For some odd, even suspicious reason, Alberta has chosen not to grow the capacity to refine bitumen from the oilsands within the province.
That means the raw material must be shipped to markets outside Canada – like shipping logs rather than cut lumber. It also means that Canada will become dependent on the one country that develops the refining capacity, forever an exclusive market.
There are two options being considered for exporting raw bitumen and each involves building a controversial pipeline.
The proposed Keystone XL pipeline to Texas seems to have the most support. There, aging refineries designed for less than reliable Venezuelan heavy oil could transform bitumen. Because the refineries are old technology and not designed specifically for bitumen upgrading, there is concern their use will result in unneeded pollution. The carbon footprint on the planet will be much greater – but this is not being considered, or even acknowledged.
The second proposal, the Northern Gateway pipeline would send the bitumen across the Pacific Ocean to China. The pipeline would traverse British Columbia to get the bitumen to Kitimat on the west coast and then via super tankers to Chinese refineries. Natural gas will still be required to process it there. That gas may also come from Canada – from the plant also at Kitimat that turns natural gas to liquid (LNG). The problem is, the LNG process uses up as much as 30 per cent of the energy of the natural gas to transform it to a liquid state. That is very inefficient use of energy and again a much bigger carbon footprint on the planet than necessary.
Both approaches have their big-picture issues then, and that is not counting any of the concerns of actual pipeline construction – or fears that there might be a rupture and pollution in future years.
The federal and Alberta governments are blissfully unaware of all that and are shamelessly promoting both projects while the pipeline assessment hearings for the Northern Gateway project are moving from town to town. That constitutes a complete disregard for the hearing process, disrespect for anyone involved in it and as such is irresponsible.
Nobody knows more about pipeline proposals, and the hearings that flow from them, than Northerners. We have lived with the many storied vision of the Mackenzie Valley gas pipeline (MGP), with all its promise and trepidation, for four decades. Northern historians may at some point say that opposition to the MGP proposal in its initial stages was a catalyst – the awareness, education and growth of political muscle that resulted forced a new maturity, and with it a sense of confidence both to the Dene and to northern culture generally. The process was an evolution from opposition at inception, to acceptance, to advocacy and onto promotion today. There is much to be learned from that.
The MGP would inject billions of dollars into the Alberta economy – as much as $20 billion in a decade. The spin-off benefits would resonate all the way to Ontario. Given that, one would think the Alberta and federal governments would be working harder to see it go through. But it seems forgotten to them. The only point of opposition to the MGP has come from environmentalists who are concerned that relatively clean natural gas will be used to refine oilsands bitumen. They do not want to see a more pure form of energy used to process one that is much dirtier.
What has stopped the MGP is economics. Gas buried in commonly found shale deposits is readily available much closer to southern markets. Profit invariably trumps environment in the current economic climate so even though capturing shale gas requires the unpopular process of “fracking,” it will likely not be defrayed. Despite its universal popularity as a project, with no market for the gas, it appears the MGP will be in pending mode for a long, long time.
Meanwhile the frenzied pace of production of bitumen in northern Alberta and Saskatchewan continues to escalate as international oil giants rush to get into the high stakes game. And they want their profits now.
Exporting the raw bitumen would mean jobs and wealth would be exported as well. That seems very counter-intuitive, especially for Conservatives. That is why their plan to export the bitumen seems so unusual.
Both pipeline options are certain to face huge opposition and delays. Lines would be drawn politically and socially. As happened with the MGP when it was first proposed 40 years ago, the issues would crystallize opposition and foster change. Reputations will be made, parties will win and lose, power will shift. It is a high stakes, uncertain game.
The solution to avoid all the issues, divisions and strife, is to set up bitumen refineries close to the oilsands and power them with natural gas from the Mackenzie Delta. Do not export the raw bitumen, and lose the capacity for jobs, wealth and economic benefits. Keep it all in Canada. Build the MGP, the one pipeline that has full public support and use that gas to refine the bitumen and reap all the benefits from it as well. Sound too good to be true?
That approach would require vision, leadership and compromise on all sides – oh yes, and common sense. Is that too much to wish for?