Musings: Canadian Study Tries to Start Adult Discussion of Oil Sands

Last week a peer-reviewed study conducted by a panel of experts assembled by the Royal Society of Canada attempted to set forth objectively the facts about the development of the country's oil sands resources. The report takes aim at oil companies, governments and environmental groups alike over their respective roles in the development of the Athabasca bitumen resources, and finds fault with everyone. The committee that authored the report also recommended steps to improve the environmental monitoring in this economically important industry for Canada.

Oil sands have been a hot-button topic for many years, but maybe never so much as during the past two years since the Obama administration has been in office. The "dirty" fuel reputation of this significant North American energy resource has drawn increased attention this year, just as production from the northern Alberta region is beginning to ramp up following the financial crisis of 2008-2009. The oil sands represent the crown jewel of Canada's $110 billion oil industry and the companies involved in the resource have embarked on plans to double oil sands output over the next decade to nearly three million barrels a day. Much of the oil sands output finds its way to the United States, a huge consumer of energy, and oil in particular. Efforts to expand pipelines to haul the bitumen from its home in the northernmost part of Alberta potentially to U.S. refineries along the Gulf Coast have stimulated a bitter partisan battle among U.S. politicians and environmental activists. 

Questions have been raised about the energy efficiency of developing the oil sands, i.e., the amount of energy that must be expended to extract, transport and upgrade the bitumen produced relative to the energy value of the output. A series of pipeline leaks this year on the systems owned by Enbridge, and its affiliate, Enbridge Energy Partners, in North Dakota, Michigan, Illinois and New York State, have raised concerns about the company's plans to expand capacity on its lines hauling bitumen from the oil sands to refineries in the United States and Eastern Canada. The role of the oil sands in both the global energy picture and the crude oil supplies for the United States have been controversial given the distaste for the resource among "green" officials within the Obama administration and the Democratic Party. 

The reputation of the oil sands industry suffered substantially this year as a result of the conviction of Syncrude related to the deaths of 1,600 water birds in one of the firm's tailing ponds near Fort McMurray, the release of a report co-authored by biologist David Schindler of the University of Alberta claiming that oil sands operations were sending toxins including mercury, arsenic and lead into the waters of the Athabasca River and its watershed, and by the high-profile visit to the region by noted film director and environmental activist James Cameron. From these controversies and publicity have come many myths about the oil sands and their effect on human and animal populations in Canada. The Royal Society's study was designed to address many of these myths with the aim of providing factual information not tailored to any agenda with the hope it would facilitate an adult discussion of the risks and role of the oil sands in Canada's, and ultimately North America's, energy future.

The study hits virtually all parties involved in the development and regulation of the oil sands resource. The report repeatedly says that science must not take a backseat to the rhetoric. It laments that the final approval of Alberta energy projects rests with politicians rather than scientists. The panel would like to see the scientists more involved and argues that there are a handful of areas for further research. These areas include: the state of groundwater; the condition of the Athabasca River; and the impact on long-term health and social effects from developing the oil sands. The authors of the study fault Alberta that controls the resource and should handle most enforcement for having too many cooks in the kitchen with respect to collecting and monitoring data. They criticize Ottawa, which is supposed to oversee major river monitoring and aboriginal issues, for being asleep at the switch. The authors state that there should be a more rigorous environmental impact assessment program and that the government should be collecting more from the oil producers for "reclaimed" land or returning mined-land to its original state. They view this deficiency as creating a huge unfunded liability for the residents of Alberta. 

While criticizing the oil companies for doing too little to restore land to its pre-mined state, it denies any scientific validity to the claims of declining air quality and rising cancer rates. In trying to present a balanced report on the oil sands and their development, the authors addressed the common claim by environmentalists that this is the worse ecological disaster on the planet by saying that "Based on our review of the publicly accessible evidence, a claim of global magnitude is not accurate." They went on to say, "This depiction is clearly aided by the photographs of ugly surface-mined landscapes, but the claims of global supremacy for oil sands environmental impacts do not accord with any credible qualitative evidence of environmental damage."

As expected, Susan Casey-Lefkowitz, the director of the international program at the Natural Resources Defense Council in Washington, D.C., said, "I would still say that the tar sands industry is a terribly destructive industry."

The Globe and Mail wrote an article about the report based on a pre-publication review of the study and an interview with the head of the seven-member panel. One aspect of their article was to examine some of the popular myths that swirl about the oil sands and what the study said was the truth. We thought it would be worthwhile repeating that section of the article.


"The Royal Society of Canada's oil sands report takes aim at a handful of popular misconceptions.

"Myth: Regulatory oversight is strong.
"Report: Alberta hasn't "kept pace with rapid expansion" and has a confusing process prone to 'political interference' and lacking scientific rigour. Ottawa isn't doing any better and needs 'to show some leadership.'

"Myth: The aboriginal community of Fort Chipewyan, which is downstream of oil sands development, has an elevated cancer rate.
"Report: ‘There is no credible evidence to support the commonly repeated media accounts of excess cancer in Fort Chipewyan.'

"Myth: Oil sands operations are draining the Athabasca River, and polluting what's left.
"Report: Current extraction levels are sustainable and there is no 'current threat to aquatic ecosystem viability.'

"Myth: Land is being reclaimed, or returned to normal, after mining.
"Report: The province is on the hook for unfunded reclamation liabilities and ‘no tailings pond has yet been completely reclaimed.'

"Myth: The oil sands are an environmental catastrophe of international scale.
"Report: The claim lacks any ‘credible quantitative evidence.' The James Bay hydro project has destroyed 15 times as much boreal forest as the oil sands; coal power is responsible for 17 percent of Canadian carbon emissions, more than three times the oil sands' total.

"Myth: Environmentally, open-pit mining is the worst form of bitumen extraction.
"Report: Open pit is messy, but 'in situ,' or underground mining produces as much as 20 percent more greenhouse gas."

Thus, while the Royal Society study takes aim at all the stakeholders for failures in their role of developers and regulators, it points out that the oil sands resource is not anywhere near as environmentally destructive as the opponents and many in the media are suggesting.  Maybe this report, not only will start an adult discussion in Canada about the development of the resource, but also in the United States.  More important, maybe it will force the U.S. to confront the economic value of the bitumen from Canada that would help reduce American dependence on foreign oil from unfriendly places on the planet.

G. Allen Brooks works as the Managing Director at PPHB LP. Reprinted with permission of PPHB.


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