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Earle Gray is the former editor of Oilweek magazine and author of seven books about Canada’s petroleum industry.
Slower growth in world oil demand, increasing energy efficiency, alternative fuels and possible caps on carbon dioxide emissions will negatively affect Alberta’s oilsands.
Disregarding global warming and the risk of putting all your eggs in one basket, the Harper government has bet Canada’s economic future on the oilsands. But do we want to return to a time when Ontario consumers paid half a billion dollars to subsidize an imperilled Alberta oil industry, with two-thirds of its capacity shut in for lack of sales?
At risk are hundreds of billions of dollars in jobs, government and industry revenue, and capital investment. Essential to diminishing hopes for an oilsands bonanza are three proposed pipelines, costing $17 billion, to move oil to the U.S. Gulf Coast and to the West Coast for tanker shipment to China. There is no certainty they will be built — even assuming government authorizations.
A fortune from the oilsands was foreseen as recently as the middle of last year. In a study last June, the Canadian Association of Petroleum Producers (CAPP) predicted an increase in oilsands output from 1.8 million barrels per day to 5 million by 2030, plus another million barrels a day of conventional crude oil. The Canadian Energy Research Institute predicted $253 billion in new oilsands investment, generating $1.2 trillion in Alberta government revenue over a 34-year period.
But in November, the International Energy Agency forecast demand for oilsands production at just 3.3 million barrels per day in 2035. Worse was British Petroleum’s 20-year forecast to 2030, published in January. BP expects U.S. oil imports of 11 million barrels a day in 2011 to be slashed 70 per cent by 2030. If BP is correct, Canada will be fortunate to just maintain current oil export sales to the United States, let alone increase them by 2 or 3 million barrels a day.
With this outlook, why would the United States need the controversial Keystone XL pipeline, intended to move oilsands oil to U.S. Gulf Coast refineries? Even assuming Keystone is approved, who will risk investing $7 billion to build it?
A host of factors dims the prospects for the oilsands.
The “shale revolution,” which releases oil and natural gas from buried shale rocks, promises a fivefold increase in the world’s known recoverable oil, according to estimates by the International Energy Agency, and double known gas reserves, according to the U.S.
For the rest of this column, please go to the Toronto Star website: http://www.thestar.com/opinion/commentary/2013/03/13/collapse_of_oilsands_boom_will_scramble_canadian_economy.html