2
ON average, petrol costs around 20 cents less in Canada’s western province of Alberta than it does in New Brunswick where I am now. The reason is that Alberta produces surplus oil, while New Brunswick imports it from Saudi Arabia. The country as a whole produces around 3.5 million barrels of oil while it consumes some two million. But because of the distance between the oil-producing west and the consumers in the east is so vast that only an oil pipeline would make it feasible to transport crude oil to refineries in New Brunswick on the Atlantic coast.
This is exactly what TransCanada wants to do with its proposed Energy East pipeline. However, it has run into a roadblock in the form of environmental groups and First Nation tribes over whose lands the pipeline would pass. Although parts of the project have been completed, it still remains a work in progress until the legal formalities have been completed and objections overcome.
Currently, there is a federal commission travelling to all the provinces that would be affected, gathering information and listening to voices for and against the pipeline. It won’t be until 2018 that a formal report is made to the cabinet which will then decide whether to go ahead. Meanwhile, the debate will continue to rage. Already, the local press in St John, the city where the Irving Refinery is located, and where the proposed pipeline would end, has carried several letters denouncing critics of the project for not caring about unemployed Canadians who would benefit from the pipeline.
In one way or another, oil has figured largely in Canada’s public discourse these last few years. As oil prices rose inexorably, and new discoveries became few and far between, it became economical to extract oil from the vast bitumen fields under Alberta. But apart from being expensive, the process was messy and caused pollution on a massive scale. Nevertheless, it enriched the province and caused an oil rush with its high wages and profits.
While the oil industry as talked about Alberta’s proven reserves of 166 billion barrels — third highest after Saudi Arabia and Venezuela — and the five billion Canadian dollars it pays the exchequer in taxes for extracting oil from tar sands, it is careful not to mention environmental concerns. However, according to Greenpeace, the nearby Athabasca River has been heavily polluted with toxic substances; the local First People complain of an outbreak of cancers and autoimmune diseases; and a housing shortage faces scores of thousands of workers brought in to work on the tar sands.
It is these environmental concerns that caused President Obama to refuse permission for the extension of the Keystone Pipeline. This denies Canadian companies a big market and forces them to look elsewhere to sell their oil. Currently, they are trying to get permission to take a pipeline across the pristine province of British Columbia to the Pacific Ocean from where it could be shipped to the Far East. However, the proposal has run into similar environmental issues as the pipeline would cross a thousand rivers, and some of the most unspoiled areas in Canada. Critics point to the regular leaks in the existing pipelines in Alberta.
Meanwhile, as these legal, political and environmental debates go on, the oil market has shifted to the disadvantage of oil extracted from tar sands. At $100 a barrel, it was economical to extract oil using modern, albeit polluting, methods. But at $40, the process is simply not feasible. As a result, oil is now being produced at a loss. As the expensive equipment installed is a long-term investment, production cannot be halted without incurring huge losses.
This pain is familiar to all major oil exporters whose economies are struggling to cope with falling prices. Countries like Saudi Arabia with total oil dependence have been hit specially hard. Venezuela has witnessed big riots protesting shortages of basics; but the country’s mismanagement has much to do with this state of affairs.
A couple of decades ago, before the advent of fracking to extract gas from shale rocks, and of producing oil from bitumen, oil was thought to be a diminishing resource. And given rising demand, it was assumed its price would forever go up. But apart from unconventional techniques to recover oil and gas, clean sources of energy rapidly are coming online. For instance, last year 18pc of the energy used in the UK came from solar or wind. And Germany, a country that has turned off its nuclear plants, had one day in 2015 when over half of its energy was produced from sustainable, green sources.
This trend is only going to intensify. Given the concerns about weather changes taking place as a result of the greenhouse effect produced by the release of carbon from oil and gas consumption, many countries are focusing on exploiting solar, wind and tidal energy. The problem is that these sources do not produce electricity at a constant rate, and at night, when there is no sun, solar panels become useless. And when the wind drops, turbines come to a halt. Currently, storing power when it is not being used is a bottleneck as batteries cost too much to use on national grids. However, there is a lot of promising research going on, and it is expected that by 2020, the price of storage will come down to $100 per megawatt, thus making it competitive.
Pakistan, although it has endless sunshine and several wind corridors in Sindh, has lagged behind, largely due to the power of the oil lobby. Punjab has made some progress, but we have so far failed to exploit our plentiful natural resources while spending billions on exploring for oil, and committing billions more to an obsolete coal-fired power plant at Thar. Surely our planners can see the writing on the wall.
Published in Dawn, August 15th, 2016
