Creative pragmatism challenges environmental dogma in Alberta. With two important decisions important to oil sands development, a government less than a year in office has eased fear it will yield to pressure from climate extremists. While departing from the consistent support of its conservative predecessors, the New Democratic Party now in leadership clearly wants to sustain production from the oil sands even as it tightens regulation of greenhouse gas (GHG) emissions.
Extremists will object.
Relief on royalties
Most recently, a panel reviewing royalty reform recommended that rates in Alberta remain unchanged for oil sands production and that they be frozen for 10 years for existing output from conventional oil and gas resources. Rates for production from new wells are to increase in 2017.
The royalty review fulfilled a campaign pledge of Premier Rachel Notley. Until the panel conducting it published recommendations at the end of January, the possibility of debilitating change had menaced oil-industry planning in Alberta. Canadian Association of Petroleum Producers Pres. and Chief Executive Officer Tim McMillan called the panel's report "principle-based" and said it "provides a foundation to build the predictability industry needs for future investment."
Notley also signaled support for the oil sands in strategically timed remarks on GHG regulation in November. Speaking in Edmonton a week before the COP 21 climate summit in Paris, she outlined a policy that sets a long-term cap on GHG emissions associated with oil-sands work but that allows bitumen production to grow. As noted here earlier, the cap is comfortably high, especially if historic improvements in emissions per barrel of production stay on trend (OGJ, Nov. 30, 2015, p. 15). Indeed, it encourages producers to sustain impressive progress already under way in this area.
The Alberta premier has her own incentives, of course. Her province grapples with a deficit likely to exceed $6 billion this year. She has felt pressure to lift royalty rates not only as a gesture toward climate remediation but also as a quick way to raise money. The long-term effects of such political and fiscal expediency would have been dire. The deficit reflects oil-field distress born of an oil-price slump. Especially now, a royalty increase coupled with punishing GHG regulation would have atrophied the oil sands business. Notley properly recognized that's no way to treat a natural treasure.
In a subtle shift of political strategy, the premier has hitched economic practicality to climate ideals. She demonstrated the approach in a recent federal filing supporting Kinder-Morgan's expansion of the Trans Mountain Pipeline between Alberta and the Pacific Coast near Vancouver, BC. Increasingly in Canada, pipelines are targets of environmental obstructionism.
"We will get pipelines built by working collaboratively with other jurisdictions and having drama-free discussions about pipelines based on their merits," she said, referring to controversies of predecessor governments. "We will get pipelines built by demonstrating clearly and calmly why pipelines help every economy in the country. And we will get pipelines built by taking real action on climate change."
Notley's pursuit of balance is commendable and worthy of notice elsewhere. Balance, though, has no place in the extremist agenda.
'Stay underground'
The Sierra Club, 350.org, and Greenpeace made that clear in a recent report entitled Keep It in the Ground—the pronoun of course referring to oil, natural gas, and coal. The document estimates the potential emissions of hydrocarbon resources in specific countries and postulates production deferrals needed to keep global average temperature from rising more than 2° C. from preindustrial levels—a wildly theoretical parameter rigidly enshrined as a political benchmark. The Canadian section of the report quotes Jake Schmidt of the Natural Resources Defense Council, who calls output from the oil sands "the dirtiest oil on the planet" and declares "it definitely has to stay underground."
Groups that make such assertions have no patience for balance such as Alberta seeks between environmental and economic imperatives. Albertans should hope their government holds ground against the moralistic calumny sure to come.
