Canada, Pipelines, World Oil Dependency and Sustainability

Being recently inspired after watching numerous documentaries and a TEDx Talk (Victoria) named “The true cost of oil” by Garth Lenz and BC Bill 4 2014 has passed, I decided to write about the Canadian oil industry as a whole focusing on the two pipeline proposals. About a year ago in North America two pipelines construction was by far one of the most debated topics on the public and political scene. Today, we do not really hear about it, but it is still in the air.

The True Cost of Oil



Today’s most industrialized countries are looking for better, cleaning and renewable form of energy. Therefore, it would make perfect sense to assume that your country is doing the best it can to help moving along this way to be one of the leader in the industry but also to leave a sustainable legacy to future generations. However in Canada, governments (provincial and federal) seem to think otherwise. Achieving short term profit seems to be a better plan for them. There is a sustainability concept called the “Triple Bottom Line” which covers the environmental, social and economic aspect of an organization or project. The Canadian oil companies are breaking them all. Essentially, what Garth explains in his talk is what the real impact of the oil sand has on the triple bottom line. Lets review together how the oil sand industry does on a triple bottom line standpoint.


Environment

Only by understanding the oil sand extraction process to get reach the bitumen from the ground or even simply looking at a picture from a plane, it is quite easy to realize that there is something wrong with the whole industry. Every step of the process has a negative impact on the environment. To begin, healthy forests are being cleared cut to provide access to the ground. Then the process requires digging a gigantic hole (we are talking city size holes) in the ground just like an open-pit mine. Once the soil has been removed from the ground, it needs to go through an elaborate step-by-step process that requires over four barrels of fresh water to produce one barrel of oil. Once the process is over, used water is flushed into tailing ponds which are built to settle toxic chemical a process that takes over 30 years. The existing tailing ponds are now covering over 176 square km in which few of them are located less than 500 meters from the Athabasca river in which all the chemicals leak into. The impact that this practice has on the environment totally irreversible.

What is mentioned above is simply what is happening now, the future looks even darker. When you are a child and you do something that hurts you, you understand very quickly not to do it anymore. However, when a person grows up, this sense seems to be disappearing. Have we not learned from our previous mistakes? In 2010, the Deepwater Horizon disaster has apparently taught us nothing. Only a year later oil companies, politicians and lobbyists are trying to push for not one but two pipelines from Alberta; The Keystone going to Texas and the Northern Gateway to Kitimat, a costal town in northern British Columbia. In fact, Keystone has to go through the U.S. from North to South going through the most important agricultural land of the country. What would be the impact of having an oil spill on the food reserve of a whole country? As for the Northern Gateway, the plan is to build a pipeline in the hearth of the Rocky Mountains, the B.C. Costal Mountains and finally through the last natural Rain Forest in the entire world. Moreover, the pipeline is planned to go through native villages which will require them to relocate from their multi generational homes. Kitimat is a costal town located at the end of the Douglas Channel. This area is surrounded by island and tight inlets and is known to be one of the most difficult area to navigate in the world. This video gives you a better understanding of the difficulty level.

Super Tanker in Douglas Channel


The possible oil spill would destroy and disturb all wild life that lives on the coast which includes many species such as salmon, herring, Orcas, dolphins, Humpback wales, sea birds, seals, sea lions and much more. This would results in major consequences throughout the whole food chain, including us. Marine life will be caught into the oil patch and most likely die from it. As an example, bears in the rain forest would not have the same amount of fish to feed on due to the amount of salmon going up stream during the breeding season. If less salmon reach the rivers then it will have repercussions on the availability of the fish in the subsequent years. To draw a quick picture, it would like like Texas but instead of hitting desert, the oil patch will land the beaches on one of the most healthy area in the world.


Social

As mentioned previously, when the tar sand has been processed it now carries strong damaging chemicals with it. Once the water is flushed into the tailing ponds, the water sits there until the chemicals settle. This process is estimated to take approximately 30 to 40 years. As the tailing ponds are heavily leaking into the Athabasca River, it has a destructive effect on the Fort Chipewyan, AB community. This community now has the highest rate of cancer in Canada. Doctors have even found a type of cancer that has never been seen before. The main reason for this is that the community has always fed itself with fish and fresh water from the Athabasca River. Since the river is now being contaminated upstream of Fort Chipewyan by the oil industry, people eat poisonous fish and drink water containing high chemical density. In the event of an oil spill from one of the two pipeline, this could happen to many other communities, food supplies, agricultural lands, water sheds, and so on. We are all dependant of the food chain and if we mess with it, we will be the ones being affected by other people’s bad decisions.


Economic

In today’s world where everyone is energy dependent, energy is simply the world’s biggest industry. The world wide oil industry is by far having the biggest market share in the energy industry. This is why it is so hard to make a change to the system when it has been running for so decades. Enbridge which is one of the leader in the oil industry is now making time record net profits of over 600 million in 2012 and over 400 million in 2013. The economic benefits of having the world’s largest oil reserve in Canada are numerous, it creates a lot of good paying job, it is a relatively stable industry meaning that people are not scared to lose their jobs and can spend money as they please, plus it brings a lot of foreign investment in the country.

Canadians are moving from all over the country to get a job on the oil rigs, leaving their provinces. It disrupt a demographic change mostly for the Maritimes provinces as their economy is slowing down. The oil sand ideology follows the old business model in which profit maximization prevails. Companies and governments do not see destructive resource buried in the ground, they see dollars, quick easy short term dollars which is what our financial system is based on. The fast increasing energy demand in the emerging markets is seen as an amazing opportunity for the Canadian oil sand which is why they what to build the pipelines in the first place. The U.S. foreign demand for oil is slowly decreasing and Canada needs to look for other markets to sell their oil to. Due to the international increasing market, there is nothing in sight to slow them down.

By shipping more oil internationally every year, the risks of catastrophes increase annually. Building a pipeline and using tankers could literally put an halt to the Canadian West Coasts economy. British Columbia’s tourism industry counts for over 13 billion dollars in 2008 which makes it the most important driving factor in the province. By simply having one sunk tanker, the oil spill would destroy the majority of the coast, and disturb the primary economic province income. Moreover, the coastal communities will get a huge economic downturn as most of them rely on the ocean’s fish supply to survive.


Policies

Canada first big mistake was to break its commitment with the Kyoto Protocol back in 2011. From there, it was inevitable that PM Harper had the oil sand growth in sight. Canada went from being one of the top leader in green practices to an advocate in marketing tar sand by sending lobbyists wordwide. This created a rapid growth in oil production, projected to be tripled by 2025 in Alberta only. By reaching the oceans, Alberta is hoping to get easier access to international market by getting Keystone or Northern Gateway pipeline approved. However, the approval is on British Columbia (Northern Gateway) and the United States (Keystone) power. Unfortunately, a lot of changes have happened recently. In early March 2014, Bill 4 2014 has been approved by British Columbia Legislative Assembly. This new Bill now allows the feasibility study for building industrial activity such as roads and highways, pipelines, telecommunications projects, and such in the protected Provincial Parks. This is the first scary step forward into approving a pipeline from Alberta to the B.C.’s coasts line. The wording of this bill is so broad that basically any type of industrial activity could be approved. Minister Polak assured us that it does not change a thing and that our parks are just as well protected and there is not oil production in sight. So why would you change the law that protects our provincial parks from industrial projects? This new bill has made a lot of noise on the social media between British Columbians since the population had not been consulted prior to approval. They clearly knew that they would not have the population’s agreement and decided to do everything doors closed. To easy up the process of getting a pipeline approved, Enbridge has sent employees from Alberta, flew them to Kitimat to knock on resident’s door to explain them the benefits of the pipeline project for their community.

Regeneration

I know some of you have heard of what happened in the Howe Sound in Squamish a few weekends ago. A group of killer whales chased a pod of dolphins down the inlet. As the whales stopped chasing the dolphins, the experts suspect that the whales unexpectedly found a school of fish to feed on. The Orcas have gone crazy jumping all over the place in front of hundreds of eyes from the Squamish beach. The reason why this is so amazing is because the Howe Sound was renowned to have no remaining life due to the chemicals flushed in the water from the Squamish pulp mill and the Britannia Beach copper mine decades ago. Witnessing the return of these mammals is a great sign that life is finally regenerating and attracting marine life again. Contrarily the Northern Gateway Pipeline, the impact would be reversible as an oil spill has a much more negative impact and on a much longer period of time since it settles and never go away. Chemicals are bad, but fishes and other species avoid the area by not returning due to food scarcity. When an oil spill occurs, it is more difficult for wild life to escape from it. The oil spill would not only trap marine life, but diminish all food resources for them to feed on as well. We clearly have seen it in Texas a few years ago after the explosion of the Deepwater offshore oilrig.


Healthy Howe Sound


Investing (Renewable Energy) with a 6.5 billion dollars investment from Enbridge 2

Knowing the risks of creating such projects, every human with a bit of common sense would have stopped it all already. So what is the traction here? Oil companies have always been driven by profit maximization fore their shareholders without caring about the other stakeholders. It is easy to pretend that you care by having a sustainability team within the company, it gives you a great image but the team is not aligned with the company’s goal which prevent them to do any significant changes down the road. (I will get back to the Conscious Capitalism concept in the next post) Let’s pretend that you are in charge of an oil company generating billions of dollars in net profit, what would be your plan to grow even bigger than you already are? There are only two options available to you. Either you think short term by making as much profit as you told your investor you will and carry on, or you are changing for a long term vision and start investing in other energy resources, perhaps renewable energy. The energy market has an impact on the whole world. Everyone needs it, from the shoe manufacturer to the car racer to any household for cooking the next meal. Finding a technology or multiple technologies to reduce the negative impact on earth using solar, wind, wave & biomass energy generation is the key to make sure that the next generation can see the world as we see it today. British Columbia Premier made a hilarious statements while opening the Globe Series 2014 in Vancouver. During her speech she mentioned that “the LNG (liquefied natural gas) is the transition fuel and we are building a long term plan to reach the resource for the next twenty years”. Am I off track or a long term plan is not twenty years anymore but a 100 or 200 years from now? The wind will never stop blowing, biomass will always be around and the sun will always shine. This is the kind of long term vision that needs to be consider by our politicians. The increasing demand for energy is enormous especially in developing countries. To meet this new demand we have to start providing them with “the energy of the future” and prevent them from making the same mistake we made; making an oil dependant society. The upfront investment is definitively substantial, so it will be the long term return on investment for generations to come as they are not finite resources. Short sighted short term profits is what made this global economy to collapse in 2008. Sadly, there is no soul in businesses anymore, numbers and graphs prevail. By investing in the future and with a long term vision, people would be investing in the business’ purposes (the why – Simon Sinek) in which they believe in. What is the point of buying a company’s shares when you already have an exit strategy? The world needs a new economic model and restructure its old unsustainable model to assure a bright future for generations to come.

Simon Sinek – Find your Why


Germany has become a world leader in sustainable energy. The German Renewable Energy Act came in place in 2000. It was designed to encourage residents to become more energy efficient on their day to day activities. As the German renewable energy industry was picking up in the early 2000′s, it helped driving it up more rapidly to the point where renewable energy now counts for 23% of produced electricity in the country. Germany’s goal is to become powered entirely by renewables as fast as possible. The act also provides feed-in tariffs to whomever puts energy into the grid, from individuals to companies. The movement is mostly driven by people power as 84% of the population supports and get involve in project. Germans are investing and building their retirements towards renewables as they know this is something that will never go scarce which assure a constant revenue. This also assures that the whole industry is not only supported by the government incentives but by long term community investments. This concept guarantees a future energy source for the next generation as well so they can concentrate on the next new thing and it will not have to worry about finding more natural resources since it will be available at all time as maintenance will be the only thing required.


It is insane to hear on the news about how renewables would negatively impact our economy because of jobs losses. It seems to be another politic scam as in fact, the solar industry is now employing more people than the coal industry in America by almost a third. It might not be the same case for the oil industry as of now but simply put a small investment into a new industry and things could change.

Coal and Solar Industry Job Ratio Comparison


As Canadians and world citizens, we need to express our concerns towards our future, our land, our ecosystem, our rights and finally asking to change the fact that an industry alone thinks it can influence a country that is not its but ours. That doesn’t mean we have to go out protesting and going to Alberta to stop the tar sands, but simply by changing your purchasing habits, paying attention to politics instead of having a 50% voting rate, expressing your voice on social medias, the type of car you drive, signing petitions and so on.

Now go out there and make a difference for what you believe in.