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Canadians Ponder Cost of Rush for Dirty Oil

by John Vidal

As oil prices continue to reach record highs, the search for new sources of energy has led the world to Alberta, Canada, and its vast oil sands. The country famed for its wilderness and clean living finds itself caught between fueling the world’s oil-hungry economy and the ecological devastation and soaring greenhouse gas emissions that exploiting the tar sands produces.

The Caterpillar 797B heavy hauler is the world’s biggest truck. It’s taller than a four-storey house, as wide as a tennis court and it removes nearly 35,000 tonnes of oily sand a day from a deep open cast mine in northern Alberta in western Canada. Truck number 108 is driven by Norman Johnson, 63, a long-time Shell man who is planning to spend his retirement fishing, camping and “hunting the critters” in the vast boreal forests and bogs that stretch across the region. “It’s just like driving your car. Couldn’t be easier - once you get used to its size,” he says from his cab, 40ft off the ground. He won’t let the Guardian start up either of its two great engines.
But the future of northern Alberta’s aspen and pine woods, its rivers and animals are in doubt as the world’s greatest modern oil rush accelerates. Shell, Chevron, Exxon, Total, Occidental, Imperial and most other oil majors have so far invested nearly $100bn Canadian dollars (£50bn) in the 1,160 square mile (3,000 square kilometre) “bitumen belt”, which is being called the “new Kuwait”.

A decade ago, the vast landscape of forests and lakes around Fort McMurray and the Athabasca River provided a fairly minor and barely profitable sand oil industry. But it is now pitted with hundreds of square kilometres of toxic waste ponds, mines that are 300 feet deep, hundreds of miles of pipes and burgeoning petrochemical works. Every day brings a bumper to bumper stream of lorries carrying the world’s largest plant, pipes and machinery to the area, as well as young men seeking fortunes, and, say critics, the devastation of a pristine land.

The companies are now mining 1.3 million barrels a day of heavy crude oil from the sands, which are saturated with bitumen. But they expect to spend another £50 billion to more than double production to 3.5 million barrels by 2011. The surge is expected to attract 100,000 more workers to the northern wilderness where the wolf and bear are still common.

And that would just be the start. By 2030 they plan to produce at least 5 million barrels a day, and export more than Nigeria, Venezuela or Norway, which would make Canada one of the world’s largest oil producers.

Oil Boom

If the oil price stays high and new technology permits, oil companies will move, with the Canadian government’s blessing, to extract the estimated 180 billion barrels of crude to be found far deeper under 140,000 sq km of Alberta in what are the world’s largest proven oil deposits after Saudi Arabia.

By 2050 Canada could be the second largest oil producer in the world, shifting the global energy security equation but exacerbating global climate change in a way that has scarcely been considered.

The tar sands industry could pump vast amounts of money into the local and national economies. Alberta is the fastest growing Canadian province, and more than 40,000 people have moved to the oilfields in the last five years.

Only 20 years ago Fort McMurray was a homely, tumbleweed-blown place with a population of 25,000 people. It is now at the epicentre of the rush and its newfound wealth is visible everywhere with its casino, upmarket bars and new hotels. It is expected to grow to a city of 250,000 people within 20 years.

“There are four-hour traffic jams and companies can’t give away jobs. Kids out of school can earn $100,000 a year; people pay $400 a week to share a room; companies pay people $4,000 a month to lodge and $80,000 to just come here,” said one estate agent in Fort McMurray. “There’s money galore but the town can’t cope.”
The average price of a three-bedroom house, she says, is nearly $650,000 [£320,000] and rising.

The downside is ecological devastation and soaring greenhouse gas emissions on a scale that is beginning to alarm Canadians and other western countries trying to reduce the intensity of their carbon economies to counter climate change. Canada, alone, of developed countries, is expecting to increase emissions for 30 years and ignore its commitments to Kyoto.

So far, nearly 180 sq miles (470 sq km) of forest have been felled by tar sands miners and giant lakes of toxic waste water cover a further 130 sq km. Environmental campaigners, first nation groups, and doctors accuse the companies of creating massive air pollution, threatening river ecologies and killing fish, and even causing human cancers.

“This is the dirtiest source of oil anywhere in the world and there are barely any regulations,” says Simon Dyer, a researcher for the University of Alberta’s Pembina Institute.

He says the greater energy needed to produce a barrel of oil from the sands means three times more greenhouse gas emissions than producing a barrel of conventional oil. The greater energy is needed because the oil has to be dug out and then separated from the sand, and because it is low grade it has to be heavily refined. Tar-sands mining "is the fastest-growing source of greenhouse emissions in Canada", Dyer adds.

Environmentalists from round the world last month called for a moratorium on all new oil sand mines to impose higher standards. In the next 30 years, says Dyer, the oil works in Alberta could extend to an area as large as England. He says "hundreds of millions of extra tonnes of greenhouse gases will be emitted" just from the extraction process.

This month the province of Alberta and the federal Canadian government came under pressure to clean up the environmental mess already made and to lower urgently the carbon intensity of exploiting the oil sands. United States presidential contender Barack Obama and, separately, hundreds of US mayors have questioned the wisdom of making oil from bitumen.

Jason Grumet, Senator Obama's senior energy adviser, said the presidential candidate, if elected, intends to break the US's addiction to "dirty, dwindling, and dangerously expensive" oil.

"If it turns out that the only way to produce [resources] would be at a significant penalty to climate change, then we don't believe that those resources are going to be part of the long term, are going to play a growing role in the long-term future," he said.

His statement followed a direct attack on the oil sands by more than 1 000 mayors of large US cities who voted last month to boycott energy with a large carbon footprint.

In addition, California’s governor, Arnold Schwarzenegger, last month signed agreements which will cut the use of high carbon petroleum sources from Alberta and elsewhere. Ontario and British Columbia must now meet California’s low-carbon fuel standard and other provinces and US states are expected to join the standard, shrinking the market for oil sands.

In late June, the Canadian federal and Alberta provincial governments joined the Canadian oil industry to play down the impact of the sands on the environment. “Canada only produces 2% of the world’s greenhouse gas emissions, and the oil sands are only 8% of these [2%],” says a spokesman for the Canadian association of petroleum producers.

“We are only 15% more intensive with greenhouse gas on a lifecycle basis than conventional oil. We have to reduce emissions by 15% to get to parity. We are doing this by tree planting, installing carbon capture programmes and through hydrogen [mixed into bitumen in processing],” said a spokeswoman for Albian Sands, a consortium of Shell, Chevron and Marathon, which is working the 8 sq mile (20 sq km) Muskeg river mine 50 miles north of Fort McMurray.

This article was originally published in the July 12, 2008 issue of the Guardian newspaper.

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