CAP & TRADE; WHAT FORD ELIMINATED IN ONTARIO

Philip Cross: Ottawa can't cap oilsands output so Trudeau should stop saying he can

The Liberals ceded direct control over oilsands emissions when it implemented a carbon tax instead of a 'cap-and-trade' system

IT'S UNDER PROVINCIAL JURISDICTION 

SO THE ARGUMENT IS MOOT

Author of the article: Philip Cross
Publishing date: Sep 03, 2021 

After choosing a carbon tax as its tool for lowering emissions, Ottawa is not in a position to directly control the oil industry's output, writes Philip Cross.

IN DEBATING THIS IS CALLED THE ALTERNATIVE ARGUMENT; YOU DISAGREE WITH YOUR OPPONENT BUT INSTEAD OF SAYING SO YOU CREATE AN ALTERNATIVE EXPLANATION HENCE CARBON TAX VS. 

CAP & TRADE

 PHOTO BY REUTERS/PATRICK DOYLE

During a weekend campaign stop at Granby, Que., Justin Trudeau defended his government’s purchase of the Trans Mountain pipeline by saying “The biggest concern that people have around the pipeline is, ‘Oh, we’re going to see oilsands expansion.’ No, we’re not.” The promise to curtail the oilsands echoes his famous 2017 remark to a gathering in Peterborough, Ontario, that “We can’t shut down the oilsands tomorrow. We need to phase them out.” This is just the latest example of Trudeau’s penchant during election campaigns to promise whatever the audience wants to hear without considering whether he can conceivably deliver it.

In a recent paper for the Macdonald-Laurier Institute, I outlined how oilsands production has powered ahead even after the swan dive of oil prices in 2014. The oilsands have expanded rapidly to account for 70 per cent of all oil produced in Canada, with one-third of their growth occurring since 2015 when Trudeau took office. Capital spending of $8.3 billion a year in the oilsands is four times that of auto manufacturers, whom the prime minister has no trouble subsidizing even as he disparages the fuel that powers almost all of their vehicles.

The oilsands' steady growth almost certainly will continue no matter what Trudeau says

Oilsands production has followed a remarkably stable growth path since 1991. This reflects how its huge capital outlays require a long-term planning horizon that ignores both cyclical downturns in oil prices and electoral cycles in politics. This steady growth almost certainly will continue no matter what Trudeau says. IHS Markit projects that even after the drop in oil prices in 2020, oilsands output will rise from 2.7 million barrels a day to 3.8 million barrels by 2030. Half of the forecast increase comes from existing operations, which suggests the ruling party in Ottawa has no mechanism to prevent more oilsands production no matter who is its leader. The National Energy Board does control the issuance of permits for oil exports, but it is independent of the Prime Minister’s Office.

One of the many problems surrounding public discussion of the “oilsands” is the portrayal of all operations as the same. Though every oilsands plant is unique in terms of both emissions and technology there are only two main types of operation. One is the open-pit mining technique that the media loves to picture next to all references to the oilsands, while the other is underground (“in situ”) melting of the bitumen. In situ has become the dominant form of oilsands production despite less than two decades of this innovative Canadian technology being deployed. Most importantly, in situ operations only require provincial permits, making it even harder to see how the federal government could contain their expansion even if it wanted to.

The prime minister went on to say of the oilsands that “We’re not going to see an increase in those emissions.” But oilsands production could expand without necessarily raising emissions if technology continues to improve. Already, oilsands emissions have declined to about the average for oil produced in the U.S., although they vary greatly from project to project even when the same technology is used. Despite these advances, environmentalists continue to demonize the oilsands as if nothing has changed since the 1990s.

The future course of oilsands emissions is not directly controlled by the federal government, so it is misleading for Trudeau to pretend he can dictate their course. His government ceded direct control over emissions when it implemented a carbon tax instead of a “cap-and-trade” system. One of the problems with using a carbon tax to help control emissions is that it targets the price but not the quantity of emissions. The government sets the carbon tax at a level that it expects will reduce emissions by a certain amount, based on the estimated responsiveness of oil demand to price hikes. This is an inherently imprecise exercise in forecasting. If, for example, the price of oil shoots up by enough, firms could decide it is profitable to produce more and let emissions rise while paying the carbon tax

The alternative is the so-called “cap-and-trade” scheme, in which the level of emissions is capped and their price is set in markets in which people trade emissions permits. Cap-and-trade allows the government to directly control the quantity of emissions by foregoing control over the price the permit market places on emissions. The point is not that a carbon tax is superior to cap-and-trade — economists debate the merits of the two systems — but that, after choosing a carbon tax as its tool for lowering emissions, Ottawa is not in a position to directly control industry output.

Posturing about containing oilsands production and emissions panders to environmentalists outraged by Trudeau’s pipeline purchase but makes little difference to global emissions and climate change. As the International Energy Agency’s chief economist put it, the impact of the oilsands on global emissions “is not peanuts, it is a small fraction of peanuts.” The prime minister would serve Canadians better if he used his pulpit to inform the public about the misinformation surrounding the oilsands and explained how their continued development was consistent with both economic growth and an improving environment.

Philip Cross is a senior fellow at the Macdonald-Laurier Institute.

Trans Mountain pipeline

As TMX enables record oil output, First Nations hope for new chapter

Amanda Stephenson, The Canadian Press

Some Indigenous communities in northern Alberta hope the Trans Mountain pipeline expansion will mark the start of a new chapter in their relationship with Canada's oilsands industry.

The $34 billion pipeline project from Alberta to the B.C. coast promises improved access to export markets for oilsands producers, which are forecast to achieve all-time-high output this year. 

The pipeline's expected opening on May 1 is a big deal for the Fort McKay First Nation, located about an hour's drive north of Fort McMurray and home to around 800 people of Dene, Cree and Métis descent.

"It matters to the Fort McKay First Nation. When there's an opportunity like the Trans Mountain pipeline, the question is, how can we actually leverage it to transfer that opportunity to Fort McKay?" said Chief Raymond Powder in an interview.

"Because I've shared that with my industry partners across the table from time to time — I've said, 'You know, if you guys want to grow and want to expand and all that, that's not an issue for us.'"

But Fort McKay also needs opportunities for growth as the industry expands, he said. 

Located smack-dab in the middle of the Athabasca oilsands, Fort McKay is the bull's-eye on the dart board of the world's third-largest crude oil reserve. 

The First Nations community is surrounded by industrial development, and the acrid scent of nearby oilsands facilities can be detected on the breeze. Band members like to point out the black, tarry-smelling soil that lines residents' roads and driveways here — evidence of the rich bitumen deposits that lie so close to the surface. 

In Fort McKay, the complicated relationship that the oilsands industry has with Indigenous people is evident. The First Nation is one of the wealthiest in the country, thanks to revenue generated from impact benefit agreements with oilsands developers as well as from the many Nation-owned businesses that serve the oil and gas sector.

Because of these spinoff benefits, the community boasts a beautiful long-term care centre that fronts onto the Athabasca River, a first-class arena, a virtual golf facility and other amenities not commonly found on reserves.

But Powder is quick to point out that his community's relationship with industry has not always been so rosy. 

"When you go back to the history of who Fort McKay is, we actually did not initially begin with a good relationship with industry because of the fact that who we are as First Nations and our identity was tied to the land," he said.

Fort McKay also has significant current concerns about the safety and environmental impact of the massive oilsands wastewater tailings ponds in the area.

"And so the arrival of industry had a huge impact on our own traditional livelihood and way of life," said Powder. 

"But on the positive side of all of that, we've had the opportunity to grow our programs, grow our services, grow our infrastructure."

Not all First Nations see their industrial neighbours this way. 

Eriel Deranger is a member of the Athabasca Chipewyan First Nation, which is currently suing the Alberta Energy Regulator in the wake of a series of toxic tailings ponds leaks from Imperial Oil's Kearl oilsands facility.

She's also the executive director of Indigenous Climate Action, an advocacy group focused on the water, air, and health impacts of the oilsands on First Nations communities. 

Deranger describes the relationship between Indigenous communities and the oilsands industry as an "economic hostage situation," explaining that many communities see the negative impacts of oilsands development but don't speak up because there are no other economic opportunities to be had.

"It's really important that we don't get bogged down in the argument of, 'Well, if Indigenous peoples are business partners in pushing these projects forward, then they must be OK,'" Deranger said.

"The problem is that this industry has such a stranglehold economically. But we cannot continue to say we need this for our economy, because there will be no economy if our province burns down this summer because of wildfires due to climate change."

Oilsands development has been a double-edged sword for Indigenous communities in the past, said Justin Bourque, the former CEO of the Willow Lake Métis Nation and president of Fort McMurray-based Âsokan Generational Developments, a consulting firm that specializes in Indigenous-industry partnerships.

"Philosophically, the resource has been extracted from the traditional territories of the Indigenous peoples in the area. They have lived and endured the development, both environmentally and physically and as well with the growth of Fort McMurray," Bourque said.

But as he looks to the future, Bourque sees growing opportunities for First Nations to participate in the oil and gas sector as equity ownership models become more common, allowing communities to benefit from long-term, predictable sources of revenue. 

"I think now with reconciliation and certain ESG factors, corporations are now thinking more openly about sharing a long-term relationship with Indigenous communities when and where they operate," Bourque said.

He also pointed to the federal government's recent announcement that it will offer $5 billion in loan guarantees to support Indigenous communities seeking ownership stakes in natural resource and energy projects.

"I think it’s going to be a hugely positive catalyst to allow these communities to become much more active in the industry, which will only make the industry stronger.”

Last month, the Fort McKay First Nation struck a memorandum of understanding with Suncor Energy Inc. on an oilsands lease development opportunity on its reserve lands.

While Suncor is still assessing the quantity and quality of minable bitumen in the area, if the project goes ahead, it would be the first-ever oilsands production on reserve lands in Canada.

Powder said the agreement charts a new path for economic development on Indigenous lands and will help secure the community's long-term future.

"It's quite a huge deal and it's actually a great accomplishment," Powder said, adding the deal will mean that if the oilsands industry grows in the years to come, Fort McKay will grow with it.

"We don't want any ceiling on opportunities for Fort McKay when it comes to industry and the spinoffs of what that Trans Mountain pipeline has to offer," he said.

This report by The Canadian Press was first published April 29, 2024.

Trans Mountain pipeline project ushers in new era for oilsands hub Fort McMurray

Amanda Stephenson, The Canadian Press

As the urban centre at the heart of Canada's oilsands industry, Fort McMurray has seen more than its share of ups and downs.

A decade and a half ago, the northern Alberta community was this country's most famous boom town. High oil prices helped to drive unprecedented demand for the thick, viscous bitumen that lies beneath the earth's surface here, and workers flocked from around the world to cash in on the bonanza.

Then crude prices crashed, layoffs began, and the frenzy of oilsands-related construction dried up. The party, it seemed, was over.

Now, with the official opening of the long-awaited Trans Mountain pipeline expansion just days away, those who live and work in this region hope their fortunes are once again headed for an upswing.

'What supports them, supports us' — a community tied to one industry

Fort McMurray, population 68,000, is situated in northern Alberta in the heart of the Athabasca oilsands, the world's third-largest proven crude oil reserve.

The oil industry permeates every aspect of life here. Every morning, oil workers clad in blue-and-yellow coveralls line up at the local Tim Hortons for double-doubles, and diesel trucks and big rigs churn up dust on their way out to industrial work sites. The airport gift shop sells "Canada's Oilsands" sweatshirts and local rec centres and educational facilities are emblazoned with the names of their oil company sponsors.

With so many livelihoods dependent on oil, all eyes here are on the expected opening this week of the Trans Mountain pipeline expansion, a years-in-the-making megaproject which will soon start shipping Canadian crude to export markets.

“It’s hard to quantify the value of the ... pipeline to a region like ours," said Dennis Vroom, senior strategic advisor for the regional municipality of Wood Buffalo, which encompasses Fort McMurray and the surrounding rural area.

"We are so heavily supported by oilsands operators in the region, that when things that are important to them — like the Trans Mountain pipeline — happen, there are direct benefits to us. What supports them, supports us.”

The Trans Mountain pipeline, which was bought six years ago by the federal government, is Canada's only oil pipeline to the West Coast. The expansion will increase its capacity from approximately 300,000 barrels per day currently to 890,000 barrels per day, improving access to export markets for Canadian oil companies.

The path to get here hasn't been rosy. The pipeline project, which took more than four years and at least $34 billion to construct, has been marred by environmental protests, delays and budget overruns.

The federal government, which paid $4.5 billion for the project in 2018, is likely to take a significant writedown when it tries to sell the completed project, experts say. And Trans Mountain itself remains locked in a dispute with its oil company customers about the rising fees it wants to charge them to ship their product.

Still, oilsands producers have been waiting for this pipeline for a long time. Export issues have been a thorn in the side of Canadian energy companies for years, due to a lack of pipeline capacity from Alberta's oilsands region to coastal tanker loading facilities.

That shortage of pipeline space, combined with refinery and transportation costs, is the reason Canadian oil producers typically take a price discount on their product compared with their U.S. competitors.

It has also inhibited oil companies' ability to grow, so the anticipation when it comes to Trans Mountain is real

Oil output climbing to all-time heights

“It’s an exciting time. It’s been a long time since we’ve had some new incremental egress for Canadian products," said Drew Zieglgansberger, executive vice-president and chief commercial officer for Cenovus Energy Inc., a major contracted shipper on Trans Mountain.

"We had some growth and efficiency projects on the books already, but (the pipeline expansion) does enable some stability in the market in the near and medium-term that really does give us some confidence to add more growth to the company.”

The additional export capacity that Trans Mountain will provide means that 2024 is expected to be a boom year for oil output.

A recent TD Economics report suggested Canadian oil production this year could grow by between six and 10 per cent year-over-year, the equivalent of between 300,000 and 500,000 barrels per day.

Even on the low end of the forecast, this growth rate would match the average annual oil output growth rate Canada saw in the booming years between 2010 and 2015, when commodity prices were high and Alberta's oilsands region was undergoing unprecedented levels of construction and activity.

But today, the oil price downturn of the last decade forced companies to tighten their belts. Rather than spending on major capital projects, oil companies have spent the last couple of years of strong commodity prices paying down debt and rewarding shareholders with healthy dividend payments.

Technological advancements have also meant that companies now know how to increase their oil output without massive increases in capital spending.

Cenovus, for example, plans to grow its production by 150,000 barrels a day over the next five years.

But the company — which once thought it would build an entirely new processing facility at its Narrows Lake oilsands asset, now under development — has decided instead to use new technology and engineering methods to connect that site with the central processing facility at its currently operating Christina Lake project, located about 150 km southeast of Fort McMurray.

Like Cenovus' other oilsands projects, the Narrows Lake development will use a drilling method called steam-assisted gravity drainage to extract the thick, heavy oilsands bitumen. But because of these changes, it will cost much less and require far less construction than originally planned.

"The oilsands of 15 years ago, we just didn’t have some of the technologies or the operating experience and practices that we have today," Cenovus' Zieglgansberger said.

"It's allowed us, from an overall development cost, to really lower the cost of producing oil."

'So many things have changed'

Many people's mental image of Fort McMurray is synonymous with the period when the community was a bustling boom town defined by heavy traffic, high housing costs and money that seemed to grow on trees.

Sarah Thapa, the owner of Avenue Eatery & Café which opened in 2021, remembers those days. She moved to Fort McMurray in 2012, during the height of the oilsands boom.

"I got a job as a server at one of the local restaurants, and they made seven to 10 grand just by selling breakfasts," she said.

"It was packed every day, it didn't matter if it was Monday, Tuesday, 6 a.m. in the morning — every table was taken," Thapa said. "Every restaurant, every small business in town, was doing so well."

But after a decade of layoffs and oil company consolidation, the atmosphere in town is not the same, she said. The community has also had to contend with the 2016 wildfire that destroyed approximately 2,400 homes and buildings in Fort McMurray, the COVID-19 pandemic, and a 2020 flood that forced thousands of residents from their homes and caused more than $520 million in insured damages.

"COVID happened, the flood happened, the fire happened — and we’ve not seen the town the same way," Thapa said. "So many small businesses have already closed and left town ... so many things have changed since I moved here.”

While Thapa said she welcomes the Trans Mountain pipeline expansion, she knows this year's record oilsands output is not going to turn Fort McMurray back into the boom town of yesteryear. The companies are leaner, they're producing more oil but spending less, and the days of the construction-heavy oilsands expansion projects are over.

The climate change problem

Another factor that makes today's oilsands different is ever-growing environmental scrutiny. Since the last industry boom, Canada has signed the Paris Agreement, an international treaty on climate change that commits signatories to greenhouse gas emissions reduction targets. The world has faced a growing number of climate-related extreme weather disasters, and calls to reduce society's reliance on fossil fuels are intensifying.

The process of extracting oilsands bitumen is a comparatively emissions-heavy way of producing oil. And while companies have been able to reduce the greenhouse gas intensity per barrel, the industry's overall emissions footprint is increasing due to increased production. In 2021, the oil and gas sector was responsible for 28 per cent of Canada's overall emissions.

The industry believes it can continue to grow while reducing its environmental impact. Six of the largest oilsands companies have banded together to form what they call the Pathways Alliance, through which they are proposing to build what would be one of the largest carbon capture and storage projects in the world.

That project would involve building a 400-kilometre pipeline to transport carbon dioxide emissions from 20 different oilsands production facilities in northern Alberta and embed them safely in an underground storage hub. If it goes ahead, it could mean a new era of construction in the oilsands.

"That's a $16 billion project right there that’s looking to start construction," said Lisa Sweet, director of business and investment attraction for Fort McMurray-Wood Buffalo Economic Development.

"There are investment opportunities that are coming, and we're out there to promote that."

But the Pathways Alliance companies haven't yet made a final investment decision and there are a number of uncertainties hanging over their project. One of these is the federal government's proposed emissions cap, which is supposed to be finalized sometime this year.

The government has said the cap is meant to cap pollution, not production, but the industry has warned the cap will have "unintended consequences" — scaring away investment and potentially causing companies to curtail their output and spending.

It seems likely that the environmental impact of the oilsands will continue to be scrutinized for years to come, and that too has an impact on the local community.

"Our community is so closely tied to the oilsands that sometimes the negative image of the oilsands that gets painted unfairly translates to our community as well," Vroom said.

A new era

The Trans Mountain project has taken so long to build, and the oilsands industry has had so much time to prepare, that it is expected to be filled soon after coming online. Many in the industry believe Canadian oil output will exceed pipeline capacity again within a few years, perhaps as early as 2026.

But for the time being, the Trans Mountain pipeline expansion represents a new era — for both the industry and the community most closely linked to it. The next few years may not be a repeat of the heyday of Fort McMurray, but they do represent a revival of opportunity.

"People come here for economic opportunity, and that hasn't changed and that won't change," Sweet said.

"The Trans Mountain pipeline just reiterates that message."

Back at Avenue Eatery & Café. Thapa echoed that sentiment. "I’m optimistic about the town picking up again," she said.

"We may not see the businesses doing as well as they were 10 to 15 years ago, but overall I think we’re going to come back. I think we’re going to see some positive changes, I really do.”

This report by The Canadian Press was first published April 29, 2024.

IN-DEPTH
Carbon emissions to pool noodles: oilsands producers seek a ‘beautiful’ rebrand

A leak of the newest industry PR offensive reveals an effort to steer attention away from pollution and toward the potential of carbon capture

By Drew Anderson
Nov. 30, 2021 

An aerial view of a reclaimed Suncor tailings pond. The company is one of the oilsands producers pitching a pathway to net-zero emissions.
Photo: Suncor Energy / Flickr

Alberta’s major oilsands producers want you to look at a barrel of bitumen and see a pool noodle.

A leaked PR campaign from the oilsands giants shows the companies are eager to rebrand the carbon-intensive industry as a net-zero resource that effortlessly turns its emissions into everything from water toys to carbon fibre boats and microchips.

Currently being tested in focus groups, the Oil Sands Pathway Alliance campaign focuses on transforming carbon into everyday products with the tagline “Energy. Beautifully Designed.”

A pitch video, initially posted online for focus group participants to view, but which has now been taken down, was sent to The Narwhal by Keith Stewart, senior energy strategist with Greenpeace Canada, shows what the campaign will prioritize.

“Creating jet fuel out of our petroleum while using carbon from that process to make carbon fibre boats is a beautiful thing,” a voice over the video says.

“Developing microchips out of carbon capture for refined oil is beautiful. Producing barrels of oil and making Styrofoam chips out of the resulting carbon. That’s beautiful. Producing oil and from the resulting carbon making pool noodles that kids can float on. Beautiful.”


The campaign was prepared for a group composed of Suncor, Imperial, Canadian Natural Resources, MEG Energy, ConocoPhillips and Cenovus, who together are responsible for what they say is about 95 per cent of oilsands production. Only MEG Energy responded to The Narwhal’s requests for comment, reiterating statements given by Pathways Alliance.

The alliance was formed to push forward a plan for net-zero emissions from the oilsands by 2050.

But the focus on promoting positive messages about the oilsands, as revealed in the leaked material, is only the latest in a series of public relations and marketing campaigns over the years by both industry and government. Many of the campaigns were aimed at countering criticism about environmental impacts of extracting heavy oil from Alberta’s oilsands, a region that holds the world’s third largest reserves of crude, after Saudi Arabia and Venezuela, and requires large amounts of energy and water in production.

“I think this will be the fifth or sixth attempt to rebrand the oilsands,” Stewart said.

A pitch video for a proposed oilsands PR campaign that was shown to focus group participants.

 Video: Oil Sands Pathways Alliance.

The basic premise of the Pathways plan to achieve net-zero emissions is this: continue producing bitumen in the oilsands, but couple that production with carbon capture and utilization technologies in a bid to decrease the overall carbon pollution of the industry. This includes a carbon dioxide pipeline from the oilsands region to a sequestration hub approximately 440 kilometres away, near Cold Lake, Alta.

In a video posted to the Pathways site, MEG Energy President and CEO Derek Evans said it will be the largest carbon capture, utilization and storage facility in the world, “in terms of breadth” and the amount of carbon dioxide it would capture.

The plan to remove emissions relies heavily on the development of new technologies to achieve its goals and the campaign is vague about the details of converting carbon to pool noodles.

“This suggests that we can somehow separate the bad stuff — carbon — from the good stuff — oil as energy,” Shane Gunster, an associate professor in the school of communication at Simon Fraser University, told The Narwhal. “And then that bad stuff we can, with technology, magically turn it into the good stuff that we want.”

The plan highlights projects in Norway and the Netherlands as inspiration for the carbon capture utilization and storage component of the plan, though these projects aren’t yet operational.

‘The wonderful world of oil’ not a new advertising strategy: expert

The proposed campaign would join ongoing efforts from industry groups like the Canadian Association of Petroleum Producers, and its campaign offshoot Canada’s Energy Citizens, which describes itself as the largest oil and natural gas advocacy organization in Canada. The Alberta government’s own war room — officially dubbed the Canadian Energy Centre — also pumps out content touting the responsible development of the province’s oil and gas sector.

The recent public inquiry into anti-Alberta energy campaigns called for a long-term rebranding strategy in collaboration with industry and pointed to past campaigns from individual oil companies and organizations as “flawed in their approach.”

Patrick McCurdy, an associate professor of marketing at the University of Ottawa, has tracked the last 15 years of evolving marketing strategies of oilsands stakeholders.

In a 2018 paper, McCurdy found that the recommendation to brand and better sell the benefits of the oilsands dates back to a 1995 report from the Alberta Chamber of Resources — a resource sector industry group. But that recommendation wasn’t taken seriously until 2010 as a response to mounting pressure from environmental campaigns.

That was the year the Canadian Association of Petroleum Producers launched its “responsible Canadian energy” campaign alongside efforts by the Government of Alberta to pitch the oilsands directly to U.S. consumers.

The focus of that campaign was on oilsands workers, while simultaneously extolling the work done to protect the environment from the worst effects of oil extraction.

These latest ads represent the evolution of the marketing strategies at play, morphing from a focus on what companies are doing to protect the environment to a focus on how oil and gas can improve lives. But for McCurdy, it’s nothing new.

“The wonderful world of oil … was a common advertising strategy,” he said in an interview with The Narwhal, noting it’s a “strategy that harkens back to the rise of petrochemicals” in the middle of the 20th century.

The proposed Pathways campaign riffs off earlier industry ads like those from Cenovus in 2011 that highlighted other products made from petroleum — from artificial limbs to ultrasounds — but goes further by implying society can keep consuming oil and gas, and other products made from fossil fuels, as long as the resulting carbon is captured or reused.



This does represent a departure from earlier industry efforts to deny the existence of human-caused climate change altogether. The campaign joins a larger push to paint the industry in a different climate light and relieve the guilt and anxiety that many feel while trying to navigate a changing world, according to Gunster.

“[Industry] has been trying for a while now, especially certain parts of the industry, the bigger players, to integrate themselves into how we as a country, how we as a world, address climate change,” Gunster said.

“[Companies are] trying to position themselves as part of the solution, rather than part of the problem,” he said.

For Stewart of Greenpeace, that cuts to the heart of the issue.

“Their problem is performance, not PR,” he said.

Emissions from the oilsands have increased 400 per cent since 1990

The emissions performance of the oilsands, long a source of concern for those interested in reducing Canada’s climate impact, is of increasing importance for producers and their long-term financial viability.

In its recent world energy outlook, the International Energy Agency pointed to the real possibility of declining oil and gas demand, particularly for high cost, high emissions resources like the oilsands in Canada.

The performance is also increasingly under the watchful eye of the federal government, with its pledges of net-zero emissions in Canada by 2050 and its recent announcement at the United Nations climate change summit in Glasgow, COP26, that it would put a cap on emissions from the oil and gas sector.

It’s all part of the reason that companies have been working to reduce their emissions intensity — the amount of carbon produced for each barrel of oil — even while ramping up production.

Together these companies account for the vast majority of the 83 megatonnes released by the oilsands in 2019 from production alone. That’s equivalent to the yearly energy use of almost 37 million homes. The oilsands make up 11 per cent of Canada’s overall emissions — and they’re increasing.

Emissions from the oilsands have climbed from 15 megatonnes in 1990, an increase of over 400 per cent.

Adding the emissions associated with refining the bitumen in other countries and combustion would increase that number significantly.

If all goes well with carbon capture utilization and storage, coupled with the possible use of small nuclear reactors and the emergence of new technologies, the Pathways Alliance projects it could eliminate 68 megatonnes of emissions per year by 2050.
Oilsands advertising has an ‘ideological function’

Stewart said he thinks this campaign is part of the coming negotiations with industry stakeholders who want to avoid costly regulations while lobbying for subsidies.

The Pathways Alliance did not make anyone available for an interview on the campaign and did not respond to questions about the viability of the technologies it promotes, but it did send a written statement.

“Pathways is focused on our goal of net-zero emissions from oilsands operations by 2050 to help Canada meet its climate goals, including its Paris Agreement commitments and 2050 net-zero aspiration,” spokesperson Alain Moore wrote in an email.

“We know Canadians want to learn more about our plan to meet this ambitious goal. We’re building on our current communications to help share that information. However, nothing has been finalized at this time.”Justin Trudeau’s Liberals pledged during the election campaign to cap emissions from oil and gas and reiterated that commitment at the recent COP26 meeting. Photo: Justin Trudeau / Flickr

Gunster, from Simon Fraser, said the campaign falls squarely into the political realm as a response to the mounting pressure from governments and citizens increasingly concerned about the direct impacts of climate change.

Canadians don’t buy products from oil companies directly, he said, noting there’s no oil section aisle where you choose between Cenovus and Suncor like you do Coke and Pepsi.

“Their advertising … has a kind of ideological function, it has a political function, which is to try and advance a vision of the world, the problems of the world and how to fix the problems,” Gunster said.
Oil pitched as ‘guilt free’: marketing professor

These kinds of campaigns can have an impact.

Analysis of the previous oilsands campaign launched by the Canadian Association of Petroleum Producers over a decade ago and released through access to information requests in 2012, showed that effort resulted in improved impressions of the oilsands and reduced concerns about their environmental impact.

“The large majority of Conservative and the majority of Liberal supporters say the campaign makes them more inclined to believe that there is an effort to limit environmental impacts, a more responsive industry and that oilsands can be developed in a responsible way,” reads the 2011 analysis conducted by public opinion and market research firm Harris Decima. “NDP supporters are also positively impacted by the campaign, but at a lower rate.”

Rishad Habib is a professor of marketing at what is now known as X University in Toronto. In an interview, she said the campaign appears to be aimed at those who aren’t heavily involved in sustainability or the oil and gas industry and won’t be swayed by facts and statistics on what the industry hopes to accomplish.

“Part of it seems to be like, ‘oh, here’s a guilt-free option, you don’t have to feel guilty about using it anymore. Because it’s energy, it’s beautifully designed.’ So you can use oil and still feel good about yourself,” she said after being shown the pitch video.

That appeal to emotions in the Pa thways campaign can be powerful, and political, but it can also backfire, Habib said — particularly as the effects of climate change, like the wildfires in B.C. this year, start having a big impact in Canada.
Alberta’s oilsands face strong headwinds from alternatives

For Chris Bataille, an associate researcher at the Institute for Sustainable Development and International Relations, the move to limit carbon pollution from the oilsands is part of a conversation dating back decades that should have been acted on much sooner.

“My frustration is that we could have been doing this [in] 2006, 2007, 2008 and could have rode that into the high oil price through 2014, which then collapsed,” he said, noting the additional costs involved in trying to eliminate emissions and the price slump of recent years.

“But they didn’t do any of it. So there’s just this real lack of intention there.”

Bataille added that it is questionable whether the oilsands producers, whose product is piped to the U.S. to be refined into various petroleum products, can withstand the shift to electric and hydrogen vehicles.

That said, Bataille also argued Alberta is one of the best jurisdictions in the world for being able to effectively store carbon emissions underground, as long as companies pay for the infrastructure themselves.

The campaign, however, doesn’t get bogged down in those details.

“All across our country, beauty surrounds us, wherever we are, it’s there,” intones the Pathways Alliance video.

“We need beauty in our lives, but we also need energy.”

Stewart said the campaign fails to capture the current mood, pointing to the visceral and real impacts of climate change that Canadians are experiencing — including B.C.’s devastating wildfires.

“If the companies are serious about net zero, then that means changing their business model so they’re no longer selling oil and gas,” he said.

Why Wall Street just hiked its Canadian oilsands outlook for the first time in five years

Record-breaking production predicted for the rest of this decade

Author of the article:

Pamela Heaven

Published May 26, 2023  • 

Oil, steam and natural gas pipelines run to an oilsands operation near Cold Lake, Alberta. Canadian oilsands production is expected to increase to 3.7 million barrels per day by 2030. PHOTO BY TODD KOROL /REUTERS

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They call it the “era of optimization.”

And it’s why, for the first time in five years, Wall Street analytics firm S&P Global Commodity Insights is raising its outlook for Canada’s oilsands.

Oilsands production is now expected to reach 3.7 million barrels per day by 2030, half a million bpd more than today and 140,000 more than last year’s forecast.

Last year it didn’t look like either energy security fears or higher crude prices were having much effect on oilsands production, wrote Celina Hwang, director of North American crude oil markets, and Kevin Birn, Canadian oil markets chief analyst, who authored the report.

“A year later, one might conclude that the response to higher prices just took longer than anticipated to have their usual effect,” they said.

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Capital expenditures in 2022 reached their highest level since 2015 among the four largest oilsands producers and could go higher in 2023, they said. However, much of this went to keeping up with inflation and not to building new projects.

What will be driving oilsands growth this time around is not new mega-projects but rather improving efficiency and optimizing output, they said.

“The Canadian oilsands have entered an ‘era of optimization’,” said Birn. “Learning by doing and step-out optimizations account for nearly 90 per cent of our overall production outlook.”

The remaining 10 per cent comes from removing bottlenecks that limit production flow.

Birn said the last time oil prices were this high the oilsands saw a surge in development. This time by optimizing its already large base of assets producers can materially increase output while maintaining the capital discipline investors want

“Higher oil prices have driven record returns for the Canadian oilsands,” said Hwang. “Although producers continue to demonstrate capital discipline, stronger balance sheets are now giving oilsands companies renewed confidence in regard to their intentions for capital spending.”

S&P Global expects Canada to continue to post record oil production for the rest of the decade. Output growth will start to slow in the mid to late 2020s, and a “very shallow decline” will only begin to emerge in the early 2030s. It will be particularly shallow because of the long, flat production typical of the oilsands, the analysts said.

Oil prices have retreated lately over concerns about demand in the slowing global economy. But the International Energy Agency says market pessimism is in stark contrast to its forecast of a tighter market in the second half of this year, where it expects demand to exceed supply by almost 2 million bpd.

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The Canadian Association of Petroleum Producers (CAPP) predicts investment in oil and gas production in Canada will jump by 11 per cent this year to hit $40 billion. Oilsands investment is seen reaching $11.5 billion.

As well, the completion this year of the Trans Mountain pipeline expansion is expected to offer producers an extra 590,000 barrels per day of export capacity.

The only fly in the ointment to S&P’s outlook could be a federal cap on oilsands emissions.

“If the emissions targets prove too stringent, and unattainable by the industry, then further investment — however modest — could be at risk,” Hwang and Birn wrote.

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Capital Economics