Documents leaked from the Alberta Energy Regulator in November 2018 stated that cleaning up the Alberta oil patch could cost $260 billion. About half of that amount, $130 billion, is related to the oil sands industry—mostly tailings ponds. For context, the combined market capitalisation of the five biggest oil sands companies: Suncor, CNRL, Imperial, Husky, and Cenovus, was about $165 billion in February 2019. How did Alberta get to a point where the cost of rectifying the environmental impacts of the oil sands industry rivals the market value of its main producers? Looking for answers to this question took me back to the first commercial development phase of the Alberta oil sands industry – the mid-1960s to the early 1980s.
The boom in conventional oil production in Alberta started in 1947 when Imperial Oil struck oil south of Edmonton near Leduc Alberta. Previously one of the poorest provinces in Confederation, oil transformed Alberta. The scale of the Athabasca bitumen deposits was long known by government, industry and Indigenous peoples, but the difficulty and cost of mining and upgrading bitumen into marketable hydrocarbons prevented the commercial extraction of bitumen before the 1960s. The first large-scale oil sands operation Great Canadian Oil Sands, funded by Sun Oil, started production in 1967. A second, larger operation, Syncrude, funded by a consortium of US oil companies, planned a second plant.
The commercialisation of the oil sands industry coincided with the formalisation of environmental policy at both the provincial and federal levels. In Alberta, the Social Credit Government, which held power until 1971, created the Department of the Environment and a range of environmental laws and policies. The oil sands industry became one of the big environmental policy questions in Alberta. When the Progressive Conservative Party, led by Premier Peter Lougheed, formed a government after winning the 1971 election, it strengthened and expanded the scope of environmental regulation into the mid-1970s. Lougheed’s PC government initially pursued the development of the oil sands industry with caution, to maximise the domestic economic benefits and minimise the environmental impacts.
The rising energy prices and stagflation of the 1970s, marked by the OAPEC embargo in 1973 and the decoupling of the US dollar from the gold standard in 1971, changed the economic viability and importance of the oil sands industry. For Lougheed, the oil sands industry became a cornerstone of the PC government’s goals to diversify the Alberta economy. To save the Syncrude project after Atlantic Richfield withdrew its thirty per cent stake in the consortium in December 1974, the Alberta government bought a ten per cent position along with the federal government and Ontario.
My forthcoming article, ‘Conflicting Interests: Development Politics and the Environmental Regulation of the Alberta Oil Sands Industry, 1970–1980’ argues that investing in the oil sands industry created a conflict of interest for the Alberta government, as it became both the regulator and the developer of the resource. Using a range of archival sources and oral history, my article examines the history of the first bitumen boom through the lens of environmental governance. It shows how Alberta’s environmental policies and research programmes were sidelined by the Lougheed government in the latter half of the 1970s, culminating in the cancellation of the Alberta Oil Sands Environmental Research Program in 1980.
Earlier scholars laid the shortcomings of Alberta’s environmental governance of the oil sands industry at the feet of the Lougheed government but did not acknowledge that in its first years, the PCs were meaningfully committed to environmental policy. Although this might seem like a subtle distinction, it has significant implications for resource governance and environmental policy.
As demand for oil has grown, producers have shifted to more difficult deposits with higher financial and environmental costs. When governments invest in high stakes energy projects, they blur the lines between government and industry, creating a conflict of interest that can marginalise environmental regulation. In 2018 the federal Liberal government purchased the Trans Mountain pipeline from Kinder Morgan for $4.5 billion, and the Alberta NDP government earmarked $1 billion for bitumen upgrading. With the Trans Mountain expansion project stuck in regulatory limbo and bleeding cash, the federal government will be increasingly pressured to act to make the project succeed.
Better managing the impacts of extractive industry means recognising that conflicts of interests between development politics and environmental policy transcend time and political party lines and are a fundamental problem in the governance of countries and provinces that depend on primary resources.
Feature Image: The 600-foot Syncrude Smoke Stack, Alberta (Winter 1976), Imperial Oil Archives, IP-6s-2-2-13A, Glenbow Archives.
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In other words, after Lougheed, the interest-conflicted cronyCorpiratist stooges in successive ALberta governments violated their oaths of office and abandoned moral, ethical, intellectual integrity to allow the largely foreign-owned PetroRacket to do whatever the hell they wanted.
They knew, or could reasonably be expected to know, that they were committing breach-of-trust, reckless near-criminal-negligence and committing harm to the beneficiaries of the public trust, yet they chose to proceed.
Since they are protected by their Immunity to Act With Impunity Priviledge, their individual and collective behaviour is automatically exonerated – and now, through legislative collusion, regulaTory neglect, direct and indirect subsidization, and externalization of risk, cost, and harm into TheCommons, the public is forced to surrender the meager benefits they obtained to mitigate the damage left behind.
In more civilized regimes, with competent governance, such as Norway, the value of the resource is held as property of the public.
The petro corpirations are paid the cost of extraction, development, production, etc, plus a profit.
In backwoods Oilberta, the value of the resource is virtually given away to the corpirations who are also paid subsidies and incentives and tax-deferrals-to-infinity, they pay the cost of the extraction, development, and production, pay the public some small (7%max) royalty, and bugger off with the rest as profit.
Seriously . Norway was very clever they only had billions of barrels of oil deposited under a Ocean. Those dumb Albertans elected to have a few hundred billion barrel of bitumin deposited interlaced with sand and clay, requiring billions of dollars spent on surface extraction equipment built not including a few thousand miles of pipeline to move it to a market.
Your unA educated rant is a sad commentary on your lack of knowledge of any portion of the Industry.
Hopefully your never in charge of anything.
They should all be charged with all the cancer deaths since they poisoned the Athabasca River!
Another biased opinion from someone who hasn’t bothered to interview people who work or worked in the oiI industry. How much did the Tides foundation and the Rockefellers pay you????
Thank you for sharing