Last week I had the opportunity to go and visit my cousin and her family who are currently living in Ft. McMurray, in Northern Alberta, Canada. Ft. McMurray has been in the news over the past 15 years or so due to its location as the hub of production and development of oil from the Athabasca Oil Sands.
From a frontier town of a few thousand people only 2 decades ago, the population has swelled to around 100,000 people, rapidly straining existing infrastructure. Therefore, along with development of the oilsands around it, the town itself has been extensively developed, with construction going on everywhere, from houses, commercial centers, roads and even a new airport. The promise of six figure salaries, and the ability to work on one of the most exciting and cutting edge engineering projects in the world has lured people from all of the world to brave -40C winters and converge on this once remote town in Northern Alberta. Honestly, I thought it was a nice place. The population is diverse, all basic amenities are available, and at least in the summer, I thought it was a beautiful place to spend an evening.
After getting back home to Vancouver, I have spent a bit of time doing a bit more research about the oilsands and their development. It holds special interest for me, for several reasons. As an Engineer, I thought the project was fascinating and COOL. Getting the chance to see machines larger than the size of most buildings, and get a glimpse of a development site which is hundreds of kilometers in area is basically an engineers dream. Moreover, my current area of research is related to investingating some of the potential effects of global climate change. Production of oil from the oilsands is a carbon intensive process, and environmentally speaking, not very friendly. Undoubtedly, development of the oil sands has a significant carbon footprint and thereby is contributing to global climate change.
The following thoughts are just my opinion. I am no expert by any means, nor do I have any vested interests in what is going on right now in Northern Alberta.
Socio-Economic Impact:
It has been recognized by economists that the development of the oilsands is probably the single biggest reason that Canada was able to avoid the worst of the global recession. At current prices, production and selling of oil from the oil sands is extremely profitable, and pumps millions of dollars into the economy, which in turn creates thousands of jobs directly in the sector, and thousands more indirectly in related services. However, some reports indicate that development of the oil sands has artificially made the dollar stronger than it really should be, and increases inflation. Therefore, the argument is that the economy is over dependent on the development of natural resources, and the strong dollar is weakening other parts of the economy, such as the manufacturing sector. Honestly, I am not an economist, and I wonder if it is simply a case of sour grapes, as power shifts within Canada from the manufacturing hubs in the East, to the natural resources which are abundant out West.
Currently, in terms of reserves, because of oil sand holdings, Canada is in posession of the second largest known reserves of recoverable oil in the world behind only Saudi Arabia. In terms of oil which is currently unrecoverable, it would have the worlds largest reserves by a long shot. It is only a matter of time before technology is developed to tap into these currently unrecoverable reserves and make Canada number one globally. With these kind of numbers, and the worlds current dependence on oil, it gives the country tremendous political clout, and may make our neighbors to the south a bit less condescending in terms of attitudes to the country. Proximity, and a stable political environment give the mouse a bit more of an upperhand against the elephant. In my novice opinion, I do feel that if we use this resource diplomatically and wisely, Canada can definitely use it as a power to improve our standing economically and politically on the worlds stage.
Environmental Impact:
At first look, the development of the oil sands is environmentally devestating. Swaths of forest are cut down to make the sites accessible, and toxic water from the extraction process is spewing into tailings ponds which are located throughout the oil sands. Pipelines need to be built to transport the oil away from Alberta and into the United States, or to ports along the Pacific Ocean for transportation to Asia. Moreoever, compared to conventional practise, extraction of oil from the sand is an especially energy intensive process, as the oil which is extracted is in the form of bitumen, which needs to be upgraded through a complicated process into conventional crude oil. Undoubtedly, the ecosystem of the oil sands is being disturbed and perhaps irreparibly destroyed.
My particular area of research involves looking at the effects of climate change on infrastructure. The main contributor to climate change is the emission of carbon dioxide into the atmosphere. Therefore, I had particular interest in looking at how much carbon dioxide was being emitted as a byproduct of the extraction process. The results were rather interesting. First of all, clearly, it is an energy and carbon intensive process, and a major contributor to emissions. However, if we look at things on a larger scale, surprisingly, the oil sands were not as bad as some people make them out to be. 5% of CO2 emissions in Canada can be attributed to oil sands development, which is equivalent to about 0.1% worldwide. In the scheme of things... that is a very low number. Looking purely at the numbers, there are other sources of emissions which are much greater and it would make more sense to try and reduce them, than to worry about 0.1%. I still strongly believe that we should not blame China and India for trying to develop and consume in a way that the west has been doing for the past century. Per person consumption levels in the west are still faaaaaar to high, and I think we can make a larger dent in emission levels by consuming less ourselves. Rather than driving prices of oil up by cutting down supply levels, to me, it make more sense to try to drive them down by reducing demand.
Environmentalists fear that development of the oilsands will provide a ready supply of oil and thereby discourage the use of greener forms of energy generation. However, realisticly speaking, I feel that not making this source available will only drive up world prices further and at some point we would give into human greed and start extracting anyway. If not here, then extraction of oil sand would surely be done in other parts of the world. Rather, after giving it some thought, it would make better sense to make use of this asset to improve the countries standing, but to try and develop it in a more sustainable way. How we should do this is something that a proper policy needs to be worked out, and it needs to be done soon, as we are rapidly heading towards the tipping point at which we will irreversibly change our planets ecosystem.
