MAC: Mines and Communities

Scouring Scum and Tar from the Bottom of the Pit (Peter Cizek)

Published by MAC on 2006-08-15

Scouring Scum and Tar from the Bottom of the Pit (Peter Cizek)

Canadian Dimension Magazine

July/August 2006 Issue

Faced with the undeniable reality of “Hubbard’s Peak” in global conventional oil supplies, the world’s largest multinational energy corporations are now hell-bent on squeezing oil out of tar in northern Alberta, like junkies desperately conniving for one last giant fix in a futile attempt to quench America’s insatiable “addiction to oil” (described so eloquently by President George Bush II). Along the Athabasca River near Fort McMurray, a sub-arctic town almost 1,000 kilometres north of the U.S. border, tar literally seeps out of the riverbanks where Aboriginal peoples once used it to patch their birch-bark canoes. But most of the tar sands lie hidden below northern Alberta’s boreal forest, in an area larger than the state of Florida.

The first serious effort to dig huge tar pits along the Athabasca River to steam out the oil began in 1963 with the Great Canadian Oil Sands Company developed by Sun Oil Ltd., later to become Sunoco, and eventually Suncor.

By 1967, the company’s scion, J. Howard Pew, self-proclaimed “champion of free enterprise and enemy of godless communism,” had sunk $240 million (over $1 billion in today’s currency) into this project in an effort to wean Americans from dependence on foreign oil — Canada being considered an American territory. However, this Pew family project was less than successful, since separating the tar from the sand and then turning it into crude oil requires huge amounts of energy, steam and water. Even after the tar is melted down into bitumen, it still has to be “upgraded” into synthetic crude oil by adding hydrogen, usually made from natural gas.

Starting in the 1970s, the federal and Alberta governments paid out billions of dollars in tax breaks and research subsidies, invested in a joint-venture corporation called Syncrude, and even significantly lowered the royalty rate in the tar sands in 1997. In the mid-1980s, new “in situ” technologies like “Steam-Assisted Gravity Drainage” (SAGD) were developed, which steamed the tar from deposits around Cold Lake and Peace River — deposits too far below the surface to strip-mine. By the turn of the millennium, dozens of multinationals had invested over $24 billion into the tar sands, which finally began to yield huge profits with the explosive increase in the price of oil.

Between 1995 and 2004, tar-sands production doubled to more than 1.1 million barrels per day, 16 years ahead of schedule. It was a banner year in 2003, when the United States Energy Information Administration recognized that 175 billion of the total 1.7 trillion barrels of oil in the tar sands were “economically recoverable,” placing Alberta second only to Saudi Arabia in the world’s pecking order of oil reserves.

The Tar Sands’ Appalling Impact

“Oil Sands Fever,” a report released in November, 2005, by the Pembina Institute, a Calgary-based energy think tank, barrages the readers with an onslaught of horrifying facts and images that make the appalling environmental impacts of the tar sands assume gargantuan proportions:

About half of Canada’s oil production currently comes from the tar sands. Tar-sands oil production has been predicted to quintuple from one million barrels per day in 2003 to five million barrels per day in 2030, representing over three-quarters of Canada’s oil production, 70 per cent of which is destined for export to the United States.

Around Fort McMurray over 430 square kilometres of boreal forest has been eradicated. There is an approved disturbance of 950 square kilometres and a planned disturbance of 2,000 square kilometres. Not including the loss and fragmentation of boreal forest from “in situ” operations in Cold Lake and Peace River, this will be twice the combined urban footprint of Calgary and Edmonton (1,000 square kilometers). No land has yet been certified as reclaimed.

To produce one barrel of oil, four tonnes of material is mined, between two and five barrels of water are used to extract the bitumen, and enough gas to heat 1.5 homes for a day is required. Oil-sands producers move enough overburden and oil sands every two days to fill Toronto’s Skydome or New York’s Yankee Stadium.

The tar-sands industry now consumes 0.6 billion cubic feet of natural gas per day, enough natural gas to heat 3.2 million Canadian homes for one day. By 2012, this industry will consume two billion cubic feet of natural gas per day, enough to heat all Canadian homes for a day. By 2030, the tar sands are forecast to consume over five billion cubic feet per day of natural gas, representing more than the combined output of the planned Mackenzie Valley and Alaska gas pipelines, which will induce exploration and development of thousands of natural-gas wells and feeder pipelines spanning the Northwest Territories, Yukon and Alaska.

The greenhouse-gas intensity of tar-sands production is almost triple that of conventional oil, largely due to the vast amounts of natural gas consumed. Even before the actual produced oil is burned, carbon emissions from the tar sands are forecast to increase from 23.3 million tonnes per year to between 83 and 175 million tonnes per year. This might represent almost two-thirds of Canada’s 2005 “Kyoto gap” of 270 million tonnes. Canada’s “Kyoto gap” has increased from 138 million tonnes in 1997 to 270 million tonnes in 2005, due in large part to the impact of the Alberta tar sands.

Approved oil-sands mining operations are already licensed to divert 349 million cubic metres of water per year from the Athabasca River. This is approximately three times the volume of water required to meet the municipal needs of Calgary, a city of almost one million people, for one year. Planned projects will increase water diversions to almost 500 million cubic metres of water per year, representing 10 per cent of the river’s winter low flow.

Syncrude and Suncor are the top two air polluters in Alberta, which have already degraded the once-pristine air quality in Fort McMurray, a small northern city of 70,000, to the level of metropolitan centres like Edmonton and Calgary. Air-quality modeling for approved projects predicts that national, provincial and international guidelines for sulfur dioxide and nitrogen oxide will all be exceeded.

A Modern Gold Rush

Very recent developments reinforce and amplify all these facts. Multinational corporations, including majority players such as ExxonMobil, ConocoPhillips and Shell, who also happen to be the promoters of the Mackenzie Valley and/or Alaska arctic natural-gas pipelines, have confirmed a grand-total planned investment of $100 billion into the tar sands in the next decade. This makes it the largest mega-project complex in the world, growing to an astounding total of at least $160 billion when all the required arctic natural-gas supplies from the Mackenzie Valley and Alaska pipelines are added — which requires coining a whole new word: “gigaproject.”

Brokers like Raymond James Ltd. and the Canadian Imperial Bank of Commerce are advising investors about the realities of “peak oil” and counseling them to invest in the tar sands, which they describe as the planet’s last new significant oil-supply addition with total production forecasts whose total output will rival Saudi Arabia by 2030. When interviewed by CBS’s 60 Minutes in January, 2006, about the confirmed tar-sands reserves of 175 billion barrels, Clive Mather, CEO of Shell Canada, baldly stated, “We know there’s much, much more there. The total estimates could be two trillion or even higher” — eight times the reserves of Saudi Arabia.

Early this year, frenzied speculation hit new heights in a bidding war for new tar-sands leases, where energy corporations spent almost twice as much cash in one month than they had ever spent in a whole year. During the month of January, 2006, the Alberta government raised $850 million for selling 4,000 square kilometres of new tar-sands leases, adding this block to the grand total of 24,000 square kilometres of boreal forest available for extracting oil from tar, a combined area almost as big as Vancouver Island. Finally, the Alberta government is steamrolling towards a March 31, 2006 deadline to complete public consultations about its “Mineable Oil Sands Strategy” (MOSS). The plan is to effectively re-zone the entire Fort McMurray region as a permanent industrial landscape — or what Ronald Reagan once called a “national sacrifice area” — finally abandoning the fantasy of “multiple use” through “integrated resource management,” which balances resource extraction with wildlife and other ecological values.

The option of nuclear power to supply steam and hydrogen to the tar sands has been promoted for at least a decade by Atomic Energy of Canada Limited, desperate to rejuvenate the dwindling market for its white elephant CANDU reactors. In the fall of 2005, French energy conglomerate Total SA began to muse publicly about using nuclear power in its new tar-sands projects. More pragmatically, TransCanada Pipelines just announced serious discussions to revive the dormant 1,800-million-watt Slave River hydroelectric project at the massive rapids near Fort Smith at the Northwest Territories’ border, host to the northernmost rookery of the once-endangered white pelican.

Our Meek Environmentalists

Despite Pembina’s exhaustive documentation of this unfolding ecological holocaust, its policy prescriptions are shockingly timid and meek. On December 1, 2005, led by the Pembina Institute, eleven major environmental organizations, including World Wildlife Fund Canada, the Canadian Parks and Wilderness Society and the Sierra Club of Canada, issued a declaration called “Managing Oil Sands Development for the Long Term.” It calls for elimination of subsidies, a network of protected areas and corridors, a binding, integrated regional resource-management plan and, most curiously, “carbon neutral (zero net greenhouse gas emissions) by 2020 through a combination of on-site emission reductions and genuine emissions offsets.”

The possibility of slowing down, much less stopping, further expansion of the tar sands is not even mentioned.

Moreover, the declaration goes on to assure its intended audience that, “These conditions can be implemented without significant macroeconomic impacts through innovation and strong leadership. Only through the satisfaction of these conditions do we believe that Canada will be in a position to develop this energy resource in a responsible manner that will create a positive legacy for current and future generations.” Are these environmental organizations so terrified of upsetting this “foundational economic driver for Canada” — as described in a 2004 agreement between Alberta and the federal government — that allows speedy work permits for foreign “guest-workers” to relieve labour shortages in Fort McMurray? Or are there deeper forces yanking at these environmentalists’ chains?

Pembina just happens to make money selling “carbon offsets” to the guilt-ridden rich and progressive corporations by subsidizing TransAlta Utilities, a major Alberta coal producer, to construct windmills that produce electricity without emitting carbon. Without legislated “caps” on maximum carbon emissions, the purchase of carbon offsets is a feel-good illusion, as this does not actually result in the reduction of overall carbon emissions. A major purchaser of these credits is Suncor, which most recently offset 144,000 tonnes of carbon out of its total 10 million tonnes per year of steadily growing carbon emissions for a whopping 1.4 per cent. Pembina also offers franchise opportunities to other non-profit groups in this moneymaking scheme. With Conservative prime minister Stephen Harper’s announcement that Canada cannot meet its Kyoto commitments, Pembina’s climate-change specialist Matthew Bramley conceded with a capitulation: “We do need to buy international credits as part of our package of measures to meet our Kyoto target.”

Twisting Science

One need look no further than the list of “partners and clients” in Pembina’s annual report to find a veritable who’s who from the oil patch, including major players in the tar sands/arctic natural-gas pipeline “gigaproject” like ConocoPhillips, Encana, Husky Oil, PetroCanada, Shell Canada and even Suncor, whose vice-president of sustainability makes valuable use of his surfeit of uncritical face time in Pembina’s tar-sands video to proselytize about the company line.

In November, 2005, Pembina also produced a report called Counting Canada’s Natural Capital: Assessing the Value of Canada’s Boreal Ecosystems, wherein they proclaim that the Canadian boreal forest absorbs 173 million tonnes of carbon worth $1.85 billion each year, which could presumably be used to “offset” carbon emissions from the tar sands. Yet, deep within the body of the text, Pembina acknowledges recent scientific literature, which concludes that the boreal forest actually became a net source of 44 million tonnes of carbon emissions per year in the 1970s, largely due to increases in forest fires and pest outbreaks, all related to global warming.

In an amazing twist of logic, Pembina then uses a study from 1995 that explored possible intensive-management scenarios, like tree-planting, fire suppression and pest control to reverse future carbon emissions from the boreal forest, as a way to rationalize its deceptive conclusion that the boreal forest is now absorbing carbon and not actually producing it. The primary author of all these boreal carbon studies is Dr. Werner Kurz, (*) formerly of Natural Resources Canada but now with Ducks Unlimited, who, despite Pembina’s distortion of his studies, is surprisingly also listed as an advisor, reviewer and contributor to the report.

Follow the Money

The sponsor of Pembina’s Counting Canada’s Natural Capital report is the Canadian Boreal Initiative (CBI), self-described as “an independent organization working with conservationists, First Nations, industry and others to link science, policy and conservation activities in Canada’s boreal region.” This “organization” does not have a board of directors, is not registered as a non-profit corporation under any federal or provincial laws, and does not have a charitable number. Yet, this “organization” employs a staff of eleven and has sponsored at least five major research reports about the boreal forest in the past three years. Cathy Wilkinson, the CBI’s “director,” appeared on the Report on Business T.V. show Squeezeplay on December 13, 2005, to publicize the findings of the Counting Canada’s Natural Capital report:

Kevin O’Leary: “I like to understand where people’s interest lies and I always do that by finding out where their money came from because I believe that money and interests are always aligned. Who funds your organization?”

Cathy Wilkinson: “We’re funded by charitable organizations both in the United States and in Canada who are interested in the value of the world’s largest and intact forests. So this is really an international effort in the same way that our trade moves across the border.”

Not quite. As noted on CBI’s own website, its sole funder is actually the Philadelphia-based Pew Charitable Trusts — the same Pew family who originally developed the tar sands, created Suncor (worth $5.9 billion, when they sold their shares in 1995) and who continue to own Sunoco, a major refiner of synthetic crude oil from the tar sands.

So, if it is neither a legal entity nor a registered charity in Canada, how does CBI actually channel money “across the border”? The Pew first transfers money to the North American headquarters of Ducks Unlimited in Nashville, Tennessee, which is funneled to its Canadian branch-plant headquarters in Winnipeg. Ducks Unlimited, which proudly lists Suncor and Syncrude as its “corporate partners,” then recycles “boreal” money not only back to the CBI, but also to other Canadian environmental organizations, like World Wildlife Fund Canada (WWF) and the Canadian Parks and Wilderness Society (CPAWS).

Buying the Environmental Movement

WWF and CPAWS got their first snort of this nose candy from the Pew in 1999 with a grant of $1.8 million over two years to “protect at least 20 million acres of boreal forest wilderness in the Yukon and Northwest Territories of Canada.” Even though they never came even close to this lofty objective, the Pew kept cranking the dose of crackerjack cash higher and higher, from $2.1 million per year in 2000 to $4.5 million per year in 2002-03, topping out with a mind-blowing speedball injection of $12 million — the Pew’s single biggest grant in 2004.

Just like they do not oppose the tar sands in Alberta, WWF and CPAWS also do not oppose the Mackenzie Valley Pipeline in the Northwest Territories.

After all, the new president and CEO of WWF, Mike Russill, is a former senior executive of Suncor. WWF and CPAWS are only lobbying to establish a network of protected areas before the start of construction. Last year, WWF, CPAWS and Ducks Unlimited squeezed out an additional $9 million from the federal government to conduct more studies to identify such a network under the government-approved Northwest Territories Protected Areas Strategy.

In 1996, WWF threatened to sue the federal government for approving Canada’s first diamond mine due to the absence of any protected areas in the central arctic region. WWF then withdrew its lawsuit in exchange for the government’s commitment to develop a Northwest Territories Protected Areas Strategy. Since this strategy was approved in 1999, WWF has not formally identified, much less established, any protected areas in the central arctic, while only two areas have received temporary protection elsewhere in the Northwest Territories under this strategy.

In Alberta, the once-feisty Edmonton branch of CPAWS is pursuing a similar approach around the tar sands, where it is promoting four protected areas, all of which have low oil potential and no leases. This pattern of environmental organizations adopting a docile “low-hanging fruit” strategy soon after being bankrolled by the Pew has been thoroughly documented by American activists and investigative reporters, including Jeffrey St. Clair, Alexander Cockburn, Mark Dowie and Felice Pace.

Setting Up Fronts

Until the early 1980s, the Pew religiously followed J. Howard Pew’s founding mission “to acquaint Americans with the evils of bureaucracy, the paralyzing effects of government controls on the lives and activities of people, and the values of the free market” by funding right-wing extremists like the John Birch Society and the Heritage Foundation. Since then, the Pew has adopted a much more sophisticated strategy of setting up dozens of socially progressive “front groups” across North America like the CBI, an innovative right-wing twist on classic Marxist-Leninist organizing tactics.

In 2003, the CBI established the “Boreal Leadership Council,” composed of WWF, CPA WS, Ducks Unlimited, Suncor, Tembec, Alpac, Domtar and several First Nations. Its goal is to implement the “Boreal Conservation Framework” by protecting at least half of Cana- da’s boreal forest, with the remainder available for “leading-edge sustainable practices.”

Concerned that this arbitrary benchmark of protecting half the boreal forest has never been scientifically justified, the David Suzuki Foundation did not endorse the framework. As pointed out by the free-market environmentalist Larry Solomon of Energy Probe, the “Boreal Conservation Framework” actually amounts to a massive resource giveaway requiring government subsidies, as industrial development in the far northern boreal forest is currently uneconomic under market conditions.

Lacking any accountable governance structures and directed by carefully chosen Pew operatives, front groups like the CBI not only fund but also insist on entering into partnerships with established advocacy organizations. Thus, the front group can serve as a “drag anchor” on any activities that are excessively disruptive to the status quo. According to an employee of CPAWS, the CBI is now reviewing and vetting their draft press releases. A project officer of a major Canadian foundation recounts tales of environmental organizations pleading with him for grants, desperate to break their dependence on the Pew/CBI as their sole funding source.

The Sierra Club of Canada originally took a hard-line position against the Mackenzie Valley Pipeline and the tar sands. In a wacky turn of events, shortly after receiving funding from the CBI/Pew, Sierra Club endorsed the Pembina-orchestrated “oil sands declaration” and threw its support behind the Alaska Pipeline as the “lesser of two evils” on the entirely false assumption that none of the Alaska gas would go to the tar sands. Sierra’s flip-flopping continues with its most recent announcement that it now wants a moratorium on further oil-sands development.

The only bright light in this deep, dark pit of depravity is a report entitled Fuelling Fortress America, released in March, 2006, by the Parkland Institute, the Canadian Centre for Policy Alternatives and the Polaris Institute. This report clearly advocates a moratorium on further tar-sands development, a national energy policy and exemption like Mexico from the “proportional sharing” clause of the NAFTA free-trade agreement, which only allows Canada to reduce energy exports to the United States in proportion to reductions of our own consumption.

“Canadian Oil Is Ours”

While allegedly supporting boreal conservation in Canada, the Pew is also busy addressing American foreign policy regarding the tar sands. With its partner, the $6-billion Hewlett Foundation, which also funneled $1.85 million through the Pew to the CBI in 2004, the Pew established the “National Energy Commission,” a bipartisan group of twenty energy experts.

This group includes James Woolsey, a former director of the CIA and a member of the “Project for a New American Century,” which advocated pre-emptive war and the invasion of Iraq as early as 1998. In its 2004 report, “Ending the Energy Stalemate,” the Commission advocated, “a $300 million increase in federal funding over ten years to improve the environmental performance of technologies and practices used to produce unconventional oil resources” in Alberta’s tar sands and Venezuela’s Corinoco heavy oil belt. Overall, the Commission advocates $36 billion in government subsidies to the energy sector to be financed though the sale of carbon credits.

Canada’s tar sands and arctic natural gas have been on America’s foreign-policy radar screen at least since 2001, when Dick Cheney’s “National Energy Policy” report stated that the continued development of the tar sands “can be a pillar of sustained North American energy and economic security.” Last year, American politicians were outraged by a relatively small Chinese investment of $225 million in the tar sands, which prompted energy analyst Irving Mintzer to blurt out the widely held but publicly unspeakable opinion of Beltway insiders: “The problem with the Chinese is that they don’t know that the Canadian oil is ours. And neither do the Canadians.” Mintzer is also a co-author of the report, U.S. Energy Scenarios for the 21st Century, commissioned by the Pew Center on Global Climate Change.

In 2005, Dick Cheney’s “National Energy Policy” was transmuted into legislation called the “National Energy Policy Act,” with the support of the “Set America Free Coalition,” a front group of the “Institute for the Analysis of Global Security.” A member and advisor to both organizations, James Woolsey proudly proclaims that, “We’ve got a coalition of tree-huggers, do-gooders, sodbusters, hawks and evangelicals,” including the Natural Resources Defense Council, a regular recipient of millions in Pew and Hewlett funding, which has also become involved in a boreal-forest campaign in northern Manitoba.

In addition to providing $13.6 billion in subsidies to the energy sector, the National Energy Policy Act has a “Set America Free” sub-section, which establishes “a United States commission to make recommendations for a coordinated and comprehensive North American energy policy that will achieve energy self-sufficiency by 2025 within the three contiguous North American nation area of Canada, Mexico, and the United States.” Since the United States currently imports 60 per cent of its oil supply, this continental self-sufficiency will require much additional Canadian and Mexican oil. Furthermore, the Act establishes a Task Force to initiate “a partnership with the Province of Alberta, Canada, for purposes of sharing information relating to the development and production of oil from tar sands.” Finally, the Act requires the Secretary of Energy to update his/her assessment of domestic heavy-oil resources to include “all of North America and cover all unconventional oil, including heavy oil, tar sands (oil sands), and oil shale.” However, this legislation merely formalizes the continent-wide “deep integration” that has been well underway with the establishment of the “Security and Prosperity Partnership,” which released its “Oil Sands Experts Working Group” workshop report in March, 2006.

Beware of Foundation Grants

Canadian environmental organizations should think long and hard about accepting money from and becoming financially hooked on the largesse of gigantic American foundations. Although there is no recent evidence of such activities, the CIA has a long history of funneling money through philanthropic foundations to achieve American foreign-policy objectives by co-opting the soft, non-radical Left, as carefully documented in Francis Stonor Saunders’ book, The Cultural Cold War. In 1976, a select committee of Congress found that CIA funding was involved in nearly half the grants made by 163 foundations in the field of international activities.

While countries like Sweden and Iceland are seriously planning to break free from oil by 2020, multinational corporations are busy digging Canada deeper into a tar pit, determined to become history’s last kingpin pushers to oil junkies across America and around the world, no matter the consequences to the planet’s climate. The double tragedy is that so much potential opposition to this self-destructive lunacy has been readily defused through a wad of cash, an addiction just as cunning, baffling and powerful as oil itself. Members and individual donors to environmental organizations need to hold their leaders and staff to a much higher standard, making sure that they match their rhetoric with results instead of just bouncing from one mega-project cash cow to the next in an endless hustle to line their pockets with lucre.

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