We’ve never seen May heat like what’s being predicted in the Arctic over the next seven days. A shot of warm airs blowing northward over Siberia that are expected to generate a warm front that takes in nearly the entire Arctic Ocean. A weather pattern that, if it emerges, will completely compromise the central region of polar cold that has traditionally driven Northern Hemisphere weather patterns…
Introduction by Roger Annis, May 16, 2016
The enclosed three articles examine the background and consequences of the catastrophic wildfire that struck the city of Fort McMurray and surrounding tar sands region in early May 2016. The city is the major service center of the Alberta tar sands, one of the world’s single, largest climate wrecking projects. It is located in the boreal forest region of northern Alberta, some 400 km north and east of Edmonton.
The fire started west of Fort McMurray in late April and prompted a panicked, emergency evacuation of the more than 80,000 residents of the city on May 3. As of this writing, the fire is still burning out of control, moving eastward across sparsely-populated territory in Alberta and approaching the neighbouring province of Saskatchewan. A total of 250,000 hectares (app. 1,000 square miles) has burned.
Related reading: World’s climate threatened by greed and militarism, official Canada remains part of the problem, not solution, by Roger Annis, Jan 18, 2016
‘The world climate change summit meeting in Paris in December 2015 signaled an historic recognition that the world is facing a ecological emergency. But corporate Canada still has its head in the sand; the ‘tar’ sand, that is.’
Firefighters as well as luck saved some 85 per cent of Fort McMurray’s buildings, including its hospital and the rest of the downtown core. No date has been set for the safe return of residents. Water, electrical and communication services will take weeks to restore. Smoking ruins in and around the city continue to pose a threat. CBC News reports on May 16 that air quality in the city is very bad due to smoke, hampering fire dampening and recovery efforts.
None of the surrounding tar sands operations were damaged by the fire. Unlike the city, they were designed for protection from fires by clearcutting the surrounding forests. But many were shut down due to safety concerns or due to the emergency flight of personnel. At the peak of the crisis, more than half of daily tar sands production–some 1.2 million barrels–was shut down, costing some $65 million daily (Globe and Mail, May 12, 2016).
As the enclosed articles detail, the lessons of the disaster as a harbinger of a climate-warming world are very serious. They call out for intense examination and radical changes to a capitalist economic system that conducts reckless, unbridled extraction of fossil fuels and every other imaginable natural resource. This will not happen short of mass protests in favour of pro-ecology policies combined with a fight for an anti-capitalist government representing workers, farmers, First Nations and all other peoples who have no interest in capitalism’s continued pillaging of the environment.
Indeed, Alberta Premier Rachel Notley held a press conference on May 10 with 13 of the top barons of the tar sands industry to say that restarting operations is a top priority for them, safety conditions permitting. “We’re hopeful that we will be able to move in a relatively expedited way,” she said.
Notley and her Alberta government are abetting the oil industry’s wish to expand tar sands production in the years to come. To make that happen, they are lobbying hard to gain approval for new pipelines to be built to transport tar sands bitumen and conventional oil to export terminals on the Pacific and Atlantic oceans. The new government in Ottawa under Prime Minister Justin Trudeau shares that ambition.
According to CBC News, the Conference Board of Canada estimates that the cost of the fire to the oil industry in lost production is $1 billion, and counting. In the earlier stage of wildfire crisis, initial estimates of insurance costs were $9 billion.
Update on May 17, 2016: The wildfire in and around Fort McMurray has taken another serious turn in the past several days. Neighbourhoods in the north of the city are once again under direct threat of fire, while for the first time, tar sands operations north of the city are directly threatened. Eight thousand employees have been evacuated from sites; others are on emergency evacuation notice. Among the threatened sites are several of the largest–Suncor and Syncrude.
CBC News reports that scientists at the National Oceanic and Atmospheric Administration in the United States are reporting that April 2016 was the hottest month of average global temperature in its 137 years of record-keeping. The average global surface temperature was warmer by 1.1 degrees Celsius than the 20th century average for that month. This is the 12th consecutive hottest month on record. (March 2016 NOAA report here.)
The arsonists of Fort McMurray have a name
Fossil fuel corporations are causing the climate change fueling mega-fires – and they should be footing the bill for the devastation
Commentary by Martin Lukacs, The Guardian, Thursday, May 12, 2016
As the fire that ravaged Fort McMurray finally moves past the city and the province tallies the heartbreaking damage, a search will begin to discover the source of the destruction.
Investigators will comb the nearby forests for clues, tracing the fire’s path to what they call its “point of origin.” They’ll interview witnesses, collect satellite imagery, and rule out natural causes—much like the work of detectives.
Except, in the age of climate change-fuelled mega-fires, this truly is a crime scene. Not, I mean, the handiwork of troublesome teenagers, nor a campfire left accidentally burning. The devastation of Fort McMurray is the predictable outcome of arson on an entirely different scale.
These arsonists have a name and they’re hiding in plain view—because their actions, at the moment, are still considered legal. They’re the companies that helped turn the boreal forest into a flammable tinder-box. The same companies that have undermined attempts to rein in carbon emissions. The same companies that, by their very design, chase profits with no mind for the ecological and human consequences.
Yet in the fire’s aftermath, it has seemed impossible to name them: fossil fuel corporations. Of course they’re not the only ones who have fuelled climate change: all of us consume oil at every level of our lives. But the record is clear that we are not equally responsible: an astonishing 90 companies alone have caused two-thirds of global carbon emissions. And all the oil giants involved in the Alberta tar sands are among them: ExxonMobil, BP, Shell, Total, CNRL, Chevron.
In the last week, these corporations have escaped accountability as quickly as ordinary Albertans have risen to action. Across the province, people have opened their homes to evacuees, offered gas, shared food. The most marginalized have given the most: First Nations welcoming thousands to their communities; Muslims praying for rain at the Alberta legislature; and Syrian refugees, barely resettled in the province, gathering donations. Stories of heroism have abounded: like the school principal who drove a bus full of children out of the burning city, reuniting each one with their families, and filling extra seats with strangers from the roadside. At almost a moment’s notice, a province often written off as dog-eat-dog individualists proved the naysayers wrong: they have come together in a spirt of fellowship and solidarity.
Most of these people had no idea of the disaster that was coming. But there were some who did: the corporate arsonists themselves. As far back as forty-five years ago, certain Canadian oil corporations already knew the lethal climate consequences of their business model. Last month, building on similar revelations about US companies, investigative reporters discovered stunning proof in the archives of a Calgary museum—a clue as good as any about this mega-fire’s “point of origin.”
An uncovered report produced in 1970 by Imperial Oil, the Canadian branch of ExxonMobil, put it crystal clear: “Since pollution means disaster to the affected species, the only satisfactory course of action is to prevent it.” Except the oil company proceeded to spend decades lying about what they knew, and ensured the disaster would be as profound as possible. Little wonder the same company report branded its own actions as “anti-social.”
The very picture of anti-social? A fire ripping through a city. The incineration of homes. Irreplaceable possessions and family albums burned to ash. Climate refugees spilling across a province and country, stripped of their livelihoods and uncertain of their future.
Science may not show a direct link between climate change and the existence of one particular fire, but there is no doubt why the blaze that devoured the Alberta town was so powerful.
“We have loaded the dice for more extreme wildfires,” says Mike Flannigan, a wildfire scientist at the University of Alberta. “We attribute the increase in wildfires and their severity and intensity to human-caused climate change. We’ve been saying it for years. Many of us saw a Fort McMurray-like situation coming, but none of us expected anything as horrific as what has happened.”
Today, twice as much land in Canada is being devoured by fires as in the 1970s—and that will double or quadruple again in the decades to come. Climate change is putting such pressure on the boreal, which covers most of northern Canada, that a study published last year in the journal Science issued a stark warning: “this forest will convert to a type of savannah.”
To remain mute about those responsible for this devastation is not an act of sensitivity toward the citizens of Fort McMurray. It is to stand idly by while these corporations move on to claim their next victims. To argue, as prime minister Justin Trudeau has, that making the connection between climate change and this infernal fire is not “helpful,” is not a gesture of statesmanly maturity. It is the prevarication of political cowards.
Other politicians have adopted an even more toxic approach: not letting the crisis go to waste. Former Conservative natural resources minister Joe Oliver argued on national television that Trudeau should seize the fire as an opportunity to force through a tar sands pipeline to the coast. And British Columbia premier Christy Clark insisted the economic impact of the blaze could be balanced by ramming oil and liquified natural gas projects through the regulatory process—doubling down on what helped cause this crisis in the first place. In the days ahead, watch for this argument to grow even louder.
But the greatest model of insensitivity is this: the arsonists don’t seem content with the burning of just one Canadian town. The latest climate science has told us exactly how much fossil fuels we can burn before we lock in catastrophic warming—warming that will make today’s mega-fire look modest. But companies have access to four or five times that amount in their reserves. They plan to extract and burn it all.
If we want to contain warming to the Paris climate accord’s target of 1.5 degrees, we will need to keep most fossil fuels in the ground—to strand these assets and shift to clean energy. But corporations have no such intention. “We don’t see any stranded assets. We think all our assets will be required,” an ExxonMobil spokesperson said after the signing of the Paris accord. It “reinforces our approach,” Shell added. In other words, they’re bent on arson on a global scale.
The law is finally catching up to this planet-altering recklessness. In the United States, both California and New York’s attorneys general are investigating ExxonMobil for spending decades misleading the public about its knowledge of the risks of climate change. Meanwhile, both Democratic presidential candidates have joined the chorus of voices demanding the federal Department of Justice join the investigation. Last month, lawyers in the Philippines launched another precedent-setting case: a lawsuit against fifty of the world’s fossil fuel companies for damages the country has suffered from climate change-driven hurricanes.
This path should show the way forward for Canada, entrenching a basic moral principle: the polluter pays. Fossil fuel companies shouldn’t be celebrated for the minimal corporate paternalism they are now demonstrating—housing, feeding and flying evacuated workers out of Fort McMurray and the surrounding work camps. They should be footing the bill for the devastation. They invested billions in an industry knowing it would prove destructive to the air, water, climate, and health of Albertans? It’s time to put our hands—through higher taxes, royalties, even a public takeover—on some of their gargantuan profits, and use them to transition to a new economy full of good clean jobs and beyond these dangerous energy sources.
That would mean rejecting the lopsided sacrifice currently demanded of us: that corporations derive the rewards while we cover their damages. Canada’s fossil fuel companies have vacuumed billions in profits out of Alberta, and used their political influence to prevent the emergence of a more diversified economy in a province with incredible renewable energy potential. Yet the relief and recovery effort, which may cost upward of $10bn, will be paid for by the government and taxpayers. The donations offered by individual Canadians are a testament to incredible generosity: they also represent an outsourcing of responsibility.
But that spirit of solidarity and mutual aid, of compassion and confidence in each other, is the best expression of ourselves. It points the way forward. Two people tragically died in the evacuation of Fort McMurray—but many more no doubt were saved, by courage and heroism and the deep care and love for fellow citizens that can flourish in a period of catastrophe. Such are the values we will need to mount a collective fight against the unfolding disaster of climate change.
Imagine these values actually governing our society—for a start, relaxing EI rules to ensure dignity for all of the evacuated workers. Imagine this resiliency, courage and generosity being harnessed to lead the transition to a healthier, more just post-carbon society—helping prevent even more extreme weather to come. Imagine the rebuilding of Fort McMurray being not just a page turned on an unprecedented disaster, but the beginning of a new direction.
If that can happen, the smoke will truly lift from this country and this town.
Martin Lukacs in a writer in Montreal. On twitter: @Martin_Lukacs
The other fire: Fort McMurray’s slow burn
By Andrew Nikiforuk, The Tyee.ca, May 13, 2016
Homes can be restored, but not the bitumen boom that first put them there.
The $10-billion wildfire that consumed 2400 homes and buildings in Fort McMurray may be the least of the region’s problems. Although the chaotic evacuation of 80,000 people through walls of flame will likely haunt its brave participants for years, a slow global economic burn has already taken a nasty toll on the region’s workers.
That fire began last year when global oil prices crashed by 40 per cent and evaporated billions of investment capital in the tarsands. As the project’s highest-cost producers started to bleed cash, corporations laid off 40,000 engineers, labourers, cleaners, welders, mechanics and trades people with little fanfare and even less thanks.
Many of these human “stranded assets” endured home foreclosures and lineups at the food bank. Worker flights to Red Deer and Kelowna got cancelled and traffic at the city’s new airport declined by 16 per cent. Unemployment in Canada’s so-called economic engine soared to nearly nine percent.
Despite the high cost of the oil price crash, most residents of Fort McMurray, along with Canada’s politicians, think that oil prices will rebound and things will turn around sooner or later. They’ve seen it all before, they say. But a number of economic trends and analyses suggest that bitumen’s glory days may be over.
Oil demand is slowing
What resembles a string of bad luck may actually be the unfortunate consequence of rapidly developing a high risk and volatile resource with no real safety net.
The first undeniable factor is weakening demand for oil, the engine of global economic growth. China’s economy, the world’s largest oil importer, is faltering as its industrial revolution peaks and fades.
Europe, Japan and the United States are also using less oil, and their economies are stagnating too.
The global economy has become so stuck in neutral that famous financial power brokers such as Larry Summers now write depressing articles entitled “The Age of Secular Stagnation,” in Foreign Affairs Magazine, no less.
In such a world, little if any bitumen will be needed in the international market place. In fact, economists now trace about 50 per cent of the oil price collapse to evaporating demand.
Investors fear getting burned
But there are many other potent signs and they have already covered the economic landscape with smoke.
Murray Edwards, the billionaire tycoon behind Canadian Natural Resources, one of the largest bitumen extractors, has decamped from Alberta to London, England. Edwards and company slashed $2.4-billion from CNRL’s budget in 2015. Since the oil price crash, by some accounts, Murray’s company has lost 50 per cent of its market value. (Cenovus, another oilsands player, got cursed with junk bond status.)
Edwards likely has read the tea leaves and understands that bitumen might not play a significant role in the secular age of stagnation.
In fact, bitumen has lost so much of its global investment lustre that, even before the Fort Mac blaze, Bloomberg reported that no new supplies of low-grade bitumen will enter the market in 2018. This would mark the first time in more than a decade that the rate of bitumen extraction, now at 2.4 million barrels a day, will not increase.
In addition Carbon Tracker, a market friendly group, now informs investors that low oil prices will favor existing production from low carbon and low cost conventional sources. That’s a terrible forecast for Alberta’s oilsands and its product which is neither low cost to produce nor low carbon to refine.
Sold cheap, pricey to refine
Unfortunately, there’s more reason to expect Fort McMurray’s and the oil patch to get burnt by global economic realities. Consider the Alberta government data on the dive bombing value it places on bitumen.
The junk low-grade heavy oil or what the Koch brothers accurately call “garbage” (the right-wing billionaires remain the largest buyers of raw bitumen at their Pine Bend facility in Minnesota) is such a complicated and low-grade resource that it requires a complex methodology to grade its market value.
Bitumen might be the world’s most expensive hydrocarbon to extract out of the ground, but it remains the world’s cheapest refinery feedstock. Due to its low quality it has always sold at a discount to West Texas Intermediate.
About half of all oilsands exports — 1.2 million barrels — are raw unrefined bitumen. Unlike the Alberta government, which has rarely thought about adding value to bitumen, the Koch brothers saw an opportunity years ago. Since the 1980s Koch Industries has been buying Canada’s bitumen crude and turning it into high value jet fuel and gasoline at their Pine Bend refinery. In fact, Koch Industries now gobbles up 300,000 barrels of bitumen a day and remains the single largest buyer of Canada’s dirtiest crude.
To the Kochs, it’s a no brainer: bitumen offers some of the most attractive refinery margins in the world. With the oil price collapse, the Kochs keep on making more money, while Alberta gets poorer.
In February, the Alberta government set a minimum value for bitumen at $10 per cubic metre. That equates to a value of about $1.50 per barrel of bitumen. But in 2014, the government’s monthly report valued bitumen at $421 per cubic metre. The data suggests that bitumen has lost 97 per cent of its value during the price collapse. In other words companies once worth billions are now worth millions. Could that be why Edwards sailed to England?
A slow fire has victims, too
Last but not least comes a pithy analysis by Jeff Rubin, CIBC’s former chief economist. Rubin warns that contraction is the only future for the oilsands unless Canada wishes its economy to become “obsolete and non-competitive.”
He correctly notes that 80 per cent of the increase in new global oil did not come from OPEC but from high cost bitumen mines and fracked U.S. shale deposits.
North American corporations, in other words, engineered the global oil glut. Encouraged by easy credit, Big Oil flooded the market with difficult and largely uneconomic hydrocarbons.
The Saudis, the world’s number one and cheapest producers, refused to scale back production or give up market share. Instead, they precipitated a price free-fall.
When oil prices stood at $100, rash bitumen development made some sense. But when prices fell below $45, the gamble turned into Russian roulette.
Unlike Saudi oil, most bitumen projects require prices of at least $60 to $70 a barrel to survive. And so most tarsands extractors (except those who own refineries) are now bleeding cash; many banks have developed nervous twitches; and thousands of workers have found themselves unemployed.
The overproduction of bitumen explains why, says Rubin, “the oilsands morphed from an engine of economic growth into the epicenter of a made-in-Canada recession.”
Canadian politicians and the media, adds Rubin, still treat the market downturn as “a largely self-correcting” oil price cycle and assume that happy days will return again. But Rubin doubts that. As the world economy stagnates and begins to cut carbon emissions, demand for oil and its most carbon intensive products from the tarsands, Canada’s single largest source of carbon pollution, will likely shrink.
The wise course of action for Alberta and Canada, therefore, rather than being caught by surprise, would be to plan for an orderly transition that protects communities and oilsands workers, and rewards them for the economic contributions they’ve made by providing funds for retraining and industry diversification. As Rubin argues, the tarsands can downsize today and avoid more economic pain. Or it could ignore all the smoke and global trends and wait for “massive write downs tomorrow.”
No one who has survived a horrific fire wants to hear that sort of truth. But there are nasty and dirty fires burning in the economic woods and they are now stalking a project that industry and government carelessly allowed to grow too fast and too big.
Most Albertans and most Fort McMurray residents never wanted reckless growth. In a heartbeat they would have voted to slow down the tarsands years ago with higher royalties and better regulations, but their political masters refused to put on the brakes.
Ironically enough, only a wildfire has been able to do that.
Andrew Nikiforuk is a prolific author of books on Canada’s industry and natural environment, including ‘Slick Water: Fracking and One Insider’s Stand Against the World’s Most Powerful Industry’ (2015); ‘The Energy of Slaves: Oil and the New Servitude’ (2010); ‘Empire of the Beetle: How human Folly and a Tiny Bug are Killing North America’s Great Forests’ (2011); and Tar Sands: Dirty Oil and the Future of a Continent (2012).
Can Justin Trudeau see the forest fire for the trees?
By Andrew Nikiforuk, Foreign Policy Magazine, May 11, 2016
Canada’s photogenic prime minister promises a new type of enlightened, environment-friendly leadership. But he’s still hooked on dirty oil.
The horrific wildfire that is consuming large swaths of Fort McMurray, Alberta, has already broken Canadian records for calamities fueled by climate change. The fire surpassed the economic damage wrought by Quebec’s multibillion-dollar ice storm in 1998 and even southern Alberta’s biblical $2 billion deluge in 2013. The boreal inferno, which mushroomed exponentially like some airborne virus, not only forced the perilous evacuation of 80,000 Canadians from the corporate mining outpost but also consumed nearly 2,400 buildings. Twitchy bankers and nervous insurers now peg the unprecedented firestorm as Canada’s costliest natural disaster.
It is no accident that the fire sprang up amid Canada’s climate change debate in one of the nation’s most disturbed northern landscapes. All around Fort McMurray, pipelines, roads, seismic lines, and mining pits occupy huge chunks of the forest like an industrial octopus. Humans most likely started the blaze, but climate change helped propel the flames into a storm that made its own lightning and has left behind an estimated $10 billion in damage.
The unfolding horror show caught the young government of Prime Minister Justin Trudeau at an interesting juncture. Unlike his predecessor, Stephen Harper — an ideologue who championed pipelines, muzzled climate change scientists, and attacked environmentalists with malice — Trudeau has changed the tone. He ended the censorship of scientists and personally played a prominent role at the recent Paris COP21 conference on climate change. But he has not yet departed from Harper’s “drill, baby, drill” national narrative. He now promotes oil-export pipelines and wind farms in the same sentence — a sort of political schizophrenia. Contrary to overwhelming scientific evidence, Trudeau acts as though sunny rhetoric on curbing emissions will somehow win more markets for what has become an uneconomic crude. At current oil prices, most oil sand miners are bleeding cash.
Even Trudeau’s response to the climate-inspired disaster was somewhat oily, though sadly demonstrative of the business-as-usual attitude that afflicts even Ottawa’s best and brightest. On May 4, he abruptly criticized Green Party leader Elizabeth May for spelling out the obvious: that the fiery consumption of Fort McMurray and the global climate crisis are linked. “Any time we try to make a political argument on one particular disaster, I think it’s a bit of shortcut that can sometimes not have the desired outcome,” Trudeau countered. “There have always been fires.”
But that’s not true in a world destabilized by an increasingly human-engineered atmosphere.
For more than a decade now, Canada’s federal foresters and climate change experts have documented a plethora of bad trends. Warming temperatures have not only increased the area burned by wildfire, but also extended the length of the fire season. Thanks to climate change, patterns of natural forest renewal by fire have been thrown off-kilter. The more frequent and more disastrous blazes have also bankrupted provincial fire-fighting budgets.
Canada is home to a third of the world’s great boreal forest. It supplies Canadians with $700 billion worth of life-supporting services each year and remains one of the world’s important climate and water regulators. Yet the hotter and drier it gets, the more easily it will succumb to fire, disease, and insects. As early as 2003, Canadian forestry experts made the inconvenient prediction that “it is unlikely that there will be sufficient resources to respond to increasing fire.” This, of course, all came to pass in the ashes of Fort McMurray.
Anyone who doesn’t work in oil sands (a low-grade heavy oil that even the Koch brothers call “garbage” crude) grasped the disaster’s smoky irony. The fire consumed sections of the business center of this dirty industry. Bitumen, a tarry mess trapped in oil sands, has one of the highest carbon footprints of any hydrocarbon on the planet and is more impure than Mexican or Venezuelan sour crudes. As a consequence, the energy required to extract and upgrade 2.4 million barrels a day of oil sands has made the energy megaproject Canada’s single largest source of greenhouse gases.
Thanks to unchecked growth and the lack of a national carbon plan, forest-drying emissions from the nation’s oil and gas sector recently surpassed those of Canada’s immense transportation sector. Moreover, despite historically low oil prices, the industry now wants to double production, which would worsen emission trends. As a consequence, the oil sands and their climate-denying supporters have become an almost unmovable boulder on the road to constraining national carbon emissions. The project’s scale also explains why federal promises, made in 2006 to reduce Canadian emissions by 20 percent by 2020 and 65 percent by 2050, have all come to naught. “There is no way Canada can come close to meeting its greenhouse gas targets by expanding bitumen production,” says David Schindler, one of Canada’s top scientists. Simply put, there’s no way Trudeau can make a dent in climate change without limiting — and then shrinking — Canada’s chief carbon-maker.
Canada’s fading oil sands boom is a cautionary tale on the madness of crowds and the greed of politicians. By rushing development to take advantage of high oil prices, the industry and complicit government regulators exaggerated benefits, ignored carbon risks, lowered taxes, and saved hardly a dime. In the process, the oil sands made Canada the world’s fifth-largest oil producer and the supplier of nearly half of U.S. oil imports. But the perils of rapid development, including a volatile petrodollar and a wounded manufacturing sector, are now raining down on the country like glowing embers pelted convoys of vehicles fleeing Fort McMurray.
In a strange twist of fate, the firestorm gives the federal government and Canada’s political class a chance to revisit the project’s failing economics and carbon liabilities. The collapse of global oil prices last year ignited a highly predictable market firestorm. The high-cost oil sands industry quickly dumped 40,000 workers in Canada and scaled back investments by tens of billions of dollars. The downturn also illustrated the marginal character of an ugly resource. Extracting oil sands not only costs more than other hydrocarbons; it also sells at a fraction of the price of West Texas crude due to its poor quality. Jeff Rubin, the former top economist at one of Canada’s biggest banks, recently noted that bitumen still “trades at anywhere from a 25 to more than 50 percent discount to world oil prices, rendering it the cheapest-priced oil in the world, with one of the highest production costs.” That sort of fragility makes Canada’s heavy product highly vulnerable to oil price volatility, as well as carbon pricing.
The fire did what no politician has yet contemplated: It temporarily shut in a million barrels of oil sands production due to worker shortages and safety concerns. Rubin and other analysts have duly noted that large production increases from U.S. shale deposits and Canada’s oil sands are largely responsible for the global supply glut. A sober government might note that new proposed pipelines would make the glut worse and possibly drive prices down further. The solution? Chart a course toward curtailing production by a million barrels a day with effective carbon pricing. It’s either that or politicians drunk on the illusions of oil wealth could wait for a carbon-constrained world to exact more punishing terms later.
That’s the blunt choice facing the Trudeau government: It can act now to save Canada’s endangered northern forests and honor the country’s commitment to a green future, or it can support a doomed and ruinous crude. It can’t do both.
Any clear-eyed observer would realize that high-cost, high-carbon oil sands extraction must shrink over time. Canada gambled on a resource boom that has fizzled and overproduced a high-risk “garbage” crude. Carbon pricing and climate change — opportunities and risks, respectively, the country collectively denied — point to only one rational destiny for the oil sands: contraction. And so, now Trudeau must act unconventionally, boldly pushing his oil-exporting nation to lead the charge against climate disruption.
More background:
Diluent shortage adds to oil sands industry’s wildfire woes, by Alex Nussbaum, Bloomberg News, May 10, 2016
A raging wildfire in Northern Alberta has dealt oil sands operators another complication: local shortages of diluent, the light oil needed to get Canada’s heavy crude flowing…
Canadian producers use about 400,000 barrels a day of diluent, which comprises a variety of low-density hydrocarbons including natural gasoline, condensate and synthetic oil. Just over half of it is imported from the United States, according to John Auers, executive vice-president at Turner Mason & Co., an oil industry consultant in Dallas.
“As soon as you start limiting the amount of diluent you can get out there, all of the sudden you can’t blend it up [with bitumen] and you can’t transport it,” Mr. Auers said in a telephone interview.
The wildfire that’s obliterated sections of Fort McMurray and forced the evacuation of more than 80,000 people has knocked out an estimated one million barrels of daily production from the oil sands region. Canadian officials said Monday that rain and cooler temperature were helping firefighters battle the blazes, though they still covered an area twice the size of New York City.
Most imported diluent reaches the area through Enbridge’s Southern Lights pipeline and the Cochin pipeline operated by Kinder Morgan Inc. The material arrives at facilities near Edmonton and Fort McMurray, where it’s blended with bitumen. The exact mix varies with different grades of bitumen, but typically about 20 per cent to 30 per cent of any oil sands barrel is diluent, Mr. Auers said.
While the material is still reaching Alberta, “the local distribution, storage and blending operations are not able to function because of the fires,” Auers said. “You add all of those together and you’ve lost production.” [end Bloomberg article]
Polar heatwave digs in as Arctic sea ice crashes — Blue ocean event looking more and more likely, report published on Roberts Scribbler, May 13, 2016
Recent Posts
