Tag Archives: canada

Oil Sands of Canada; sticky metal pipes

Canada’s oil sands contain some 170 billion barrels of oil that can be recovered economically with today’s technology (and perhaps ten times that in total). Canada thus has the world’s third-largest proven oil reserves, after Saudi Arabia and Venezuela. And since most oil-rich nations’ reserves are under state control, Canada has the largest reserves that private companies are free to invest in—more than half of the global total, reckons Ken Hughes, Alberta’s energy minister.

Other countries welcome the idea of plentiful energy from a stable democracy. It could reduce the rich world’s dependence on the Middle East. There are “no bribes or body bags”, grins an oil-industry booster. And the potential is immense. A new study by the Alberta Geological Survey estimates that the province has huge resources in its shale beds as well as its oil sands: 3,400 trillion cubic feet of natural gas and 420 billion barrels of oil—numbers comparable to America’s.  However, Canada’s output of 3.5m barrels of oil a day is less than half that of America. (America’s output is set to exceed Saudi Arabia’s; see article.) Several problems hobble Canadian energy: geology, capital, people and pipes.

First, geology. Canadian oil is hard to extract. It mostly comes in the form of bitumen, which is “hard as a hockey puck” at 10°C, as the Canadian Association of Petroleum Producers (CAPP), an industry body, puts it. If it is far below ground, it must be blasted with steam to make it flow, and then pumped out. This process (known as “steam-assisted gravity drainage”) was developed in Alberta. In the past decade, with high oil prices, it has made the oil sands economical to exploit. But precariously so: the best projects break even when oil is $30 a barrel, but many new ones need it to be $80 or more. (West Texas Intermediate is currently $85.)

See also Oi Sands Rush

Canada gets less than it should for its oil because it lacks enough pipelines. Environmentalists oppose them, arguing that pipes leak (which is always possible) and that Canada’s heavy oil causes more greenhouse-gas emissions than other oil (which is true, but not by much). President Barack Obama has delayed the approval of a pipeline called Keystone XL, which would move Canadian oil to America’s Gulf coast. A decision is expected soon.

Alex Pourbaix of TransCanada, the firm behind the Keystone pipeline, insists that the project will be good for both countries. Canada forgoes a fortune—perhaps $20 a barrel—because it cannot get its oil to the sea. Canadian gas sells at a discount, too: North American prices are far lower than those in Asia.  Another proposed pipeline, Northern Gateway, would carry oil to Canada’s west coast, whence it could be shipped to Asia. Canada would benefit from having a choice of customers. But the government of British Columbia, and various aboriginal groups, have yet to say yes.

To exploit its hydrocarbons, Canada needs capital: some $50 billion-60 billion a year, on recent trends. Such sums are “far more than Canadian capital markets can raise,” says Dave Collyer of the CAPP. Canada gets plenty of foreign investment: Syncrude, one of the biggest oil-sands developers, is a joint venture that includes American, Chinese and Japanese partners. But lately the country has grown frostier towards foreign capital.

In October Canada’s federal government temporarily blocked a $5.2 billion bid by Petronas, Malaysia’s state energy giant, for Progress Energy Resources, a Canadian natural-gas company. It has yet to approve a $15 billion offer by CNOOC, a Chinese state-owned firm, for Nexen, a Canadian oil-and-gas firm. A deadline passed last week; a decision may come next month. Mr Hughes says he is keen on foreign investment so long as foreign firms abide by the same rules as Canadians; but it is not up to the provincial government.

The other big bottleneck is human capital. Hardly anyone lives near the oil sands, so labour must be imported, from other parts of Canada and from abroad. People from 127 countries live in Fort McMurray, says Ken Chapman of the Oil Sands Developers’ Group. They speak 69 languages. The Walmart in town looks like the United Nations, except that all the shivering Africans are buying woolly hats. Mr Hughes expects to see a skills shortfall of 100,000 people in Alberta by 2017. Canada’s immigration rules are more liberal than America’s, but firms still gripe about delays. An Irish worker in Fort McMurray complains of having to fly to Calgary to sit a test of English proficiency. It’s her native language, and the test is online.

Companies poach staff from each other, bidding up labour costs. It would be easier to attract workers to Fort McMurray if the town were more liveable; a one-bedroom flat can cost $2,000 a month. To build more homes, however, the town must wrestle with provincial red tape—and also attract legions of builders, plumbers and electricians, all at inflated wages.

Working conditions in the oil sands are tough. Touch a metal pipe with your bare hand at minus 40 and it sticks. “It’s not for everybody,” shrugs an oil-firm boss. At remote work camps, companies provide hot food, warm cabins, broadband and squash courts. All this is costly. Many firms make equipment elsewhere and truck it in, so that fewer people have to toil in the cold. Some are hoping dramatically to raise the proportion of man-hours worked off-site.

With so many bottlenecks and a volatile oil price, firms are growing cautious. Suncor Energy and Canadian Natural Resources, among others, are putting new investments on hold. “It’s the uncertainty,” says Marcel Coutu, the boss of Canadian Oil Sands, a firm that owns 37% of Syncrude. “No one knows when or whether those pipelines will be built.”

Canadian energy: The sands of grime, Economist, Nov. 17, 2012, at 62

Groups Against the Individual: human rights

When one category of citizens is singled out for privileged treatment, are the rights of others infringed? Phil Eidsvik, a Canadian salmon-fisher, thinks the answer is yes. He hopes his country’s newly re-elected prime minister, Stephen Harper, recalls a pledge he made five years ago: to oppose “racially divided fisheries programmes”, in other words, giving special fishing rights to indigenous groups.

But given the storm that Mr Harper’s comment provoked—he was accused of stoking white nativism—he is likely to proceed cautiously. And legal moves are now afoot to broaden the rights of indigenous fishermen. At present Canada upholds the rights of aboriginal groups to engage in traditional, subsistence fishing; hence regulators often open a fishery to a particular indigenous group for a limited time before a commercial catch begins.

One tribe, the Lax Kw’alaams, is fighting a legal battle for special rights in the field of commercial fishing, too, challenging the government’s contention that commercial harvesting only began with the arrival of whites, and so is not a traditional activity of Canada’s first inhabitants. All this horrifies Mr Eidsvik, who argues that the rights of other fishermen (including indigenous ones) are violated when a stretch of water is allocated to a particular tribe. “The individual is completely lost in the conflict over group rights,” he says, speaking for the British Columbia Fisheries Survival Coalition, an NGO.

Among the world’s liberal democracies, Canada stands out for the entitlements it grants to one group of citizens and for its open acknowledgment that there are hard trade-offs between individual rights and group rights. From South Africa to India, many countries have “affirmative action” policies, with the aim of correcting past wrongs by allocating a disproportionate share of jobs or educational places to groups that apparently need a leg up. But critics of the Canadian system say it goes further; it creates two levels of citizen by excluding indigenous people from conservation rules, and by exempting tribes from the accountability rules that other groups must follow. It is one thing to offer benefits to citizens who are felt to need them, another to water down the principle of equal citizenship.

Canada may be egregious, but, in one form or another, most democracies have to weigh the demands of groups against the rights of individuals—and getting the correct balance has become harder in the age of identity politics, when arguments about culture and even religion have replaced older ones over economics and class. Ostensibly at least, France has remained at the far end of the spectrum from Canada. French officials like to contrast their own policy of equal citizenship with the sloppy communautarisme—rights for specific groups—that some countries, including multicultural Britain, tolerate.

Whatever lies behind that French rhetoric, the question of group entitlement has been thrown into sharp relief in all rich democracies by the recent arrival of migrants whose “cultural practices” are at odds with any liberal understanding of rights. Extreme examples include the stigmatising of children accused of witchcraft; the practice of female genital mutilation; domestic violence; and forced marriages with partners in distant lands. Whenever those practices are tolerated, the victims are deprived of basic human rights—and the perpetrators enjoy a peculiar leniency.

As countries wrestle with those problems, realities often differ less than theories do. At least in the recent past, the French authorities turned a blind eye to polygamy among north African migrants. And if there are British inner cities where the Queen’s writ (in respect of equality of the sexes, say) hardly runs, something similar applies to the ghettos of Marseilles…

If the Arab uprisings prevail, will the resulting elected governments impose the will of the majority group—Sunni Muslim in Syria or Tunisia, Shia in Bahrain? Or will they be genuine liberal democracies, with guarantees that members of minorities will be treated no better and no worse than anybody else? That question is impossible to answer in advance, though there are many vulnerable groups, from the Christians of Syria to the Tuareg nomads of the Maghreb, who have reason to fear they might fare worse under free, universal suffrage than they did under secular despots.

Compared with the chaos that could accompany any regime change in the Arab world, decision-makers in stable places like Canada or France have an easy time of it; they are free to experiment and negotiate. And in any lively democracy, groups—defined by language, religion or simply voluntary association around an idea or a pastime—will bargain vigorously over things like language teaching or zoning rights for mosques. But a dangerous line has been crossed, and a bad signal sent to other places, if, in the name of group rights, the principle of equality before the law is openly breached.

Excerpt from Group rights v individual rights: Me, myself and them, Economist, May 14, 2011, at 75