There was an interesting article in the Calgary Herald the other day: “Surging sales belie mythical oil access story.”
In it, the reporter quoted Greg Stringham, vice-president of oil sands and markets at the Canadian Association of Petroleum Producers, the holy of holies. “When you hear about market access it’s not today’s market. We’re hitting record numbers … we’re still moving every barrel of oil we need to.”
It seems that, at present, Canada pumps more than 3.9 million barrels of oil a day.
Which raises an interesting question: Hasn’t Stringham made a very strong argument to freeze production at the present level? Maybe the pipeline emperors aren’t wearing any clothes. We don’t have an access-to-market problem after all, even if we may have one in the indefinite future. (I’ll deal with the future at the end of this column.)
The bottom line is that Albertans needn’t accept the simplistic “gotta build more pipelines” narrative spun by the oil patch and its government acolytes.
For the solution to this possible access-to-market issue is so simple — freeze production — that I’m almost embarrassed to point it out.
Why do we treat as holy writ the idea that oil sands’ production must double or triple as if this were inevitable? Don’t human beings have any control over this?
Apparently not — at least not when our new Premier and his same old gang have bought what the oil patch is selling.
What about the public interest? What would a freeze accomplish? Let us count the ways:
1. We could avoid the increasingly volatile dispute between government and industry on the one hand and native people and environmentalists on the other. Social peace might thereupon break out and billions of dollars could be saved by cancelling proposed pipelines.
2. A freeze would also help Alberta’s international image, because greenhouse gas emissions from the oil sands should decrease, given the promise of Canada’s Oil Sands Innovation Alliance (COSIA) and other researchers to decrease per-barrel energy intensity.
3. Such a decision would partially address the heavy cumulative environmental and social impacts of the oil sands, as well as buying time to reclaim the immense tailings ponds from surface mining operations.
In turn, the risk of a Mt. Polley-size breach of impoundment dams would decrease.
4. It would also reduce the work load of the Alberta Energy Regulator, allowing it to devote more resources to enforcing existing environmental regulations and, where necessary, creating better ones.
5. There would be less inflation of wage and material costs as construction mania eases.
6. Less controversy would exist about labour shortages and temporary foreign workers.
7. Given the present slump in oil prices and the postponement of various new expansion projects, it may seem strange to talk about inflation pressures, but past experience has shown Albertans the risks of the inevitable boom and bust cycle when we passively allow market pressures to make decisions for us. In the long run, we can expect the present glut of oil to disappear and the price to rise again.
But in the meantime, ramping up to sell more into a weak market certainly doesn’t help.
Admittedly, big investment decisions have to take long-term trends into account. But if that is so, when the International Energy Agency says we’ll have to leave two-thirds of our reserves in the ground to avoid climatic catastrophe, planning greater production fails this test. In 20 years, “stranded carbon” may make some of our oil patch movers and shakers look pretty shortsighted.
One final thought. I agree with those who point out the risk in having only one customer — the United States — for our oil, whether light or heavy. But we can deal with this in two ways:
First, by using existing pipe to transport the products east, then transhipping them to Europe.
Second, by using existing pipe to get the stuff to various American tidewater ports. If the products are not merged with American oil, re-export from the U. S. is permissible. Indeed, Enbridge is already planning this move.
So. No new pipelines, Premier Prentice. And may I respectfully ask for greater sophistication when your government develops and debates public policy.
Phil Elder is Emeritus Professor of Environmental and Planning Law with the Faculty of Environmental Design at the University of Calgary.