Time for Alberta’s oil industry to take a stand

Gwyn Morgan

What do the seal harvesters of Atlantic Canada have in common with workers in Alberta’s oil sands? Both are targets of sustained attacks aimed at the demise of their livelihood. And in both cases, the main strategy of attackers is to eliminate the market.

Photo-ops of Paul McCartney and his former wife cuddling seals on an ice floe helped secure a vote by the European Parliament to ban seal fur imports. Now, environmental zealots are pulling out all the stops to promote a U.S. ban on fuel made from oil sands crude. Their tactics include a “Rethink Alberta” billboard and video campaign, along with mailing thousands of postcards to travel agents implying that oil sands development threatens Alberta’s most famous mountain tourist destinations.

The oil sands took another hit with the release of a study by University of Alberta ecologist and anti-oil-sands activist David Schindler. His study showing elevated levels of heavy metals in the Athabasca River downstream of the oil sands created sensational headlines, even though it revealed nothing new.

Canadian oil is also a controversial topic within the Democratic Party in the United States. After her recent Ottawa discussions on the oil sands with leaders of industry, government and environmental groups, U.S. House of Representatives Speaker Nancy Pelosi commented that she doesn’t like “any fossil, regardless of . . . where it comes from.”

On the surface, these events would seem to portend success for the concerted campaign to the ban oil sands imports. But I wouldn’t advise betting on that outcome. Seal furs for Europeans are a discretionary purchase, but oil imports for Americans are definitely not.

Nancy Pelosi may detest “any fossil,” but the U.S. Energy Information Administration data show that fossil fuels satisfy 84% of America’s ravenous appetite for energy. Nuclear, hydro and geothermal supply about 11.4%; wood and other waste 2.5%. Bio-fuel, wind and solar, the great green hopes that Ms. Pelosi is counting on for salvation from fossil purgatory, contribute a mere 2.1%.

In the 25-year period ended with 2009, U.S. oil consumption rose by more than 30% to 20.7 million barrels a day, close to one-quarter of global production. And 11.7 million barrels a day of that oil is imported, with Canada supplying more than twice as much as any other country.

Those corporate green-washers who made headlines by stating they will “avoid” the use of fuels from oil sands crude clearly have no comprehension of U.S. refining and distribution. From the Midwest to Texas, billions of dollars have been spent converting refineries to process oil sands crude. And billions more in refinery upgrading is currently being spent, creating a lot of American jobs. Banning oil sands crude would not only kill those jobs and destroy huge investments already made by U.S. oil companies, but cutting off supply to those refineries would create serious fuel shortages.

Pelosi’s opinion that she doesn’t like “any fossil, regardless of . . . where it comes from” is unlikely to be shared by U.S. geopolitical strategists. Venezuela, led by self-declared anti-American Hugo Chavez, is the second- largest supplier of U.S. crude imports at 1.1 million barrels a day. Ironically, much of that is also “heavy crude” similar to the oil sands, yet where are the environmental and political critics of Venezuelan imports? The U.S. depends on Iraq, Nigeria, Algeria and Angola for another 2.3 million barrels a day. The bottom line is that much of America’s oil comes from unstable or unfriendly regimes, and Canada’s oil sands represent the largest source of supply growth in a stable Western democracy.

Environmentalists who gathered in Ottawa for the Pelosi meetings called the oil sands “one of the world’s largest single sources of new greenhouse gases.” Nonsensical rhetoric, dutifully reported as fact. The growth of China’s coal- fired power emissions alone dwarfs that of the oil sands. But let’s look in Pelosi’s backyard. Coal-fired power in the U.S. generates some 3,400 megatonnes of greenhouse gas emissions every year. The Canadian oil sands generate 30, less than one one-hundredth.

One thing I learned from my many years as a CEO is that corporations must ensure what they say will stand up as the truth in the face of intense scrutiny, while the innuendo and deliberate distortions of their critics are seldom questioned. But I also learned that you don’t win games back on your heels playing defence. Industry leaders need do more than sitting behind the blue line trying to block shots. They need to take their oil sands story and skate hard up the ice.

Gwyn Morgan is the retired founding CEO of EnCana Corp.

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