23. Oil sands
Thirty years previous to the Nassau expedition I was living with my girlfriend in Edmonton, Alberta. My ambition at the time was to fly commercially. To afford lessons I worked for Amoco Canada Petroleum Company (since acquired by BP). It was not much of a job, but I managed to get long breaks at mid-day and would whip over to the nearby Industrial Airport for flying lessons. Mostly I worked in the office, but I did get sent over to the Swan Hills oil and gas area to learn a little about production. I came back with a lot of respect for the guys who worked in the field. (It was all guys back then).
I remember one time a bunch of us were standing in a circle in a field of mud, discussing the work and how to improve operations. I was brought to heel for using a crescent wrench instead of a spanner to tighten a bolt on a piece of equipment. Over time the crescent wrench could round the corners of the bolts. I didn’t see the point of that. Maybe they were just trying to keep a kid with a degree who didn’t know nothing in line. It was a minor point. But they really did care about the details and they insisted on following protocol. I found these guys really solid. They talked about hockey and hunting and fishing and families. Most were older than me, so are retired now or gone for good. Sometimes I wonder about them and their families. Alberta has long been a boom-and-bust province. That makes it hard.
The last few years at Feathercraft Kayaks were pretty rough: falling sales, increasing costs, a large shipment of expensive skin fabric was received that was faulty. Our big dealer in Germany dumped us. In response we downsized the shop and cut staff and costs. I had no time for design as I buried myself in production while trying not to worry about our mounting losses. Without any salary I started eating away at our savings. Meanwhile Theresa, my wife, and business partner, tried to hold the office together. It was up to her to juggle who to pay, who to delay, how to reassure the bank. Finally my partner, wife, love of my life, suffered a complete breakdown. We should have acted sooner. It was a shock to the remaining crew when I told them we had to end production after 47 years and to cover our debts we had to sell off our equipment. We had decades together. They could have walked right then. But they stuck around and together we shut down the factory. We had to tear down a wall of the RF welding room and then watch as the two big machines were forklifted out. We looked on as people came and helped themselves to our clicker press, sewing machines, bar tackers and hot air welders, sold at bargain prices, from our sewing shop. Our dreams went with them. We stripped our machine shop of our big CNC machine, cut off saws, tube bender, band saws, drill presses, milling machine, hand tools. Theresa got rid of the office equipment. Then we scrubbed the whole empty place down. No one complained. Theresa and I sold our home in Vancouver (the city had outgrown us anyway) and moved to a home in Victoria with a workshop in the basement where I now make replacement parts. Occasionally I meet up with the guys in Vancouver and share a few beers. They are good men. The Feathercraft family was strong but their own family attachments were stronger. It has been difficult for them but they have found jobs and are supporting their loved ones. The guys all have daughters. They are raising beautiful, strong, talented girls. I love these guys. Change sucks, but you adapt and move on.
The world is nearing the day when oil demand will peak and then fall. Some say this could happen as early as 2025 while others say it will be sometime shortly after 2030. But it is coming. Already investment is drying up in the oilsands and oilrigs are moving south to the U.S. where oil production is less expensive. There are signs that the shale oil boom there is cooling off too. Even Mohammed bin Salman is trying to diversify the Saudi economy and wants to float shares of Aramco, the largest oil company in the world. Aramco’s average cost of sucking a barrel of oil out of the ground is stated at U.S. $2.80. A 2015 study by Stanford University compared the breakeven price in various countries for new production of oil based on a 10% return. In Saudi Arabia the cost even after tax was $31. Canada’s rate was the highest in the world at $71.45. The transition to electric vehicles is happening faster than most industry observers predicted and auto companies are spending billions on their development. Today renewable power has become cheaper than coal and it is fast overtaking oil and gas. Tesla and other companies are developing massive, cost effective battery units for storing energy when the wind doesn’t blow or the sun doesn’t shine. As the price of fossil fuels drops the Saudis and other petro states will drive the higher cost producers down to ground. From a global environmental perspective this is not a bad thing. An earlier Stanford study found that the average carbon intensity of both Venezuelan and Canadian crude was more than three times that of Saudi light oil. The IPCC has stated that the most carbon intensive fossil fuels must remain in the ground as we transition to renewables and possibly nuclear. In 2010 MIT did a study on the Alberta oil sands. The conclusion was that “the niche for the oil sands industry seems fairly narrow and mostly involves hoping that climate policy will fail.” (M.I.T. Report ?183, Canada’s Bitumen Industry Under CO2 Constraints January, 2010).
As the western oil and gas industry falters, government and industry leaders are raging against the federal government, other provinces, and environmentalists. Talk about western alienation and separatism is growing. Even after the Calgary flood in 2013, the massive forest fires in B.C., Alberta and the Arctic and melting sea ice, they claim more pipelines must be built and the oilsands industry must be expanded by 40%. So far their bullying tactics have been successful. But reporting in the mainstream media is starting to change. It has been made quite clear in the national, although not provincial, press that tar sands production must be cut back. In 2005 Canada’s emissions totalled 739 megatonnes (MT). By 2018 they had declined only 1.2%, mainly because of oil and gas extraction, which INCREASED by two thirds to 105 MT. Canada cannot reach the federal government’s stated goal of 40 to 45% reductions by 2030 unless oil and gas, and especially the tar sands emissions, are reduced massively. Expanding tar sands production makes no sense. Shrinking production at a planned, orderly rate does.
It is a form of insanity to believe that the solution to the climate crisis and falling demand for oil is to pump more of it. “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” Possibly authored by Goebbels.
In order to “compromise” and agree to a carbon tax, the oil execs in Alberta have insisted on being able to expand emissions to a cap of 100 megatonnes by 2050. Were Canada to meet its modest GHG targets by then, 100 MT would represent more than two-thirds of Canada’s allowable emissions. The rest of Canada, including Ontario’s massive manufacturing base and agriculture across the country, would suffer enormously trying to reduce emissions to almost zero so that Alberta’s oil patch, which accounts for about 7% of Canada’s economy, could continue to pollute. And yet, there are options.
Alberta has plans to generate 30% of its power needs with renewables and it could do much more. It has received bids for energy averaging just $37 per megawatt-hour for four wind power projects totaling 600 MW. This is the cheapest power in Canada. There is huge potential here for local use and for export.
Southern Alberta enjoys more hours of sunlight than any place in Canada. There is expanding opportunity for renewable solar energy, which the International Energy Agency says is now the cheapest energy the world has ever seen. Perhaps even the panels themselves, which are primarily made in China, with big pollution costs, could be manufactured in the province.
The electrification of power grids and transport systems will require massive amounts of copper, cobalt, lithium, nickel and rare earth minerals. There are polymetallic black shale deposits in northern, northeastern, and southwestern Alberta that have these metals and minerals. Lithium can be found in the Leduc Formation, the site of Alberta’s first oil boom, and also extracted with vanadium from brine created during bitumen production. The high proportion of carbon atoms makes bitumen a poor feedstock for fuel production but very promising for the expanding carbon fibre industry, used in everything from windmills to textiles, nanotubes and bicycle frames. None of these have been fully explored or developed.
The warming climate may even offer opportunities for farming in more northern regions. As southern regions become too parched and hot for agriculture there will be an increasing demand for sustainably grown food.
Alberta is a wealthy province and its youthful citizens have been paying more than the Canadian average into the Canada Pension Plan. Instead of complaining, consider this an investment in the future. Like all big sovereign wealth funds the CPP is always looking for long-term investments. These big funds are actively divesting out of fossil fuels because they don’t want to hold stranded assets in the future. The CPP is huge, with over $400 billion in assets. Partner with them and local communities, including, especially, indigenous, to build massive wind power in the north and along the eastern side of the Rockies and large scale solar in the sunny south. Build out the electric power grid to join them all together. Harden buildings against climate change and invest in roof-top solar power. Become a green super power. There is lots to do.
Of course the biggest resource in the prairie provinces is the people. Alberta boasts the youngest population with the most university degrees per capita, and a highly skilled workforce with the highest incomes in Canada. It is hard to understand why intelligent people cannot accept that the world is in climate crisis and the demand for high cost, carbon intensive fossil fuels is set to fall off a cliff. It is not just Alberta. Across Canada people are in denial about the severity of the climate emergency. The IPCC has said that we now have about 11 years to get our emissions well down below today’s levels. That doesn’t mean that we can start in 11 years. There are over a billion trucks and cars worldwide today, there are fossil fueled power plants, cement production plants and methane-belching cows. Most of them will still be around in 11 years. To avoid massive environmental catastrophe and society breakdown we have to start reducing right now. This will lead to big job losses and a need for retraining. It is no time to down tools. There are huge challenges ahead, but also opportunities as we transition to a low carbon society. Change is difficult, but you have to move on.
I learned a few hard lessons during my own experience with disruption. The first is to learn the causes of your problems. Can you affect them or are they market changes that are beyond your control? You have to look beyond your immediate environment and not play the blame game. The second is to react as quickly as possible. The longer you procrastinate the harder your adjustment will be. I waited too long. The third is that change is difficult, often painful, but absolutely necessary. Finally, you must have a solid plan and act on it. Unfortunately, the leaders of Alberta and Saskatchewan are not even past stage one. They are actively fighting attempts to meet the GHG targets that the Trudeau has proposed in response to President Biden’s climate initiatives. Neither is the rest of Canada for passively accepting and acceding to their rants.
John Horgan was elected Premier of B.C. partly on the promise to use all the “tools in the toolbox” to stop the construction of the Kinder Morgan raw bitumen pipeline. Groups such as Coast Protectors are angry that their voices have not been heard concerning a project that is being rammed through their territories. They have vowed to stop the pipeline by any means. Construction continues and Horgan seems to have lost his enthusiasm for opposing it.
Pumping up the sausage
In May, 2016 I thought that I could add to the boating protests against the Kinder Morgan, (now Trans Mountain) Pipeline at their Burnaby Mountain shipping terminal. We welded a giant black sausage out of kayak hull fabric which I towed behind my kayak. It did not go over too well. There was a breeze and the big bag pulled me around like a tail wagging a dog. I mostly just managed to get in the way of people. The protests spooked Kinder Morgan and they later sold the pipeline project to the Trudeau government. Now the People’s Pipeline is over budget but still under construction behind a wall of secrecy that even withholds the name of the company that is insuring it.
What Horgan initially did to so anger the Premier of Alberta was to insist on studies examining the effect of dilbit on the marine environment. A review by concerned scientists found only four papers that reviewed direct impacts of bitumen on oceans. Not much is known.
At Kinder Morgan terminal
On Sunday July 25, 2010 an Enbridge Energy pipeline burst spilling in excess of one million gallons of dilbit into the Kalamazoo River in Michigan. The volatile hydrocarbon diluents evaporated and the heavier bitumen sank to the river bottom. The cleanup did not go well. A large area surrounding the spill site had to be evacuated due to the toxicity of the diluent. The U.S. National Transportation Safety Board chair, Deborah Hersman likened the responders to the “Keystone Kops”. The river was closed and in 2013 additional dredging was ordered.
That event was in fresh water. Would dilbit sink in saltwater? It depends. For one thing, the exact chemistry of the diluent is proprietary and differs amongst producers. For what it’s worth, investigators think that it may float unless there is sediment in the water, or wave action, or upwelling or wind or organic matter in the water, or the water is warm. Then, who knows?
The past government officials in B.C. liked to talk about “world class spill response”. So far, the best that has been achieved in real world emergencies is about 15% to 30% recovery. Retired Commander Frederick E. Moxey, who once commanded the Kitsilano Coast Guard Station, said in his experience “usually you recover 30 per cent at most, more like 10, and that’s with an immediate response and a trained crew with sponges and straw pulling the oil out by hand.” A dilbit spill could be much harder to deal with because the diluent would be toxic and unapproachable until it evaporated. Once it had, if the bitumen sank due to any number of conditions it would be impossible to recover.
If the pipeline goes ahead, 408 Aframax tankers a year, each 245 meters long and carrying 750,000 barrels of bitumen, could depart from Burnaby’s Westridge Marine Terminal only at high tide and sail through the Second Narrows and First Narrows, past Stanley Park, the Fraser River Estuary (still with one of the largest salmon runs in the world) out through the Strait of Georgia and Haro Strait and along surprisingly pristine marine areas that support an astonishing variety and abundance of life.
While claiming the moral high ground by standing up to the Kinder Morgan Pipeline, Premier Horgan is also backing a massive LNG terminal being constructed in Kitimat. Alberta’s former premier, Rachel Notley has called this “environmental hypocrisy”. She has a point. If the project goes ahead, B.C. will be unlikely to meet its own GHG targets, just like Alberta. You can’t have it both ways. (More on LNG later).
There is nothing hypocritical about the stand of all of the First Nations that have territory near the ocean. They are dead against it. (107 First Nations in Alberta and B.C. impacted by the pipeline are opposed, 43 inland groups are in support.) The Tseil-Waututh Nation’s lands include territory directly across from the terminal where the tankers will dock. They conducted a study of the probabilities of different spill scenarios using Kinder Morgan’s own data. According to their report, over a fifty-year period there is a 79- 87% likelihood of a spill, a 37% chance of a spill larger than 10,000 barrels and a 29% likelihood of a worst-case spill over 100,000 barrels. They consider these probabilities unacceptable. They are leading protests, and will continue until the project is stopped. Perhaps now is the time that we should be listening to these voices.
Leaders and oil execs in a number of provinces are still opposing the carbon levy, even though economists call it the most cost effective way to reduce emissions. It is helpful to remember that the former premier of B.C., Christie Clarke, froze the B.C. carbon tax that had been instituted by her own party. Tax policies come and go with changes of governments and even changes of leadership within the same party. This is another reason why it is especially important that we do not build pipelines that enable increased oil sands production. Pipelines last for 45 years. Already fires have burned across the whole Arctic, creating a cloud of smoke greater than Europe. Calgary has been inundated by floods and Fort McMurray has burned. Australia in 2019 and 2020 experienced truly horrendous bushfires and millions of animals died. We are becoming pariahs amongst the millions of young people around the globe who are looking for climate leadership.
 Dilbit (diluted bitumen) is a bitumen diluted with one or more lighter petroleum products, typically natural-gas condensates such as naphtha. Diluting bitumen makes it much easier to transport, for example in pipelines. Per the Alberta Oil Sands Bitumen Valuation Methodology, “Dilbit Blends” means “Blends made from heavy crudes and/or bitumens and a diluent, usually natural-gas condensate, for the purpose of meeting pipeline viscosity and density specifications, where the density of the diluent included in the blend is less than 800 kg/m3.” If the diluent density is greater than or equal to 800 kg/m3, the diluent is typically synthetic crude and accordingly the blend is called synbit.