PHOTOS: Part of the Jackpine Oilsands Mine north of Fort McMurray, formerly owned by Shell and now operated by Canadian Natural Resources Ltd. (Photo: Pembina Institute.) Below: Author Kevin Taft.
Guest Post by Kevin Taft
Kevin Taft is a best-selling author, well-known speaker, and former provincial politician in Alberta. He served as an Alberta Liberal MLA from 2001 to 2012, and as leader of the Official Opposition from 2004 to 2008. The holder of a PhD in Business from the University of Warwick, Dr. Taft is often referred to in this space as the best premier Alberta never had. His most recent book is “Oil’s Deep State: How the petroleum industry undermines democracy and stops action on global warming – in Alberta, and in Ottawa,” published by Lorimer in 2017. The book will be officially launched in Edmonton next week. DJC
An unhealthy quiet has descended on Alberta’s relationship with its oil industry, which means important issues are being missed by the public. Issues like royalties.
How many Albertans realize the provincial government earned far more from gaming and alcohol sales than from bitumen royalties last year, and the year before that? If oil prices stay in their current range, this will be the normal pattern. Albertans should be talking about this, asking tough questions about our royalty system.
Another issue fallen under silence: the environmental liabilities created by the oil industry that could break the province’s finances. About 440,000 oil and gas wells have been drilled in Alberta, of which 105,000 have been reclaimed. That leaves 335,000 wells that will eventually need to be reclaimed, at a cost of tens of thousands to a million dollars or more per well. The Alberta Energy Regulator estimates the total liability for reclaiming these is $36 billion, a huge number that is likely too small. Add in the 400,000 kilometers of oil and gas pipelines in Alberta –enough to circle Earth 10 times – plus the thousands of aging facilities that will need to reclaimed to protect farmland, waterways, and urban areas, and there are billions more in costs.
This doesn’t count the costs of reclaiming oilsands sites, which include several of the largest tailings ponds, earthen dams, and mines in the world. Only a tiny fraction of the costs of this reclamation work has been set aside by industry. History tells us that when these liabilities come due, companies often declare bankruptcy or otherwise dodge the bill, and the taxpayer gets stuck. They could break Alberta’s finances, so why the quiet?
Then there is the really big issue: global warming. The first big alarm bells that emissions from fossil fuels were causing global warming were rung in 1965 by the scientific advisory committee to U.S. President Lyndon Johnson, and scientists have been ringing alarms louder ever since. In the 1970s and 1980s the oil industry itself supported research that confirmed the science of global warming. By 1992, though, the industry realized that reducing fossil fuel emissions meant reducing fossil fuel use, a death knell for the industry. Taking a page from the tobacco and asbestos industries, it began a well-documented campaign to confuse the public and undermine climate change science and policies, in order to delay meaningful action to reduce emissions.
This could not succeed forever. The costs of denying the science of global warming dwarf those faced by the tobacco and asbestos industries, and a series of legal and regulatory investigations in the U.S. and elsewhere are setting the stage for lawsuits that will take many years to settle but could drive the oil industry over a cliff.
You may then ask: Why the quiet on these issues in Alberta? Where is the healthy public discourse holding the industry to account? Where are the MLAs who should be putting government on the spot over royalties, reclamation costs, and global warming?
There is an answer: a swath of Alberta’s important democratic institutions have been captured by the oil industry, so these topics are now out of bounds. I spent 11 years in the Legislature and all the major political parties – sometimes even the PCs – asked tough questions about royalties, the environment, and reclamation. Now there is barely a murmur, not because these issues have been solved but because political parties have become instruments of the industry.
A democratic institution is captured when it serves a private interest over the public interest. In Alberta, the signs of capture are widespread. The NDP government vows to turn British Columbia’s delays in approving the Trans Mountain bitumen pipeline into an interprovincial crisis, even while endorsing a royalty system that practically gives the bitumen away. The United Conservative Party, champion cheerleader of fossil fuels, demands the government kill the carbon tax and revitalize the coal industry. Meanwhile, the Alberta Energy Regulator is financed by the industry and chaired by an industry leader, while the province’s universities for years have had a rolling boil of controversies over industry influence that has generated resignations, audits, scandals, and court cases.
Change is coming to Alberta, mostly from outside, where a chorus of loud voices is challenging the power of the oil industry. Some of these voices belong to environmentalists fighting global warming and some to First Nations fighting for land rights. Others belong to entrepreneurs bringing forward an energy revolution that will leave fossil fuels behind, and still others belong to investors pulling out of pipelines and oilsands megaprojects because they see an industry facing global decline.
There should be a ruckus in Alberta about royalties, looming costs of reclamation, and global warming. Instead there is quiet, and in democracy quiet is rarely a good sign.