Development of Canada’s oil sands is at a crossroads.
The discovery and development of Canada’s oil sands represents a tremendous opportunity for continental energy independence. But because Canada has under-invested in its pipeline and refinery infrastructure, the oil from the oil sands cannot get to its buyers easily. That leaves the resource essentially landlocked without additional rail and pipeline transportation. Canadians have mapped out dozens of proposed pipeline alternatives in Canada and the US to get their product to a global customer. However, environmentalists and landowners in both Canada and the United States are putting up an intense fight, leaving Canada’s oil sands currently at a crossroads.
OIL SANDS AT A CROSSROADS Reporter’s Notebook from Jessica Stone
SEEDS OF THE STORY:
This project began with an idea from one of CCTV’s photojournalists who had a personal interest in the American debate over the building of the Keystone XL Pipeline. Initially, I just pitched a trip to attend the only U.S. State Department hearing in April 2013 to cover the debate there, but as I began researching and reporting more and more of the story, I discovered a continental energy story that impacts Canada, the U.S. and the global energy system. The discovery and development of the oil sands represents a tremendous opportunity for continental energy independence which in turn changes the global energy balance of power, allowing North America to import less foreign oil. That is already changing the market calculation for Saudi Arabia and other Middle Eastern nations. Because Canada has underinvested in its pipeline and refinery infrastructure, the oil from the oil sands cannot get to its buyers easily.
That leaves the resource essentially landlocked without additional rail and pipeline transportation. This currently impacts the price of oil the Canadians can sell at, and it has motivated the Canadians to map out dozens of proposed pipeline alternatives. However, the environmentalists and landowners in both Canada and the United States are putting up an intense fight.
So, the story of Keystone XL is actually a much bigger debate about the development of the oil sands – a much more energy intensive process than conventional oil and heavily criticized by environmentalists.
Map of places impacted by Proposed Keystone XL Pipeline
CONNECTION TO ASIA:
The interesting connection to Asia, though, is that as Asia and in particular, China, increases its demand for energy, it is also investing around the world in developing the world’s fossil fuel resources. Chinese companies have heavily invested in Canada’s oil sands, and because the nations are essentially across the ocean from each other, it’s a natural fit for them to work together on developing this resource. There are at least two proposed pipelines to service the Asian markets as well, as I discovered.
The oil sands companies are increasingly reticent to give tours of their facilities now because they’ve been so beat up by the environmentalists. Yet, you can’t really do a story about the pipeline controversy without touring their facilities. After months of waiting, we were ultimately able to secure a tour of both types of oil sands development. We toured the Syncrude surface mine which uses giant trucks and shovels to dig out the oil sand, and we also toured the Cenovus Christina Lake In Situ mine which uses steam under heavy pressure deep underground to coax the heavy oil to the surface. (I should really thank our tour guides who explained the scientific processes at such depth that we really left having understood the multiple steps it takes to make the asphalt-like substance into useable energy.) We also hired a helicopter to show us the mines from the air. I can’t say I’ve ever seen something so vast, expansive. No coal mine or other metals mine looks as vast and dark. Frankly, like many mines, it’s not a pretty sight. What makes it more visually jarring is that you are seeing this heavy industrial development essentially spring out of a pristine forest called the Boreal Forrest, which disposes of a tremendous amount of carbon dioxide on the continent. At the same time, the economic potential of this development is incredible: more than $1 Trillion dollars of oil, the world’s third largest proven source of oil, enough energy to power Canada’s energy needs for 400 years. Those are some incredible statistics.
WHAT IS BITUMEN?
One term we heard a lot was “bitumen.” It’s the tarry substance that comes out of the ground, once the oil particles are separated from the sand particles and essentially looks like tar or blacktop or asphalt. It still has to be upgraded and then refined before it can be used as petroleum or gasoline.
CANADA’S FIRST NATIONS:
One of the most unexpected benefits of covering this story was meeting members of Canada’s First Nations. We spent time with two different indigenous peoples in British Columbia: the Wet’suwet’en and the Haisla. Canada has thousands of these groups, and many are concentrated in Western Canada, where they still live on their ancestral land. In the US, almost all of the Native Americans now live on reservations created for them, which are not necessarily on their ancestral land. Canadian native populations seem to have more land rights sovereignty, so I found it quite interesting to see how native peoples are treated by the nations that form around them.
I also found it interesting that for example, the Wet’suwet’en people don’t make a choice between industrial development or none, but simply want to manage the development to prolong its job creation over a longer stretch. They don’t want a one-off, or an industry that simply creates jobs for a cycle and the peters out, and they don’t want to develop everything at once. Since their territory sits on gold, silver and natural gas deposits, it’s a more measured approach than we’ve seen in other parts of the continent. They also taught me all the different types of salmon and all the ways you can eat them — yum! From the Haisla First Nation, I learned how good Dungeness crab can taste and how close they are to the water…knowing every crook and crag and cove. They have watched the crab move and the fish move around their fishing areas.
So much of this part of the trip was out of cell service range, forcing us to just drink in the natural beauty around us. The water looked so crystal clear, and at times the sky was so bright, reminding me of the sky in Sweden where I have family. You are just four hours’ drive south of Alaska, so you are quite close to the Arctic and the sky is cleaner and brighter. It truly is magnificent.
Our trip to the April U.S. State Department hearing should have been a nice spring day, but we wound up driving through blinding snow to get there. I have a deep appreciation for the heartiness of the folks that live on the prairie now. Here too, we were often out of cell service range, learning how to find locations through grid-mapping. Each farm is split up into one square mile chunks and you count the markers from road to road to find your way. I got to feed a baby cow at one of the farms. It was fascinating to hear the stories of how long these family farmers had been on their land and all their memories.
We also met the folks trying to build the Keystone XL Pipeline – TransCanada. They had traveled to the hearing as well to make their voices known and took a variety of questions from reporters. What I found most interesting there is that this Canadian pipeline company is lobbying heavily for the US to approve this project, without any written guarantee that the US will get to buy the oil in the pipeline. While they say market forces favor that currently, and they do; that doesn’t mean the market forces will always favor that practice. Some might say, it’s a big ask.
For the past year, many have asked me what my take away is from all this reporting. I tend to be a pragmatist, so I tend to agree with the oil sands companies that as long as market forces favor the development of this resource, it will get developed. But, the environmental implications are pretty awful and pretty real, and Canada is not placing as much importance on environmental regulations as it used to. Ironically, the Obama administration is making greater strides in this area. What’s striking about the North American energy picture is that the Canadian oil sands are now in competition with millions of barrels of new oil reserves in the US now accessible through the practice of hydraulic fracturing technology. As a result, the US won’t have as much reliance on Canada in the short term, meaning, there’s less incentive for the US president to green light Keystone XL, and more incentive for the Canadians to turn to China to develop their oil sands fields.