Saturday, January 20, 2007

Alberta is Now a Geo-Political Energy Focus

The recent news report of a meeting held in Houston about a year ago around increasing oils sands production in Alberta on a faster track with streamlined environmental processes has been interesting but mostly it has turned into a political farce.

The political attempts to frame the issue by the Harper Cons by trying to make Dion’s knowledge of this meeting or not is misdirection of the real issue here. It is not about something that trite. It has much more significant import and implications.

There is no doubt Alberta is now the centre of serious geo-political interest and concerns because of the oils sands. On the investment side we have Japan, France, USA and China all participating in projects now, with India showing interest as well. On the environmental side it is the lightening rod for GHG emissions and climate change issues.

On the security of supply for the USA in particular we are the closest, safest, more reliable and politically friendly source of fossil fuels they have. The market competition is getting heated too especially from China and India who are both in need of a secure supply of imported oil.

If the Americans ever cost out what they are actually spending in cash and lives or a barrel of Iraqi oil as opposed to saying the goal is to bring democracy to that nation, they will abandon to “struggle” sooner than later. We have Venezuela nationalizing its oil production and Russia destabilizing parts Europe and Central Asia with threats to cut off supplies to certain nations.

Now Israel is reported to be studying a kind of small surgical nuclear deployment on Iran, as if there were such a thing. The House of Saud in Saudi Arabia is not that secure politically either. Then we add terrorism taking place around the world and looking to emerge in North America. The world is a very complex place when you look at it in terms of the politics of energy.

Quiet, little, stable, safe, secure, close, open, eager and friendly Alberta all of a sudden looks pretty good to Uncle Sam. Alberta, along with Canada, would no doubt be glad to oblige and service more of the American energy demand. We have to ensure it is going to be in our best interests when we do this. That is what we better start getting our heads around…what exactly is in our best interest and how do we best serve it under mounting USA pressures to accelerate oil sands production?

We have pretty much botched the deal so far. We have insufficient production infrastructure like upgraders, refinery capacity, transmission power lines, roads and pipelines to handle the current oil sands production of 1 million barrels per day. We have failed refused or neglected to provide the necessary social and public infrastructure to meet the human needs like housing, health care, school, recreational services and cultural facilities for people working in this industry.

We have now turned most of the province into this same overheated economic engine that is about to blow a gasket given the pressure it is under. We have to provide a much better quality of life for people especially in places like Fort McMurray and Grande Prairie. That means making the investments needed and to take a more moderate, longer term and purposeful approach to the development of the oil sands.

We have talked loosely in Alberta about possibly ramping up oil sands production to 3 million barrels per day within the next decade. We have no sense yet of if we can, at what infrastructure cost and social costs never mind the unknown cumulative costs on the society and environment.

If the Houston talks was really about a target of 5 million barrel per day to meet American demand, we Albertans, our political, business, environmental a social leaders have some serious thinking to do. We have some big decisions to make and we better start planning to do right - and right now!

UPDATE: Finance Minister Flaherty is courting China as a market for oil sands. Dubya is not going to be amused.