​Ottawa needs to repair Western relations to benefit from tomorrow's oilsands success

The opportunity to build world-class, improving, beneficial oilsands assets remains alive and real

Prime Minister Justin Trudeau celebrates the Liberal party's election to a minority government on Oct. 21, 2019. Image: Justin Trudeau/Twitter

Justin Trudeau’s minority government is apparently agonizing over who is the least-worst person to act as a symbolic olive-branch bearer for alienated Alberta, the province that provides the trade surpluses fundamental to Canadian prosperity.

Maybe Trudeau will find that someone, and do so in such a way not to inflame post-election partisan tensions. Let’s hope he succeeds. But if Ottawa is seriously interested in sending a message to the West, here is my free advice on how to walk the walk on rebuilding relations.

In July, a joint federal-provincial environmental review panel approved a major new oilsands project in Alberta, with 77 recommended conditions. The proponent of the Frontier mine is Vancouver’s Teck Resources, which has spent the past eight years in pursuit of permission to develop the project.

Yesterday, the Alberta government reinforced its support for the Frontier project with a statement from Energy Minister Sonya Savage.

“Projects like these show that companies have confidence investing in Alberta. Provided the projects are in the best interest of Albertans, we need to hold up our end of the bargain by ensuring timely approvals,” she said.

According to the joint review panel (JRP), construction of Frontier alone will increase Alberta’s gross domestic product and household income by $12.3 billion and $7.5 billion, respectively.

Over the life of the project, an estimated $70 billion will be spent on operations and sustaining capital spending. (For perspective, the current book value of all the companies in the TSX S&P Renewable Energy and Clean Technology index is $38 billion.)

For those who like to claim that only Alberta benefits from this kind of investment, the JRP says approximately $1 billion of total construction spending and $127 million annually in operating spending is expected to accrue to other provinces.

For those who are insisting that automation is reducing oilsands jobs (as if this is the only sector affected by technology!), it is accepted that Frontier will create 75,800 person-years in total direct, indirect, and induced construction employment in Alberta, and 18,500 person-years in other provinces, with up to to 2,500 operations jobs during the 41-year life of the mine.

Why so many jobs? The project is a truck and shovel mine that includes two open pits, an ore preparation plant, a bitumen processing plant, tailings preparation and management facilities, cogeneration facilities, support utilities, disposal and storage areas, river water intake, a fish habitat compensation lake, bridge, roads, airfield and camp. Provisioning all of this is a national-scale endeavour that spreads spending from the logistics hubs of Mississauga to the outports of Newfoundland and the suburbs of Vancouver.

Over its four decades, the mine will produce 3.2 billion barrels of bitumen, resulting in significant benefits for municipal, provincial, and federal governments: $12 billion in taxes to Canada, $55 billion to Alberta in taxes and royalties, and $3.5 billion in local property taxes.

The project is consistent with the Lower Athabasca Regional Plan to maximize the economic potential of the oilsands. The JRP singled out the project's plan for progressive reclamation as a worthy one, with a reclamation working group to ensure that indigenous viewpoints are respected and integrated into reclamation activities. The long term goal is to return affected land to equivalent capability, integrated with the boreal forest ecosystem, and have it returned to previous users.

Frontier embodies the progress made in recent times in actively recognizing the duty to consult indigenous people. A number of indigenous groups actively participated in the approval process with written submissions, documented oral testimony, traditional land-use assessments, cultural impact assessments, and numerous other studies and reports. All of the ones significantly affected have signed agreements with Teck under which economic benefits, opportunities for meaningful engagement and communication, and measures to mitigate the effects of the project are considered.

For others, the consultation has occurred but support comes with conditions that will have to be addressed.

Is such a large project able to balance the economy and the environment?

Wood Buffalo National Park will not be affected at all. In terms of emissions, Teck proposes to mitigate mine fleet NOx emissions by using Tier IV compliant equipment and ensuring the mine fleet is maintained to prevent an increase in mine fleet emissions. The panel has imposed this as a condition of approval. Site vehicles will use low-sulphur natural gas and diesel fuel.

As for greenhouse gas emissions, Frontier is being designed as “best in class” with respect to GHG emissions intensity, with the lowest intensity compared to all other oilsands production, lower than about half of all oil refined in the United States.

For those who must clutch for reasons to justify their animus against the oil sands, it’s a popular talking point to say that the big push to build out “Fort Mac” is now behind us and it’s time for Alberta to get used to declining oil and gas employment. No. The opportunity to build world-class, improving, beneficial oilsands assets remains alive and real. There is no reason why unemployment and underemployment need to remain a condition of existence for Albertans and those in other provinces who have made their living in Alberta’s energy construction space.

The molecule that built modern civilization is the hydrocarbon. There is no politically acceptable off-ramp from this fact that doesn’t lead to energy poverty, just as it is unacceptable to ignore the consequences of fossil fuel combustion. The breakthroughs in chemistry and technology that are urgently needed will only occur in an environment that values, and can pay, for innovation.

A public comment period on the JRP’s recommended conditions for Frontier opened this week and ends on November 24. The new minority government has until the end of February 2020 to make its decision.

Canada needs to present a unified face not only to those who will benefit from the investment in this project, but also to its critics. Some give and take is going to be required to get us there. Hence the moves made in repairing federal-provincial relations in the immediate short term will have significant long-term consequences.

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