The Blue Moon And Its Impact on Oil Sands Development

Once in a blue moon something remarkable happens in the world of politics—disparate opinions begin to align.  Last week the Federal government, the Alberta Federation of Labour, Greenpeace and Environmental Defence agreed with former Premier Peter Lougheed:  the pace oil sands development must slow down.

For the last 5 years Mr Lougheed has said that the frenetic pace of oil sands development has created a high cost economy and put Alberta on a collision course with the federal government.  Instead of proceeding with 60 projects at once, Mr Lougheed suggests developing no more than 5 or 10 underground bitumen recovery projects and 1 or 2 surface mining projects at any one time.  This measured approach would create pockets of time (admittedly not much) to examine and address the spin-off effects of oil sands development on the environment, the economy,  infrastructure and social services.

The suggestion makes good sense when you consider that the Alberta government appears to have learned nothing from the last boom-bust cycle.

Alberta had 75,000 oils sands related jobs in 2010.  This number will explode to 905,000 within 25 years.*  Alberta’s existing social services programs (think of healthcare and education) are in tatters.  The government’s ability to provide such services at the level required today, let alone meet the increased demand of the next boom, is utterly inadequate.

Premier Stelmach admits he can’t keep his pre-election promise to diversify the economy by keeping bitumen upgrading jobs in the province.  Bitumen production will double in the next 10 years but only 50% of that bitumen will be upgraded here in Alberta.**The government could insist that oil sands development come with “strings attached” and require industry to build on-site upgraders as part of the approval process.  But it is reluctant to do so.  Consequently the value adding jobs of upgrading, refining and petrochemical production will be created in China and India.

Alberta’s reputation for environmentally responsible development is tarnished—to the point where the federal government announced its own oil sands monitoring plan.  This plan calls for a slowdown in development in order to understand the results of monitoring of air, water, flora and fauna.

The federal government’s intervention in what is essentially the province’s right to develop its resources is the first step in the battle for control of the oils sands.  Alberta’s Energy Minister, Ron Liepert, is trying to outmanoeuvre the feds by creating the Super Energy Board (which consolidates the approval granting authority of the departments of Energy, Environment and Sustainable Development).  He hopes that quick approvals will create sufficient industry support to make feds go home.  However Mr Liepert’s “fast approval” solution is exactly what the feds are worried about—that Alberta is rushing approvals and not acting in an environmentally responsible manner.

The big question is will a slow down kill the golden goose?  Reducing the speed of development will certainly reduce job creation, royalty streams and corporate returns, however this reduction would be offset by tempering the negative side-effects of the boom (environmental degradation and an overheated economy).***

And that’s what everyone was talking about under the blue moon.  It’s time to look at oil sands development from the perspective of all Albertans, not just the oil companies.  Instead of a piecemeal approach to oil sands development we need a long term strategic plan.  The plan should consider the broader social and environmental impacts of development, not just its economic benefit.  The creation of such a plan requires input from industry, government and the public.  Let’s start the dialogue and do it right this time.

* Calgary Herald, July 19, 2011, A7

** Herald, July 19, 2011, A1

*** For an excellent review of the impact of the oil sands industry on Fort McMurray see a paper by Robert James Earley, Disconnect:  Assessing and Managing the Social Effects of Development in the Athabasca Oil Sands, University of Waterloo, 2003

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3 Responses to The Blue Moon And Its Impact on Oil Sands Development

  1. Pingback: Report: Green Jobs: It’s time to build Alberta’s future | - Alberta

  2. Hi Susan! Thanks for the nice reference to my thesis! 🙂 Neat blog, it’s the first time I’ve come, but it won’t be the last.

    Sadly, it always seems like these “strategic slowdowns” are more just lulls in industry — sounds like things are picking up quickly again in the oil sands region…here we go agaaaaaaiiiiiinnnnnnnnnnn!…..

    • Robert, it should be me thanking you…your analysis of the impact of the oil sands on Fort McMurray was very insightful. And yes, you’re right, here we go again! One would hope that after experiencing the boom/bust cycle a few times the government would have learned how to bring us all through on the other side relatively unscathed…but I wouldn’t bet on it.

      Thanks for joining the conversation. Hopefully we’ll see you again.

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