Saskatchewan is sitting on top of about three billion barrels of oil stores.
For those who may be unaware, three billion barrels is an enormous amount of oil. It’s an amount so large it has placed Saskatchewan at the top of the list of future hydrocarbon suppliers. Which is why, if Saskatchewan residents are beginning to wonder about the viability of pulling this out of the earth, it’s necessary to learn a few things from those who have already done it — look to Alberta.
Andrew Nikiforuk knows a lot about the situation facing Saskatchewan. As a native of Alberta and author of the book Tar Sands: Dirty Oil and the Future of a Continent, he has established himself as an expert in the area of oil sands development.
On Sept. 23 Nikiforuk spoke at the Delta Bessborough in Saskatoon to help residents make an informed decision prior to development of Saskatchewan’s oil reserves. The Alberta government decided to develop the Alberta oil reserves back in the ’70s and the result, Nikiforuk believes, isn’t without its consequences.
There is no question that drilling this resource will lead to rapid growth in the province and help bring in tremendous amounts of money from investment and taxes. Saskatchewan may become one of the most important international suppliers of oil within a generation. But the trade-offs are likely to be serious.
“These are not conventional oils,” Nikiforuk explains, “these are unconventional. They are difficult, extreme, inferior hydrocarbons.”
This isn’t the normal crude that one simply pumps out of the ground and whisks away to the refinery — that oil comes with far fewer ecological and economic complications. The oil resources in Saskatchewan, a form of viscous black tar known as bitumen, have massive costs in terms of both the energy needed to withdraw them and the ecological impact in doing so. Saskatchewan oil is exponentially more costly than conventional crude.
Some of the ecological costs Alberta has dealt with include 1.3 billion cubic feet of natural gas consumed and 1.8 billion litres of toxic waste produced per day, fragmented forests that will soon stretch to an area the size of Florida, greatly increased rates of rare cancers in the surrounding human population and a CO2 contribution equivalent to 76 million homes. Additionally, precipitation in the Fort McMurray area is often so acidic that it has a pH equivalent to a cup of coffee.
In terms of energy expenditure, pulling bitumen from the ground is among the most expensive forms of hydrocarbon production that is practised. This is because in order to pull the near-solid tar out of the ground, large amounts of fresh water must first be boiled and run deep into the earth, effectively melting the bitumen and making it possible to pump it up to the surface. This translates into an energy cost of one barrel of oil consumed for every three that are produced. Nikiforuk calls this “energy cannibalism.”
However, it’s hard to deny the economic prosperity Alberta has enjoyed due to their use of oil resources. The environmental cost has benefited many who go to Alberta seeking work in the northern fields and it’s still the only province without PST — all this despite having one of the lowest royalty taxes in the world on investors seeking to extract the fuel.
But while that low tax rate has done great things for attracting investors, Nikiforuk explains that Alberta has no long-term goals for the use of this fuel, citing the small amount of money saved by the province relative to its increased spending.
“We’re giving it away, and real owners don’t give away their resources.”
Saskatchewan has been going that same direction for decades. Currently the province is taking the lowest tax cut from oil revenues in its history and that number has continued to drop almost every year.
Simon Dyer, oil sands program director at the Pembina Institute, noted that the world is watching what Canada is doing with its hydrocarbon cache and so far the country has come under heavy international criticism. However, trying to fix environmental problems after they have occurred is often difficult and organized councils have a hard time accomplishing objectives in the midst of a continual thirst for economic growth. Dyer states the responsible approach needs to include “environmental management systems… in place prior to development.”
But there is one distinct factor separating Saskatchewan’s situation from Alberta’s: Saskatchewan residents can help choose the province’s course of action. And from what has happened in Alberta, Nikiforuk believes, there’s a possibility that “the best place for bitumen to be is in the ground.”