The Canadian Oil Boom

February 26, 2009 8:18 PM

Scraping Bottom: The Canadian Oil Boom."Once considered too expensive, as well as too damaging to the land, exploitation of Alberta's oil sands is now a gamble worth billions."
posted by homunculus (41 comments total)

Despite the article turning international attention toward the environmental impact of the oilsands, [Canadian environment minister] Prentice dismissed it as "just one article" and added he doesn't always agree with what National Geographic publishes.
posted by parudox at 8:35 PM on February 26

Wow, the stuff about the tailings ponds starting on page 6 sounds horrible:

The fine clay and silt particles, though, take several years to settle, and when they do, they produce a yogurt-like goop—the technical term is "mature fine tailings"—that is contaminated with toxic chemicals such as naphthenic acid and polycyclic aromatic hydrocarbons (PAH) and would take centuries to dry out on its own. Under the terms of their licenses, the mines are required to reclaim it somehow, but they have been missing their deadlines and still have not fully reclaimed a single pond.

And the short-term economic benefit to the region means pols will look the other way until the damage is irreversible. We've been here before. Like I said last time this came up, it's like watching a junkie frantically lick the inside of that last little plastic bag.
posted by mediareport at 8:36 PM on February 26 [6 favorites]

Of note, there was a previous post on oil sands pollution of the great lakes (!), as well as a comment with some facts.
posted by parudox at 8:41 PM on February 26

Are those oil sands still worth anything now that the price of oil has crashed? I know with offshore drilling (for example) the new new drilling areas aren't really economically viable anymore.
posted by delmoi at 8:50 PM on February 26

delmoi: oil companies that have invested heavily in developing tar sands are now in trouble, as they aren't feasible below $70 / barrel.
posted by atrazine at 9:03 PM on February 26

As you read the article, don't forget to take note of one sentence that could so easily be missed:

the town of Fort McMurray, south of the mines, is awash in Newfoundlanders and Nova Scotians fleeing unemployment in their own provinces.

To a lot of people, this is sort of acknowledged and then brushed off - "yeah, it creates jobs, but at what cost?" Well, at the cost of some dead ducks and a lot of chewed-up land and water pollution, that's for sure. And we should do our best to deal with those huge tailings ponds - a lot better than we're doing now. But - and this is the point I think needs to be remembered - what's the cost of unemployment? What would be the cost to Canadians of not having these projects? Thousands of families reduced once again to the indignity of surviving on welfare payments and scraps of seasonal work. Whole areas of provinces where there's no opportunity, no hope. Now they can get jobs out west, and that's worth so much more than many people really want to take into account. Don't be too quick to condemn other people to unemployment just because of a few shocking pictures.

The tar sands have probably been developed too quickly, with not enough care to avoid environmental damage and regional inflation (though the crash of oil prices is helping out on the latter front, at least). But do the negatives outweigh the positives? Absolutely not. The oil sands are a huge contributor to Canada's wealth, and to a resilient and healthy energy supply for the United States.
posted by Dasein at 9:09 PM on February 26 [4 favorites]

atrazine, I disagree. While it is variable, in 2006 Syncrude's average production cost was $32 /boe.

If you want all the grisly details, try here (about a 1/5 of the way down).
posted by H. Roark at 9:09 PM on February 26

Also when considering the economic viability as a function of oil prices, remember that what makes this tricky is that it takes a lot of energy. If energy is 2/3 of your production costs, and energy goes down 50% in price, your margins are expanding.

None of this of course takes into account the true cost of the projects, but from the perspective of a corporation it makes sense.
posted by H. Roark at 9:15 PM on February 26

It should be pointed out that the Alberta oil sands are also the largest source of greenhouse gases in Canada, by far... an amount equal to five percent of Canada’s emissions, and 1/1000th of the world's CO2 emissions. In that sense, they're already a public menace, long before any of their tailing ponds widely pollute the local waterways.

Let's hope that they're forced to pay the full costs of their pollution one day soon, as that is ultimately the best way to shut 'em down or make them change their current practices.
posted by markkraft at 9:27 PM on February 26

Dasein, it seems like you're willing to trade long-term damage, maybe permanent damage, for short-term gains, perhaps very short-term gains. It's the equivalent of trading 50 living-wage jobs for 100 Walmart greeter positions.
posted by maxwelton at 9:30 PM on February 26 [3 favorites]

I have to admit that when I first read this post, I had an Austin Powers moment thinking "Billions? Billions? Why would anyone do something for billions of dollars?"
posted by sfts2 at 9:48 PM on February 26

We need to invest now in green energy, if we put $50 billion into subsidizing (including grants, not just tax breaks) solar/wind/etc and a carbon tax or cap 'n' trade system and really build up our green energy infrastructure during the depression, oil prices will never recover. They'll stay predominantly crashed and that will really suck for all the authoritarian extraction states (Russia, Iran, Saudi Arabia)
posted by delmoi at 9:53 PM on February 26

I have to admit that when I first read this post, I had an Austin Powers moment thinking "Billions? Billions? Why would anyone do something for billions of dollars?"

Hah, I had the same thought! "Billions? Not even tens of Billions? that's hardly anything!"
posted by delmoi at 9:55 PM on February 26

Dasein, it seems like you're willing to trade long-term damage, maybe permanent damage, for short-term gains, perhaps very short-term gains. It's the equivalent of trading 50 living-wage jobs for 100 Walmart greeter positions.

As much as I agree that oil sands are bad mojo, that's the silliest attempt at a comparison I've seen at a long time. Not developing the oil sands would result in losing 50 living-wage jobs for 100 (or probably less) Walmart greeter positions.
posted by Talez at 10:06 PM on February 26 [1 favorite]

I hope Canadians can fix their right-wing government. Sounds like are they are having the same problems the US has had with Cheney's backroom dealings with energy companies.
posted by Blazecock Pileon at 10:36 PM on February 26

Not developing the oil sands would result in losing 50 living-wage jobs for 100 (or probably less) Walmart greeter positions.

It's more a metaphor that was poorly presented. The idea being that in many rural localities, authorities were more than happy to allow walmart in to create "more jobs" when in reality what they did was lower the overall economic health of their region by driving out living-wage jobs with small local retailers in favor of more but lower-paying jobs which require taxpayer subsidization in order for people to survive working at them. Still probably not the greatest example.
posted by maxwelton at 11:13 PM on February 26

A 'baby seal moment' , one hopes.
via
posted by islander at 11:16 PM on February 26

Cancer downstream from oilsands merits further study
posted by Blazecock Pileon at 11:43 PM on February 26

It's the equivalent of trading 50 living-wage jobs for 100 Walmart greeter positions.

No, it's about creating 50 living-wage jobs where none existed before. Of course I'm willing to trade some environmental damage for jobs - everybody is. You think the environment hasn't been permanently damaged to build our cities and farms? The oil sands do a lot of environmental damage, sure, but they create a huge amount of wealth, too. The environmental damage could be substantially mitigated by forcing companies to clean up the tailings ponds. As for the scars in the landscape - yes, they're worth the jobs they create, in my opinion.

And as for the greenhouse gas emissions - when the world learns how to move people and things without oil, then come back and complain about the emissions. Until then, don't blame the supplier, unless you enjoy buying from the Saudis and Hugo Chavez.
posted by Dasein at 12:05 AM on February 27

Great to hear they are employing Novascotians and Newfoundlanders to work in this area, after the quality job they did protecting their own natural resources, cod.
posted by Samuel Farrow at 12:58 AM on February 27 [4 favorites]

It's the equivalent of trading 50 living-wage jobs for 100 Walmart greeter positions.

I would say it's more like quitting 100 Wal-Mart greeter positions for for 50 living-wage jobs, which just happen to involve salting the earth and laying minefields.
posted by dunkadunc at 1:10 AM on February 27

This is Canadian environmental politics at its finest, I've gotta say. Alberta gets to make a large profit and increase its influence in federal politics (as a contributor to provincial transfers), people from the Maritimes (Newfoundland, Nova Scotia, New Brunswick, PEI) get some relief from unemployment by playing the role of migrant worker, and First Nations populations living downstream from the tailing ponds get to develop exotic forms of cancer. Everybody wins, amirite?

Screwing the environment and--by proxy--populations that are already vulnerable and dispossessed can't be excused with the promise of jobs. It might explain why Alberta and the Canadian environmental ministry are so laissez-faire about it, but it certainly doesn't justify it.
posted by LMGM at 2:14 AM on February 27 [3 favorites]

Tar sands, please. Oil is a spin-word, please don't buy into it.

Bitumenous sands, if you must.
posted by anthill at 3:29 AM on February 27

Or 100 Wal-Mart greeter positions for 275,000 living wage jobs. And make no mistake, it may not be an ideal job, but even the lowest rung of rig worker makes quite decent money.
posted by paradoxflow at 3:45 AM on February 27

I could personally name dozens, and there are literally hundreds more people just from my small town of 7000 in Northern Ontario who have headed "out west" to find work that is either directly in or as a result of the tremendous amount of money flowing into these areas. Our forestry industry is devastated, and not likely to return - newspaper circulation and new home building seem to have slowed down a tad in the last few months...

In these times, people will choose a job over the environment any day.

Our Conservative government is not going to do a thing about it. Hell, even our Liberal leader made headlines when he responded negatively to the National Geographic article.

Most days it seems to me that the tar sands project is the only thing keeping Canada afloat (gross oversimplification, I know, but this country is just so small - it's amazing in a way that moving to Alberta for work is seen as an option for virtually every single Canadian)
posted by davey_darling at 5:25 AM on February 27

I was having dinner at one of those teppanyaki places in Las Vegas about five years back. One of our table-mates was a Canadian geologist who worked in the oil sands. He was complaining about either the provincial or federal government taxing his company's oil output. He spouted off some numbers, and nearly everyone else at the table (including the CEO of the company that makes Twinkies) agreed with him that the tax rate was too high. I did the math in my head and blurted out "But that's a tax rate of only 0.1%!"

It was almost like I had farted really wetly or had sneezed all over the hibachi. Twinkie-man took pity and kept talking to my wife and me, but the Canadian contingent ignored me for the rest of the meal.
posted by infinitewindow at 5:47 AM on February 27 [3 favorites]

Alberta sure is going to be a nice place to live after they get rid of all those nasty tar sands. I only wish they could do it faster. Maybe atomic steam injectors would do the job?
posted by pracowity at 6:28 AM on February 27

Oh, I wish they hadn't buried this great chestnut at the very end of the article:

A poll conducted by the Pembina Institute in 2007 found that 71 percent of Albertans favored an idea their government has always rejected out of hand: a moratorium on new oil sands projects until environmental concerns can be resolved. "It's my belief that when government attempts to manipulate the free market, bad things happen," Premier Stelmach told a gathering of oil industry executives that year. "The free-market system will solve this."

Shocking. So, despite that the free-market has historically always shucked this responsibility for cleaning up after itself onto the taxpayer, and despite the overwhelming public opinion to the contrary, we should just continue on as usual because business is good and the free-market will solve everything.
posted by Rhomboid at 7:38 AM on February 27

This is Canadian environmental politics at its finest, I've gotta say. Alberta gets to make a large profit...

Not so fast.

Just last summer, when oil was at a high of $147 US a barrel, the province was forecasting an $8.5 billion surplus.

But a drop in crude oil prices and turmoil in the world economy put a dent in that surplus. By the end of the second quarter on Sept. 30, the projected surplus had shrunk to $2 billion.

...Alberta is on track to end up with a deficit of $1.4 billion at the end of the 2008-09 fiscal year...

...creating the first deficit in the province since 1993-94.

...Alberta currently has legislation that prohibits the government from running a deficit.


And don't get me started on Stelmach that cocksucker.
posted by chugg at 9:29 AM on February 27

The irony is that they want to build a nuclear reactor to generate the steam they need to separate the tar from the sands. I like nuclear power just fine, but maybe they could just, you know, use the electricity.
posted by GuyZero at 9:51 AM on February 27

The problem with thinking of it in terms of jobs seems to me to be that, especially during periods when tar sands oil extraction isn't even economically viable, there is positively no broad benefit coming out of all this work that people are doing. If instead of building rigs to extract smidgens of oil from tar sand, Canada's migrant workers were paid to dig holes and fill them up again, over and over again, the world would be an objectively better place for everyone.
posted by You Can't Tip a Buick at 10:15 AM on February 27 [1 favorite]

In these times, people will choose a job over the environment any day.

People were choosing jobs over the environment before these times. Now they can use one more justification. The fact of the matter is, this is where all the low skilled workers go to earn $95,000 a year for driving a truck. It will stop being profitable, probably quite soon, and Alberta will be as bereft of economic value as the maritime provinces are. This is an unfortunate pattern in Canada: We have a third world economy based on extracting and exporting commodities, but we act like a first world economy.
posted by dobie at 10:29 AM on February 27

Ontario also makes cars no one wants to buy. That's at least second-world.
posted by GuyZero at 10:35 AM on February 27 [2 favorites]

I only wish they could do it faster. Maybe atomic steam injectors would do the job?


No joke
posted by never used baby shoes at 11:43 AM on February 27

Ed Stelmach and the Atomic Steam Injectors is a tempting band name.
posted by oaf at 6:40 PM on February 27

"Are those oil sands still worth anything now that the price of oil has crashed? I know with offshore drilling (for example) the new new drilling areas aren't really economically viable anymore.
posted by delmoi at 10:50 PM on February 26 [+] [!]"

Some of my distant family in Alberta has recently been laid off.
I think that the National Geographic article must have been conceived and started when oil prices were higher.
I have no idea at what price oil/tar sands are economically viable but those companies that do know and those in related industries are indicating by their actions that the current price is too low.
posted by vapidave at 7:06 PM on February 27

I'm reading a new article which says:
"The Calgary-based Canadian Energy Research Institute (CERI) estimated last fall that companies planning new oil-sands projects require prices between $80 and $100 a barrel to earn a reasonable rate of return, depending on the extraction method."
posted by markkraft at 7:51 PM on February 27

What isn't mentioned in this article is that the Canadian National Policy in years past always favoured Central Canada over Western and Atlantic Canada... all those failing GM plants, most Canadian banking (Bank of Montreal, Toronto-Dominion) and finance jobs, the aerospace industry, and compaines like RIM are concentrated in one small geographic region of Canada - partially, but not entirely because its the most densely populated one.

I say partially because for a good deal of Canada's history, this meant that that Western Canada produced wheat, cattle, and lumber for Central Canadian busineses that would sell them back to Western Canadian consumers as finished goods. The government was quite active in ensuring this model wasn't shaken up too badly. To take one example, General Motors constructed a plant in Regina, which the government quickly took over to manufacture arms during the war (nobody believes this story for some reason - the plant still stands used for a bunch of small scale light industries and storage, with "GM" carved above the rocks at the entrance). All theis means, if the Alberta and like-minded parts of the West clings to resources and has a huge economic emphasis on resources and resource policy, it is done only for survival and its only been allowed because these are the only jobs that can't be shipped elsewhere.

Obviously the enviornmental toll this takes affects the people who live closest to it, they drive by the place and drink from the nearby water supplies... they pay the biggest price, and its interesting that the thread places an emphasis on the damage this causes in the Great Lakes region, several thousand KM's away. The Oil Sand's use of Natural Gas also drives up living costs for people in the prairies, because bitumen production uses so much natural gas it drives up the consumer costs - which is a huge problem in a region with such a harsh winter climate. Promises of big money have also created some social problems, everyone knows about the substance abuse problems in the oil towns, and it hurts people in other ways too - since high school kids can make big money doing oil field labour some of them feel no need to stay in school. All the people coming to work in the oil industry has also strained the infrastructure of most nearby cities, and driven housing prices through the roof and created a huge housing crisis in the entire region. So let's not pretend that the oil sands aren't a mixed blessing, nobody who lives in the region has missed the negative impacts I mentioned.

Finally, the entire population of Alberta is Four Milllion People... they aren't the ones consuming the oil and gas. Most of the cars, and industry that demands this energy are in other places. So, its pretty easy for people to sit in their big cities and criticize a remote region and type out grumbly rants in a laptop about another part of the country when its their friends and neighbours demanding the products. How many people support bailing out automakers, and are critical of the oil sands? Is that a sensible position?
posted by Deep Dish at 9:13 AM on February 28 [1 favorite]

The tar sands projects are the biggest mistake we Canadians have ever made.

We simply do not have the technology to extract the oil properly.

If we were smart Canadians, we'd put the whole thing to bed for a few decades. There is lots of easily-accessed oil left in the world. We do not need the tar sands oil right now.

In 2050, when oil is $200 a barrel and we've got smokin' hot technology, then we start extracting it. We'll be able to do it properly, greatly increasing yield while simultaneously reducing harm to the environment. Plus, we'd make out like bandits. The oil is worth a helluva lot more in the future than it is now: bank it now for big payoff later.
posted by five fresh fish at 9:44 AM on February 28 [2 favorites]

Great documentary about all this coming soon.
posted by Marquis at 11:12 AM on February 28

fff, let me introduce you to my neurotic friend, the social time discount rate.

The concept of 'saving it for later' is quickly eaten away by how much we would gladly pay Tuesday for a hamburger today.
posted by anthill at 8:24 AM on March 1