Big, bad oil in all its glory

Written by  //  January 26, 2008  //  Canada, Oil & gas, Public Policy  //  Comments Off on Big, bad oil in all its glory


January 26 2008
An empire from a tub of goo

How did the quest to retrieve the treasure hidden beneath huge swaths of northern Alberta go from fool’s errand to monumentous payoff?

The oil sands are seen as a crucial source in a world of increasingly tight supply, where many reserves are in politically volatile regions controlled by undemocratic states. Put another way: Should they disappear tomorrow, one industry expert estimates, the price of oil could jump a third to $130 a barrel.
The value and importance of the oil sands will make that much harder the choices that Albertans and all Canadians suddenly face. Canada has now become a major-league merchant of one of the most desirable – and dirtiest – sources of energy. The money is flowing in, and the profits are rolling out – good news for stockholders, the Canadian dollar and government coffers.
But there are environmental and social costs to stuffing our pockets while the oil speeds south. And Canadians will have to answer a question already being asked by many Albertans: When does a boom become a burden?

September 29, 2007
The rise of the loonie has been partially explained by the price of oil, which recently hit a record of almost US$84 a barrel. The Canadian economy has the world’s attention because Alberta’s oilsands contain an estimated 174 billion barrels of oil, the second-largest oil reserve tally after Saudi Arabia.
William Marsden’s book, Stupid to the Last Drop, paints a darker picture of the oilsands. Not only does Marsden argue that Alberta’s oil business poses significant environmental risks, he tries to portray the industry and its supporters as somewhat thick.
The book launches with an exotic and engaging tale. In the 1950s, Manley Natland, a paleontologist from the Richfield Oil Co. of California, came up with a plan to release the oil mixed within Alberta’s gritty sand using an underground nuclear blast . The force of the nine-kiloton explosion would blow a giant cavity in the underground rock, and the heat and the pressure from the blast would literally boil the oil out of the sand.
Richfield Oil thought the plan was a great idea. It even went so far as to spend $350,000 to buy an atomic bomb from the United States government for what the company came to call “Project Oil Sands.” A debate in Canada over nuclear testing in the early 1960s diverted Richfield Oil’s attention to Alaska. Project Oil Sands was shelved.
From the vantage point of the 21st century, the fact anyone would consider using nuclear weapons to mine oil seems absolutely harebrained, which obviously makes it the ideal launching pad for a book entitled Stupid to the Last Drop. Marsden’s book is an engaging and entertaining read. He mingles amusing anecdotes with some hefty science, something that’s not always easy to do.
That said, as the title instantly suggests the book is no objective description of life in the Alberta oilpatch. Oil is always big, bad and corporate. Industry opponents are always virtuous Davids facing snarling Goliaths. Alberta’s oil-friendly politicians are always portrayed as rude rednecks. This is a one-sided book that will be embraced by the left and lampooned by the right.
Marsden tangles with some hot-button issues, such as Alberta’s energy royalty system. He criticizes the current regime for not taxing oil producers highly enough. Note that Marsden’s book is hitting stores just weeks after a six-member Alberta panel recommended the province impose a drastic hike in energy royalties. Marsden also bemoans Alberta’s decision to sell off a provincially-owned energy company in 1993. The province should instead follow Norway’s lead and keep energy production in the hands of a crown corporation.
Given that much of Marsden’s book warns of the energy industry’s negative impact on the environment, this case for socialism is somewhat perplexing. If oil is inherently dirty, how does it become any cleaner if it’s the government who digs it out of the ground?
Even then, much of Marsden’s book mocks Alberta’s Conservative government, which he chastises for treating oil and gas revenues like a “slush fund.”
If the province’s politicians are as intellectually bankrupt as Marsden contends, how can he argue for government ownership with a straight face? When you write a one-sided book, you don’t have to burden yourself with such questions.
Such flaws aside, Stupid to the Last Drop is still a worthwhile read and it will likely generate a fair bit of discussion about the industry.

For a somewhat different and take on the book, the Globe & Mail offers a more amusing review by ANDREW NIKIFORUK
“… let’s begin with Marsden’s intelligently quirky narrative on energy and destiny. The investigative reporter starts off with a curious yet true story about plans to nuke the tar sands, the world’s second-largest source of oil after Saudi Arabia. But separating tar from sand in the boreal forest has always been a messy job. The good folks at Richfield Oil and the Alberta government figured out that a couple of atomic warheads might speed up the process in the 1950s.
Marsden can barely hide his incredulity as he relates this fantastic story. Yes, engineers spent years fine-tuning the project before it got axed. And yes, the Russians stole the idea and eventually proved that nuking heavy oil increases productivity, but also leaves an inconvenient radioactive fingerprint. And yes, the U.S. government still holds the patent on the “nuclear explosive method for stimulating hydrocarbons” in the tar sands.
From these surreal beginnings, Marsden tracks the great tar sands rush in the late 1990s to the current cocaine-driven mess in Fort McMurray. He also explains why the oil-obsessed United States understandably views the megaprojects in northern Alberta as a stable refuge from the world market: “gangsters, thieves and a surly Venezuelan.”

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