Letter from Canada: Alberta’s oil sands in the rifle hairs
The Alberta government and Western Canadian oil industry love to blame Prime Minister Justin Trudeau and the federal government for the lack of oil pipeline capacity leaving the region, but in fact they should largely blame themselves
Former Alberta premier Peter Lougheed—whom many older Albertans consider their best-ever premier—began warning the province and industry to go slow on oil sands development in the middle of the 2000s for several reasons, including skyrocketing costs and environmental damage.
Higher costs meant lower revenues for Albertans given the structure of the royalty regime, while Lougheed was concerned rapidly rising greenhouse gas (GHG) emissions and other environmental damage to land and water would put a bullseye on the oil sands industry. But, rather than heeding Lougheed’s advice, the premier of Alberta at the time, Ralph Klein, adhered to the wishes of industry instead, allowing oil sands projects and production to grow quickly in a laissez-faire manner.
In an attempt to promote the industry in the US, Klein even had a massive Caterpillar 777F hauler—similar to the dump trucks used at oil sands mines—parked on the National Mall in Washington, DC in July 2006—a stunt widely viewed to have backfired as it caught the attention of major environmental organisations based there.
In July 2008, a number of environmental groups in Canada and the US, including Corporate Ethics International, the Natural Resources Defense Council and the Pembina Institute, formed a coalition to throw a wrench into oil sands development. Heavy financial hitters such as Pew Charitable Trusts, Rockefeller Brothers Fund and The William and Flora Hewlett Foundation backed the coalition. Thwarting construction of new pipeline capacity from Western Canada has since proved to be the coalition’s most effective tactic to slow oil sands development.
There have been informal talks between separatists in landlocked Alberta and Saskatchewan, the two largest oil-producing provinces, and indigenous peoples in northern British Columbia
As of now, there is a growing movement in Western Canada to break away from the rest of the country, and the climate change ‘tyranny’ of the Feds, to get its oil to international markets. There have been informal talks between separatists in landlocked Alberta and Saskatchewan, the two largest oil-producing provinces, and indigenous peoples in northern British Columbia (BC)—who never signed treaties with Canada, making their legal status as part of the country and BC ambiguous—to break away and build massive new pipeline capacity to the west coast.
But there is a fly in the ointment. The Western Canadian oil industry has had a poor record of combating GHG emissions. And the government of Alberta—and, to a lesser degree, Saskatchewan—has become increasingly belligerent towards its climate-change critics, while at the same time opening itself to ridicule, since Premier Jason Kenney took office and his United Conservative Party (UCP) gained power in April 2019.
For example, Kenney created a so-called Energy War Room to counter misinformation about Alberta’s oil sands industry in December. Its annual budget of C$30mn has since been slashed by 90pc following a litany of gaffes, including being forced to change its logo a week after launch due to trademark infringement.
During a May podcast, Alberta Energy Minister Sonya Savage said it “is a great time to be building a pipeline because you cannot have protests” due to Covid-related lockdowns, a comment from which her government has since refused to walk back.
With the global climate change movement on the rise, even if these western provinces were to successfully separate from Canada they may not be able to sell their oil on international markets. Politicians in would-be customer countries are putting an ever-bigger bullseye on Alberta’s oil sands. The region’s oil could ultimately become embargoed as many South African goods did near the end of the Apartheid era, especially in a decarbonising world awash in oil.