Recent forecasts from the International Energy Agency (IEA) and British Petroleum (BP) have cast new doubts on the long-term economic viability of exploiting the Albertan tar sands.
In a November report, the IEA predicted that demand for tar sands production in 2035 will be 3.3 million barrels a day, lower than the Canadian Association of Petroleum Producers’ (CAPP) more optimistic estimate of 5 million barrels a day. BP’s Energy Outlook 2030, published in January, also forecasts that US oil imports will fall 70 percent by 2030 from 11 million barrels a day in 2011.
Citing the BP and IEA forecasts, author and former Oilweek editor Earle Gray writes in the Toronto Star, that “a host of factors dims the prospects for the oilsands.” Gray lists “slower growth in world oil demand, increasing energy efficiency, alternative fuels and possible caps on global warming emissions of carbon dioxide” as reasons the Harper government should be weaning the Canadian economy off the tar sands.
This is a guest post by Mark Jaccard, one of Canada's most distinguised sustainable energy economists, and was originally published on his blog, Sustainability Suspicions.
Why is Alberta’s policy a regulation and not a tax?
Alberta’s government officially says it doesn’t have a carbon tax, and I agree. But if I had a dollar for every time I’ve heard someone claim it does, I could buy a lot of anti-oil sands ads, and maybe a politician along the way.
I hear about Alberta’s so-called carbon tax from business people, politicians, journalists, environmentalists, sometimes even economists (who should know better). But the policy in question is, in fact, a “performance regulation,” that sets a maximum “emissions-intensity” for industries, and fines them $15 for each tonne of CO2 emissions in excess of that maximum.
French oil and gas giant Total SA is pulling out of its tar sands partnership with Suncor. Total purchased its 49% stake in the Voyageur upgrader project in 2010, saying they were making a “long-term bet” on the profitability of the Alberta tar sands. Now they’re selling their shares back to Suncor at a $1.65 billion loss, rather than spending the $5 billion required to keep the project going.
“Not only does the Total divestiture raise questions about the long-term viability of Canadian oil sands investments, it also raises questions about whether the controversial Keystone XL pipeline project is really in the US’ interests—at a time when US oil output is rising and Canada’s oil sands are becoming less strategically advantageous,” writes Oilprice.com.
This comes just days after Suncor announced that it would be cancelling construction of the Voyageur upgrader altogether. The company, which in 1967 was the first to begin its foray into tar sands development, argued that increasing labour costs, labour shortages and large supplies of light crude from the US have made the project untenable.
As Think Progress has just reported, a bizarre technicality allowed Exxon Mobil to avoid paying into the federal oil spill fund responsible for cleanup after the company's Pegasus pipeline released 12,000 barrels of tar sands oil and water into the town of Mayflower, Arkansas.
According to a thirty-year-old law in the US, diluted bitumen coming from the Alberta tar sands is not classified as oil, meaning pipeline operators planning to transport the corrosive substance across the US - with proposed pipelines like the Keystone XL - are exempt from paying into the federal Oil Spill Liability Trust Fund.
News that Exxon was spared from contributing the 8-cents-per-barrel fee to the clean-up fund added insult to injury this week as cleanup crews discovered oil-soaked ducks covered in "low-quality Wabasca Heavy Crude from Alberta." Yesterday officials said 10 live ducks were found covered in oil, as well as a number of oiled ducks already deceased.
In April 2011, the Province of Alberta invested $25 million to form the "Helmholtz-Alberta Initiative" that would study ways to deal with leakage from the toxic tailings ponds that are a by-product of tar sands mining operations. The HAI was also tasked with finding ways to upgrade the energy extracted from bitumen and lignite coal in order to reduce energy consumption, and a few other "sustainable solutions" to Canada's ongoing environmental and energy challenges.
This is the first post in a three-part series. For Part 2, How Redford Can Walk the Walk, click here.
Within weeks of becoming Alberta’s first female premier in October 2011, Alison Redford realized that the tired old propaganda about jobs and Canada’s reputation as a safe and friendly supplier of oil weren’t helping in the battle over the future of tar sands oil in America.
“We heard very quickly that they don’t want to hear anymore the security argument or the jobs argument. We get that,” Redford told the Globe and Mail. “Really, this is about environmental stewardship and sustainable development of the oil sands. We were quite happy to talk about that, [but] that was a shift in the kinds of conversations that Alberta was having.”
What Redford doesn’t seem to have understood is that it’s not about talking the talk, it’s about walking the walk. In a recent column in America’s biggest newspaper, USA Today, Redford tried to convince Americans that the proposed Keystone XL pipeline is part of Alberta’s “responsible oil sands development.”
One year after plans were announced for a new system to monitor the environmental effects of the Alberta tar sands, there is still no sign of any formal data.
In February of 2012, the federal government, in partnership with the government of Alberta, announced plans for a new three-year environmental monitoring system to collect information on the Alberta tar sands. Touted as world-class by environment ministers at both the federal and provincial levels, the three-year plan is meant to track data on water, air, land and wildlife, and provide annual reports for the first three years, followed by a comprehensive peer review in 2015.
“We will make the system highly transparent. We will ensure that the scientific data that is collected from our monitoring and analysis is publicly available with common quality assurances and common practices in place,” Environment Minister Peter Kent said a year ago, at a joint news conference with Alberta Environment Minister Diana McQueen.
The plans indicated that scientists would release information on an ongoing basis in some cases, and on three and six-month schedules in others. Officials anticipated the first round of information would be released before the end of last year.
In last week's State of the Union address, President Obama reiterated his vision for clean energy and urgent action on global warming. With TransCanada’s Keystone XL tar sands pipeline on the frontlines and looking threatened, oil industry supporters are suddenly desperate to look like the environmental and climate risks of the tar sands are under control.
But there’s a massive credibility gap as Canada’s contribution to global warming is spiralling out of control, with the reckless expansion of the tar sands.
We’ve always believed that actions speak louder than words. So while the oil industry and government embark on a pro-tar sands PR campaign, let’s look at how Canada has behaved on climate action and the environmental risks of the tar sands.
The government of Alberta’s continued reliance on the tar sands as the province’s main economic driver has put Premier Alison Redford in a very awkward position recently. With the market for foreign oil drying up in the US, her government is facing a $6 billion budget shortfall. For the first time in many years, Alberta is being forced to reach out for a little help from its neighbours, but the reception has been chilly.
The trouble began last year, when British Columbia Premier Christy Clark discovered that putting her unqualified support behind Enbridge’s plan to run its Northern Gateway pipeline through the province would constitute political suicide in an election year.
Whatever Clark’s motivations may have been—environmental or political—the result is that now they are in the midst of a struggle that Maclean’s Magazine calls, “the greatest political rivalry since former Newfoundland Premier Danny Williams ordered the Canadian flag removed from every government building in a dispute with the feds over offshore energy royalties.”
The British Columbia government has plans to double or even triple the amount of natural gas produced in the province in order to meet growing international demand. Although the proposed Enbridge Northern Gateway pipeline is a key issue of concern to British Columbians, widespread fracking for unconventional gas presents another significant challenge that should be on the public's radar, according to the Canadian Centre for Policy Alternatives (CCPA).
As the CCPA reports, BC's gas production targets all but ensure the province will fail to meet its own 2007 emission reductions targets as laid out in the Greenhouse Gas Reduction Targets Act. Exported gas from BC is expected to contribute the emissions equivalent of putting 24 million new cars on the road, and all for a 0.1 percent projected increase in provincial jobs.