natural gas each day to heat every home in Canada.

Given that experts say Canada has only a nine-year supply of proven natural gas reserves left (undiscovered and unconventional reserves might extend that timeline, but with large environmental costs), former Alberta premier Peter Lougheed has described the natural gas addiction in the tarsands as a waste of a "valuable resource." Houston investment banker Simmons, author of Twilight In The Desert (a look at Saudi Arabia's dwindling oil reserves) is even more blunt: "If I were a Canadian, I'd make it illegal to use precious natural gas and potable freshwater to turn gold into lead in the tarsands." His recommendations for policy-makers are equally stark: go slow, charge for water, cap tarsands production and "find some other way to produce this atrocious resource other than using scarce natural gas....To get more addicted to the tarsands doesn't make any sense to me."

Although alternative sources of energy are being developed (such as burning bitumen or coke to create gas as a fuel source), most are more carbon-intensive, with the exception of nuclear energy. To replace natural gas use in the tarsands with nuclear power would require nearly a decade of planning, hellish political controversy and as many as 16 Candu 6 reactors. Yet Gary Lewis, a tarsands engineer and member of Fort McMurray-based Environmentalists for Nuclear Power, argues that such a change would "reduce CO¸ emissions in accordance with Kyoto and not harm gas and oil production in Alberta."

The Water Wall

The tarsands drink water unlike any other petroleum resource in the world. It currently takes two to five barrels of water to wash two tonnes of sand and clay in order to make one barrel of oil. Each year the industry withdraws enough water from the Athabasca River to service two cities the size of Calgary. That consumption could soon double, with significant consequences for the entire Mackenzie River Basin, a region already experiencing accelerated drying from climate change. Shell's Albian Sands project, for example, needs 55 million cubic metres of water every year--the equivalent of about 30,000 Olympic-sized swimming pools--and will "contribute to reductions in available fish habitat," according to the federal Department of Fisheries and Oceans. Even the National Energy Board, an agency not know for its environmental rhetoric, has repeatedly warned that the limited amount of water available in the Athabasca River "could be a constraint on future expansion plans." After seven years of study, the Alberta government has failed to establish how much water the threatened river needs to support fish.

Nearly 90% of the water withdrawn from the Athabasca River ends up in toxic tailings ponds the size of small lakes in Ontario's cottage country. These toxic lakes currently cover 50 square kilometres of forest and could fill Lake Erie up to a depth of 20 centimetres in toxic waste. Until China completes its Three Gorges dam in 2008, the world's largest dam (in volume) will remain Syncrude's Tailing Dam, the U.S. Department of the Interior reports. It holds 540 million cubic metres of water, heavy metals, bitumen and sand. It's also an 18-kilometre-long holding tank for such fish killers as naphthenic acids and polycyclic aromatic hydrocarbons. The National Energy Board calls the management of these toxic lakes "daunting," while the Alberta Chamber of Resources, a group representing mining and logging interests, has concluded that "current practices for long-term storage of 'fluid' fine tailings pose a risk to the oilsands industry." Even the business-friendly Petroleum Technology Alliance Canada calls the large tailings ponds "a major concern for the long-term protection of the Athabasca River and downstream water users." Aboriginal groups representing scores of First Nations communities downstream have repeatedly called for a moratorium on further water withdrawals.

The Carbon Cauldron

A variety of analysts and critics have called climate change a pirate ship in the fog for the tarsands industry. In 2000, the tarsands produced 23 megatonnes of greenhouse-gas emissions. (The mines smoked out 80 pounds of carbon per barrel, while underground thermal operations produced up to 160 pounds per barrel.) By 2015, the industry will likely produce 108 megatonnes. According to the Pembina Institute, the oilsands currently represent the fastest-growing point source of carbon emissions in Canada. By 2020, emissions could rise as high as 141 megatonnes. "I think the CO¸ issue will be the real issue for these guys at the end of the day," says CIBC chief economist Rubin.

Thanks partly to rapid tarsands development, Canada has the third-most-energy-intensive and fourth-most-carbon-intensive economy in the 25-member Organization for Economic Cooperation and Development (OECD). In 2006, the environment commissioner, in the office of the auditor general, found widespread confusion, uncertainty and "inadequate leadership, planning and performance" in Canada's climate-change response. The program to reduce pollution among 700 companies, including tarsands operators, the so-called Large Final Emitters System, has so far failed to reduce overall emissions let alone report in a "real, measurable and verifiable" manner, said the environment commissioner. As she noted, Canada's carbon clouds are 26.6 larger than than they were in 1990, and fall way below Kyoto targets. Even the U.S. Energy Information Administration concluded in its "2006 Country Analysis Brief" that Canada's carbon-loving ways are a political liability and have "led to serious environmental concerns, primarily regarding air pollution and climate change."

Oil exports driven by tarsands production have also played a major role in rising carbon levels, Environment Canada reports. Between 1990 and 2004, oil exports grew by 513%--or almost 10 times the rate of growth of oil production. As a result, the amount of carbon due to net oil or gas exports grew from 22 megatonnes in 1990 to 48 megatonnes in 2004.

Alex Farrell, an energy expert at the University of California in Berkeley, notes that the transition from conventional sources to increasingly lower-grade products such as what is produced from the tarsands ultimately comes with "increased risks of environmental damage, as well as other risks." Farrell calculates the tarsands produce anywhere between 30% to 70% more carbon emissions than conventional oil. In the absence of any policy to control those emissions, he says, petroleum buyers may soon ask: "Are we responsible for those emissions, and do we want to buy that fuel?" In fact, Republican Gov. Arnold Schwarzenegger, in the trend-setting state of California, is already demanding low-carbon fuels.

For the world's newly emerging low-carbon marketplace, tarsands companies plan to bury carbon in old oilfields, as well as trade emission credits overseas. Shell's Albian Sands project has already announced that it will reduce carbon emissions by 50% by 2010. Nuclear power is also seen as a carbon-reducing tool. But in a carbon-restrained world, Rubin, like other analysts, asks who will profit most: "The shareholders of tarsand companies or the owners of emission credits?"

Cameron W said...

Our government wants us to 'stand up for Canada', but it seems that doesn't apply to standing up for Canadians,social justice, fairness, free speech, the ecosystems that sustain us, or for the pursuit of truth.

Health Canada muzzles oilsands whistleblower

A northern Alberta physician who publicly aired concerns over carcinogenic pollution from the massive oilsands development is being investigated by the province's College of Physicians and Surgeons. The complaint against him comes from none other than Health Canada, which claims the physician caused "undue alarm."

The doc — widely held to be Dr John O'Connor of Fort Chipewyan — says he's got a hunch the copious amounts of arsenic dumped into the water by the project might explain why so many of his mostly aboriginal patients are presenting with cancer — including rarer forms like cholangiocarcinoma (bile duct cancer).

The College won't confirm or deny that Dr O'Connor has indeed been targeted. The family doc is no firebrand and an unlikely martyr for the environmental cause. When the government released selected data from a study and concluded that people in the community were less likely than the average Albertan to die of cancer, it pained him to disagree (fuller data, released later, would suggest his hunches were largely right). "I would absolutely accept it, if I saw they had done a complete analysis..., had all the information that they needed, and had the report peer reviewed prior to publishing it," he said at the time.

(snip)

SHOCK, OUTRAGE
Colleagues and members of the community came to the quick conclusion that Dr O'Connor is paying the price for attacking a sacred cow — Alberta's multi-billion dollar oil industry.

"It's a similar scenario to what had me fired in 2002 for speaking in favour of ratifying the Kyoto Accord in the interest of public health," said Dr David Swann, Liberal MLA for Calgary Mountain View, on his blog. Dr Swann was medical officer for the Palliser Health Region at the time he got the axe.

"I admire Dr O'Connor for his courage in standing up and speaking out on issues that should concern all Albertans," added Dr Swann in a March 6 interview with Fort McMurray Today. "This is not acceptable. We're a free country. We, as professionals, are called upon to act in the public interest and to raise issues, to challenge vested interest whether it's government's or industry's monetary interest for the betterment of the society."

Dr Swann and internist Dr Michel Sauve — who's head of the intensive care unit in the same Fort McMurray hospital where Dr O'Connor is based and also regularly flies in to Fort Chip to treat patients — both feel that this case is evidence that whistleblower legislation is needed to protect doctors. Dr Sauve has said he thinks the complaint was "politically motivated."

The parties involved in the alleged complaint against Dr O'Connor aren't saying much.

"We can confirm that Health Canada physicians have lodged a complaint which involves several professional practice issues with the Alberta College of Physicians and Surgeons against a northern Alberta doctor," says Carole Saindon of Health Canada.

"The College of Physicians and Surgeons recommends that complaints not be discussed publicly. Health Canada respects this recommendation."

Unsurprisingly, the College won't comment on Dr O'Connor's case, nor will the Alberta government.

GOLDEN TAR
The Athabasca oilsands (formerly called the tar sands) were long thought impractical to exploit. But high oil prices and technological innovations have made the area feasible to develop — and all of a sudden the province's accessible oil reserves rival Saudi Arabia's. But the catch is that to get oil from the bitumen (natural tar) enormous amounts of toxic waste water are created. And this raises concerns that profits from this development come at the expense of aboriginal lives.

"We need to know if there are excessive toxins in these resins and we need to see if people are dying from rare cancer or some devastating immune disorders — that someone is collecting some samples on these people to see what is the concentration of toxins," explained Dr Sauve to Fort McMurray Today.

There have been some studies looking at the arsenic levels found in the region's fauna — but findings were contradictory. A recent study by Suncor, an oil company, found that a proposed development would lead to arsenic levels in moose meat — a local staple — 453 times the acceptable limit. The province and Imperial Oil dismissed the study saying their own data said the levels were much lower. Imperial Oil spokesperson Kim Fox stated back in November that her company's study estimated arsenic levels were 15 times lower than the Suncor numbers. "The people who actually conduct these studies tend to be very, very conservative in their methodologies. Even with these conservative approaches, what we've found is that oilsands do not contribute to increase in arsenic in the area."

ARSENIC & OLD LIES?
Locals are not convinced. "Those big shots running our government — they don't give a darn who dies, they're not concerned about us," said one Fort Chipewyan elder in a CBC radio interview. "I've fished since I was 13 in Lake Athabasca. I've seen fish in the last five or six years with great lumps on them, humpbacks, crooked tails, some of the pickerel rotting alive — I've never seen that before in all the years I commercial fished. What are they putting into the water?"

Such cynicism towards the provincial government is commonplace among First Nations communities living near the oilsands developments. On March 6, the Mikisew Cree in Fort Chipewyan pulled out of the Cumulative Environmental Management Association (CEMA), dismissing the watchdog institution as a crock. "CEMA is a parking lot where everything, all the major issues, are placed. Meanwhile approvals [for new oilsands projects] are given," Mikisew spokesperson Sherman Sheh told the CBC. Indeed, CEMA was initially given five years to release an assessment on how much oil development the province could sustain without permanently wrecking the environment. It's already been seven years and CEMA hasn't released its report, all the while oilsands development has been continuing apace. The Athabaska Cree have also given up on CEMA.