The furor caused by Prime Minister Justin Trudeau’s comment, referencing the eventual phasing out of Alberta’s oilsands developments, hit a feverish pitch the likes of which has not been seen since his father introduced the National Energy Policy decades ago.
Some reactions from political opponents suggested that every Albertan should feel personally slighted by the current prime minister’s comments. These reactions are rather ironic considering that Stephen Harper said essentially the same thing in 2015. It was at a conference in Germany when Harper vowed to end Canada’s dependence on fossil fuels by 2100. This furor does, however, precipitate an interesting discussion on the future of Alberta’s energy sector and resource development.
It is no secret that Alberta’s oilsands developments are big costly projects consuming much of a company’s capital in building facilities to extract the oil and extensive networks to transport it to market.
The latter had been a particularly troublesome hurdle to overcome until the recent approval of some new pipelines. All this can be contrasted with the relatively low cost, by comparison, of conventional drilling and the advancements in that technology. These have led to the development of more traditional oil and gas plays around the province, especially closer to the Rocky Mountains and the B.C. border.
This has become even more apparent when Adam Waterous, investment banker and global head of investment banking for Scotiabank, announced that he would be leaving the firm to launch his own private equity firm. The newly formed Waterous Energy is said to be interested in investing in more traditional oil and gas extraction and Waterous believes the unconventional energy business, such as horizontal drilling and hydraulic fracturing, will replace the oilsands as the next big driver of growth. The ease with which companies can extract these traditional plays and the abundance of easily (through today’s modern unconventional methods) accessible reserves, gives merit to the idea of an oilsands industry sunset. Perhaps Alberta is on the cusp of an oil and gas boom that will change the face of resource development in this province.
Tough questions remain when the topic of hydraulic fracturing or fracking, as its better known, comes up. The residents of Fox Creek, a town of just over 2,000 people northwest of Edmonton, know of the stomach ache that can accompany fracking operations. In 2015, two 4.4 magnitude earthquakes occurred that shook the community’s faith in the operations in the surrounding hills. These were the strongest recorded anywhere in the world linked with the extraction method. For residents, this had never happened before with this magnitude. The earthquakes resulted in the Alberta Energy Regulator issuing a stop order based on seismic activity, leading area companies to look into the causes behind the increased seismic activities.
Other questions remain about the effect that fracking and other unconventional extraction methods can have on surrounding ecosystems. The Supreme Court of Canada last week, in a 5-4 ruling, told an Alberta resident that she cannot sue Alberta’s energy regulator as part of her claim that fracking ruined her water so badly that she can set it aflame. Jessica Ernst from Rosebud, a tiny hamlet northeast of Calgary, alleges that fracking on her land released dangerous amounts of methane and other chemicals into her well and that her concerns were not properly investigated. Ernst says she complained to the energy regulator from November 2005 until March 2007 but her complaints were largely ignored and communication was cut off entirely when she started speaking publicly about the issues. The regulator told her she must raise her concerns only with them and not through the media or other outlets. Ernst maintained that infringed her charter right to free speech and effectively punished her for speaking out publicly.
The future of Alberta’s energy sector is far from over, despite what multiple vocal critics would have you believe is the narrative. There do remain cautionary tales about which path should be followed. We must not lose sight of the golden road that will lead to prosperity while bringing with it a sustainable future of which we can all be proud.
– A.J. Shewan
