Hardisty, Alberta, doesn’t seem in the least central to anything, much less the contemporary energy universe. One of the little white dots on a highway map of rural Alberta, it’s a nondescript village with about 700 residents and a sad, mostly vacant downtown. What matters is not the number of people who reside here, but the number of massive oil tanks that do. There are about seventy-five now, and more on the way, plus four underground salt caverns converted to oil storage. With a capacity of 25 million barrels, Hardisty is the largest oil storage hub in Canada and the second largest in North America. It’s the headwaters of the Keystone Pipeline system and the starting point for two proposed pipelines — one south, one east — whose fate may well determine the rate of planetary climate change. I drove eight hours from Montana to see those tanks, and to better understand the role they play in Canada’s complicated energy future.
The rows of gleaming tanks, some topped with geodesic domes, seemed like a constellation of religious temples.
At the height of summer, the Alberta prairie was emerald green from a series of recent rains, the rolling hills carpeted with the brilliant yellow flowers of mustard and rapeseed crops, broken up by stands of aspens. As I crested a small rise, the Hardisty Terminal appeared on the horizon. The rows of gleaming tanks, some topped with geodesic domes, seemed like a constellation of religious temples. Then the illusion was disrupted by sky cranes, pipes, and tanker trucks. In the midst of Alberta’s rural ocean sits an industrial city.
The tanks hold diluted bitumen, or dilbit, the heavy crude oil mined in Canada’s famed bituminous sands near Fort McMurray, some 350 miles north. A 30-inch diameter pipeline conveys a black torrent of the stuff: almost 600,000 barrels per day. It fills tanks that are as large as 250 feet across and three stories tall, operated by a host of petroleum collection, processing, and transport companies, including Gibson Energy, Enbridge, and TransCanada.
Until about 2008, fossil fuel transport was virtually ignored by the general public. Most oil and natural gas pipelines are buried, and few people give much thought to the hidden cargo of freight trains. But lately, spills, derailments, and spiraling alarm over climate change have dramatically heightened the profile of energy infrastructure. The Keystone XL pipeline, proposed in the waning days of the Bush administration, is now a household name in the United States, thanks to environmental activists who made it a political symbol. The same is true of the Athabasca tar sands in Canadian households. And there’s good cause for that. Not only are the tar sands central to North American energy policy, they are potentially the largest source of new carbon emissions in the world.
The U.S. Department of Energy recently reported that tar sands production generates as much as 20 percent more carbon emissions than conventional crude, due to the intensive energy required to strip-mine the viscous fuel, or steam it in place, and transport it across vast distances. That’s why a hundred leading scientists have called for an end to the expansion of tar sands mining. “If Canada wants to participate constructively in the global effort to stop climate change, we should first stop expanding the oil sands,” said Thomas Homer-Dixon, of the University of Waterloo. “More growth simply shows Canada has gone rogue.” James Hansen, the former NASA climate chief, has said that if mining expands as planned, it is essentially “game over for the planet.” If that’s true, Esquire Magazine was hardly exaggerating when it called Fort McMurray “the little town that might just destroy the world.” And the little town of Hardisty is its co-conspirator.
The tar sands are potentially the largest source of new carbon emissions in the world: ‘More growth simply shows Canada has gone rogue.’
Of course, we can’t see the carbon dioxide that has given the world a fever, upending weather systems, killing forests, acidifying the oceans, and melting glaciers; and we can’t do much to remove it from the atmosphere. Tar sands mining is legal, and there’s no easy way around that. Climate advocates have concluded that the best hope for the planet is to keep carbon in the ground, and they intend to do that by making it financially painful to transport, by delaying or blocking pipeline and rail development. So the construction of new infrastructures is no longer a local or regional concern, but a global battleground — real and symbolic — for a coalition of native peoples, environmentalists, landowners, and concerned citizens.
For scientists and activists like Hansen (he is both), the Keystone XL is the “fuse to the biggest carbon bomb on the planet.” For the energy industry, with trillion-dollar profits and thousands of high-paying jobs at stake, it is a lifeline that will bring the landlocked riches of the outback interior to an oil-thirsty world. Whether Canada is a petrostate — whether its governments are dominated by energy companies — is an open question, but the oil economy is a dominant political issue. When Canadians go to the polls next week, we will see whether they buy into Conservative Prime Minister Stephen Harper’s vision of the nation as an “emerging energy superpower.” And into the middle of this pitched, existential debate comes a near collapse of global oil prices. For much of the Harper administration, the price of a barrel of crude, adjusted for inflation, hovered around $100. But it fell steeply over six months beginning in June 2014, from $106 to $54, completely disrupting the Canadian energy economy. In fall 2015, the price is nearing $44, a ten-year low. No one knows where the bottom is.
Keystone XL: Dead or Alive?
Northern Canada’s bituminous sands — often called “oil sands” by proponents and “tar sands” by detractors (leaving journalists in a quandary) — contain an estimated 1.7 trillion barrels of so-called unconventional crude, the largest oil deposit outside of Venezuela and Saudi Arabia. About a tenth of that, buried beneath 57,000 square miles of boreal forest — roughly the size of Florida — is recoverable, though costly to exploit. When oil prices were higher, the value of that recoverable portion was a staggering $15 trillion. Now it’s less than half that, but what will it be five years from now?
It takes two tons of tar sands to produce a barrel of crude oil. Two tons, in other words, for me to drive from Montana to Hardisty.
It would be hard to place such riches further away from major markets. Because of the remote location and unconventional nature of its crude, Canada must build an energy infrastructure unlike any other in the world. The tar sands produce extremely heavy oil, a solid substance with a natural consistency like toffee. It comes in granules, each smaller than a grain of rice, mixed with sand, clay, and water, which must be mined and separated. Most of the sands are found deeper than 200 feet below the surface, and so a layer of overburden, the boreal forest, must be stripped off. While there are similar heavy crude deposits elsewhere, notably the Faja Petrolifera del Orinoco in Venezuela, they have not been extensively tapped because of the capital required.
It takes two tons of Alberta tar sands to produce a barrel of crude oil, and one barrel of oil to make 19 gallons of gas. (Two tons of tar sands, in other words, for me to drive from Montana to Hardisty.) Most extraction occurs in situ, through a process called Steam-Assisted Gravity Drainage, or SAGD (sag-dee). Two holes are drilled deep into the ground, and pressurized steam, 400 °F, is injected into the top well. The steam liquifies the buried bitumen, which can then be pumped out of the lower well. Alternatively, shallower deposits can be strip-mined, loaded onto 400-ton trucks, and hauled to a nearby processing facility, where the soil, clay, and water, are separated from the tar. Both methods are energy intensive, which accounts for the higher carbon footprint.
The unconventional crude is then ready for its long journey to special refineries on the Gulf Coast. Tar sands oil is so thick it won’t flow through a pipeline, and so it has to be mixed with lighter hydrocarbons and other substances. (The exact formula is a trade secret.) Heat from the friction of its flow, up to 150 °F, also helps keep it moving. The first leg of its journey brings it to the Hardisty terminal or a smaller tank farm near Edmonton, where it is staged and blended. “Like a cocktail,” said Hardisty mayor Anita Miller, who works at the terminal for Gibson Energy. “You mix all the different products and all the different densities.” Then the problem is getting it to market at high volume.
Industry experts expect the tar sands to produce 5 million barrels per day by 2030. Existing pipelines deliver about 1.5 million bpd to the United States. That total includes Enbridge’s Pipeline System, which extends from Fort McMurray to Edmonton and Hardisty, then on to the Great Lakes and beyond; as well as the more famous Keystone Pipeline, owned by TransCanada, which runs from Hardisty to the Gulf Coast. Railroads can handle additional volume. By the end of 2015, rail is forecast to haul 700,000 bpd, up from 200,000 two years ago. But that still gets you only halfway to the projected volume.
“To get to five million,” according to Lorne Stockman, research director of an environmental group called Oil Change International, “they need all of them.” All of the pipelines, that is. Two of the most controversial pipeline projects in the world — TransCanada’s Keystone XL and Energy East — would start here at the tank farm in Hardisty.
TransCanada officials agreed to show me the works. Facilities manager Stephen Bachorcik, a stocky man in his thirties with close cropped hair, and new to this job, drove me around the site in the company’s new white Jeep Comanche. Bachorcik said that despite uncertainty about the price of oil and the fate of the pipelines, things in Hardisty were still humming. New tanks rising in several locations attested to that. “We’re in a steady state,” he said, still building infrastructure.
“We don’t feel the controversy,” agreed Mayor Miller. “We have enough of our own problems. And it’s only a matter of time before it gets approved.” Across the Alberta oil patch, though, the decline is real. The downturn has hit not only the workers directly employed by the major energy companies, but also the myriad small businesses that support the industry. Job losses in the province are around 35,000, and Canada could lose as many as 185,000 out of 720,000 jobs that are directly or indirectly supported by the energy sector.
Bachorcik showed me a cluster of glistening pipes that disappeared into the ground: the headwaters of the Keystone system. The first phase, completed without major controversy in 2008, carries diluted bitumen from Hardisty to Manitoba, before heading south for Steele City, Nebraska. There is a pumping station every 50 miles — eight stations in Canada and thirty in the U.S. — to keep the oil pressurized and moving through the pipes at 3 miles per hour. In Nebraska the line splits in two, delivering some of its load to Midwest refineries and the rest to a tank farm at Cushing, Oklahoma, that is even larger than Hardisty, with a capacity of 70 million barrels. From Cushing, the oil flows to heavy crude refineries on the Gulf Coast. (The line to Port Arthur, Texas, is currently operating, and a second branch to Houston comes online next year.)
Keystone XL — which means “express line” — is the final piece of the planned system. The XL would duplicate the main stem with a larger-diameter pipe that takes a shorter route from Hardisty to Steele City, adding capacity of 830,000 bpd. Bachorcik drove me to a large gravel pad, free of vegetation, and pointed to the site where the pumps and pipes will be installed if President Obama signs off on Keystone XL. “This is the start,” he said, “that flange right there.” Eight rusty tanks sat on a hill above the site, ready for action.
When the XL was first proposed, it was just another oil pipeline. Approval was expected to be fairly routine, especially since TransCanada’s director of government relations, Paul Elliot, had been deputy director for the 2008 campaign of Hillary Clinton, whose State Department was responsible for the initial environmental impact study in the United States. In 2011, though, the dilbit hit the fan. Activist Bill McKibben devised a strategy to limit carbon emissions by applying public pressure to keep fossil fuels in the ground. (His group, 350.org, is named after a threshold beyond which scientists believe climate change is irreversible: 350 parts per million of atmospheric carbon. The current level is 400 and rising.) McKibben told me that he and his allies were battling a number of fossil fuel projects around the world — a coal terminal in the Pacific Northwest, the Galilee coal mines in Australia — when he read a paper by Hansen about how much carbon is in the oil sands. He was shocked: “We knew we had to oppose it.”
American presidents are responsible for signing off on international pipelines, which gives activists some leverage. Still, McKibben and his allies didn’t believe they could stop Keystone XL. Everyone thought “this one was wired from the start,” McKibben said. “A done deal. I don’t think there ever was a pipeline that was successfully stopped. But I wrote a letter and some other people signed it, and we sent it out asking people to come to Washington, D.C.” Some 12,000 protesters surrounded the White House.
Credit the idiosyncrasies of the media for that. “Everyone pays attention to Keystone because it overlaps with presidential politics in the U.S., which seems to be almost the only frame of reference American journalists consider important,” McKibben told me. “If it hadn’t been for a kind of quirk that gave [the president] the authority to approve or reject it, we couldn’t have made it the issue we did.” Four years later, Obama still hasn’t ruled on the Keystone expansion, though he has said he will do so before leaving office. The United States is awash in fracked oil, and the lower consumer price of gasoline has made it easier for Obama to postpone a decision.
TransCanada’s public relations staff told me that Bachorcik could show me the facilities but would not answer questions beyond technical ones. I asked him if people here were surprised by the fierce political fight over a seemingly routine construction project. Not anymore, he said. “People were surprised in year one and two. … Now it’s year five and six.” Climate activists can claim credit for delaying — perhaps killing — the Keystone XL expansion, but in the meantime, oil flows day and night through the main pipelines. We returned to a double-wide office building where Bachorcik checked his email. “Keystone just moved its billionth barrel of oil,” he said. “You were here for that.”
We returned to an office building where Bachorcik checked his email. ‘Keystone just moved its billionth barrel of oil,’ he said.
TransCanada officials wouldn’t consent to an interview, but after some wrangling they agreed to respond to questions by email. “The U.S. still imports some 7 million barrels per day,” wrote spokesman Davis Sheremata. “It makes economic, environmental, and geopolitical sense to get that oil from Canada in the safest, most efficient, and cost effective means possible, instead of [from] countries like Venezuela and those in the Middle East who don’t share our values.” His response embeds a fundamentally economic question within a moral one, mirroring the rhetoric of political leaders in both Canada and the United States, and it contradicts another of his main points. “Every test, every hurdle, has been satisfied,” Sheremata wrote. “If it’s judged on science over symbolism it will be approved.” But, of course, that’s not how politics works.
If Obama punts the Keystone XL decision and it ends up in the hands of a Republican administration, the pipeline will likely be approved. If Hillary Clinton is the next president, the picture is less certain. For years Clinton remained silent, publicly deferring to Obama and current Secretary of State John Kerry, although her silence might also have something to do with her close relationships with the Canadian energy industry. (Apparently unconcerned with the bad press in 2011 about the dual role of Clinton-aide-turned-TransCanada-lobbyist Paul Elliot, her current campaign hired former Keystone lobbyist Jeff Berman.) Last month, on the campaign trail, she was finally forced to take a stand. She told an audience of university students that she opposes the project because it is a “distraction from important work we have to do on climate change” that “interferes with our ability to move forward with all the other issues.” That carefully parsed view may change in the general election, but for now many observers in Canada assume the pipeline is dead.
First Nations in “A Battle for Civilization”
What happens to the tar sands bonanza if there is no Keystone XL? There are at least three alternative routes that could bypass U.S. territory (and thus its messy presidential politics). Most likely to succeed is the $12 billion Energy East pipeline proposed by TransCanada. It would be one of the world’s longest lines, flowing 3,000 miles from Hardisty to New Brunswick, where it would deliver 1.1 million bpd to an as-yet unbuilt tanker loading facility. The route lies wholly within Canada and would use existing natural gas pipeline for part of its run. The scheduled completion was recently pushed back to 2020.
McKibben was on his way to Toronto to whip up opposition to Energy East when I spoke to him. He believes delaying the pipeline for even a few years would be a significant victory, as it would derail tar sands expansion long enough for political and economic forces to align against new fossil fuel projects. “World opinion is evolving to the understanding that climate change is a dire threat,” he said. And “every month engineers drive the cost of a solar panel down one or two percent. Paradigms are shifting everywhere.”
Shifting indeed. Pope Francis’s surprisingly strong statement about climate change, in June, dragged the issue out of the arena of the environmentalist left and into the global mainstream, making it a moral issue for many. “Nothing is inevitable anymore,” said Stockman. “The whole landscape on energy infrastructure has changed.”
The other alternative pipelines have even less chance to succeed. Northern Gateway, proposed by Enbridge, would run west to the Pacific Ocean, where the oil would be loaded onto supertankers with a capacity of two million barrels. But the tankers would have to dock in the narrow, stormy, environmentally sensitive Hecate Strait, and the pipeline would cross hundreds of rivers and streams — Canada has 20 percent of the world’s fresh water — as well as the lands of 130 First Nations, as native peoples are known in Canada. “Moose hunting, salmon fishing, sturgeon, this is something we do every day,” said Geraldine Thomas Flurer in an interview, on behalf of the Yinka Dene Alliance in British Columbia. “One leak could destroy what we have, who we are.”
This is something we do every day. One leak could destroy what we have, who we are.
A third pipeline being considered, seemingly out of frustration as much as anything, is the Arctic Gateway, which would head north from the Alberta oil fields to a port on to the Beaufort Sea. While studies show it is feasible, it is considered the least promising because of the harsh conditions in the Arctic.
Ultimately, First Nations may hold the most power to determine pipeline routes. Though some tribes support energy development and, indeed, partner with energy companies, others have made deep commitments to stopping any kind of energy development on, or through, their lands. In northern British Columbia, members of the Unist’ot’en clan of the Wet’suwet’en First Nation set up an armed encampment dedicated to stopping a liquid natural gas pipeline (the Coastal GasLink) owned by TransCanada. They have kicked surveyors off their land, and they vow a shooting war if construction proceeds.
One of the native leaders opposing tar sands exploitation is Winnipeg resident Clayton Thomas-Muller. He is Cree, of the Mathia Colomb Cree Nation, also called the Puktawagan, from northern Manitoba. Focused on stopping Energy East — which would run through Winnipeg and beneath the city’s water source, Shoal Lake — he works with McKibben’s 350.org as well as groups like IDLE No More and the Indigenous Environmental Network. “There are three carbon bombs on the planet,” he told me: Alberta’s oil sands, the Orinoco Belt in Venezuela, and the Galilee Basin in Australia. “If any of those three are burned into the atmosphere, it’s game over for the planet. … We’re in a battle for civilization here.”
Other native leaders see the battlefield differently, and they argue that energy development is vital for First Nation livelihoods. “It’s quite clear relying on government is not doing it for us,” said Phil Fontaine, the former National Chief of the First Nations Assembly. “We’re the most impoverished group in the country. Government doesn’t live up to their obligations and responsibilities and that’s why we’re so poor. What other option do we have?” Fontaine talks with communities as a consultant for TransCanada, although he emphasized that his firm doesn’t lobby First Nations to accept Energy East. Rather, he said, “We give them as much information as possible to make sure the community impacted by the project, or the treaty area impacted, or tribal council impacted, can make an informed decision.”
Many First Nations straddle the debate. While some Wet’suwet’en take up arms, others work for the construction company building the pipeline. The Athabasca Chipewan have battled tar sands expansion (Neil Young even gave a benefit concert on their behalf), but the tribe also contracts with oil companies to provide essential services, such as planning, maintenance, and construction of the infrastructure. As Fontaine said, “It’s clear to me that aboriginal people, First Nations people, don’t want to be poor forever. And, of course, they are not saying development at all costs. Or one size fits all.”
A Tsunami of Fire
Although climate change is the primary driver of pipeline opposition, bitumen spills are a close second. When I was in Hardisty, the evening news led with the story of a major spill in Fort McMurray, where a state-of-the-art, double-walled pipe owned by the Chinese company Nexen Energy leaked undetected for more than two weeks, discharging more than a million gallons of bitumen onto the tundra, one of the largest spills in Canadian history. Activists noted that the high-tech pipe was supposed to have numerous safeguards against leaks. “That’s their selling point,” said Grand Chief Ed John, hereditary chief of the Tl’azt’en people in northern B.C. and head of the First Nations Summit. “‘We have world-class pipelines and we have world-class safety standards,’ they say. And here’s an example of where your world-class standards are not working.”
When bitumen mixes with water, it can be even more damaging than refined oil. In 2010, an Enbridge pipeline ruptured in a wetland near Marshall, Michigan. Sensors in Manitoba picked up the drop in pressure, but engineers dismissed the signal, mistaking it for a gap between two different batches of dilbit. For the next seventeen hours, the thick, heavy crude flowed through the marsh into the Kalamazoo River, oozing downstream for some forty miles. Nearly a million gallons leaked before the pipeline was shut down.
An incredible mess. These are sensitive environments, and you can’t just take a bulldozer and scrape it off.
“The river was more oil than water for a while,” said Stephen Hamilton, an ecologist at Michigan State University and chairman of the local watershed council which consulted on the clean-up. The spill occurred during high water, and as the river flooded it left a thick, tarry coating on the banks. “An incredible mess,” he continued. “These are sensitive environments, and you can’t just take a bulldozer and scrape it off, so at any one time [during the first two years] there were a couple of thousand people … scouring the flood plain for oil, removing it from vegetation and soils.” And unlike conventional oil, dilbit is denser than water, so it sinks. Much of the four-year, $1.2 billion clean-up focused on dredging heavy crude and contaminated soil from the river bottom — which, no matter how meticulous, causes environmental problems of its own. Contractors got what they could, Hamilton said, but there is much more that remains submerged.
Even if new pipelines are built, rail will always carry a share of the tar sands oil. Hardisty was established by the Canadian Pacific Railway as the line pushed west in 1904, and freight trains still support prairie industries. A few miles east of the tank farm is a brand new loading facility, a long metal building where dilbit is pumped into tank cars that are joined into trains 130 cars long. A giant pump fills the cars in a matter of minutes, and two trains can be loaded each day. The cars are “steam jacketed,” lined with hot pipes that keep the bitumen liquid enough to be loaded and transported. But while rail can fill some of the transport gap, it comes with serious problems of its own.
Lac-Mégantic is a once-quaint village of some 6,000 people in eastern Quebec, near the border with Maine. On a warm night in July 2013, just after one in the morning, a 72-car tanker train nearly a mile long, filled with fracked oil from the Bakken fields of North Dakota, was left un-braked and rolled downhill for seven miles toward the small, historic downtown. The ghost train, its lights off and horn silent, sparks flying from its steel wheels, was traveling at 65 miles per hour when it reached Lac-Mégantic. Residents said they thought the ominous rumble was an earthquake.
As the train approached the village, it careened off the tracks, the rail cars collided, and the explosions sent giant fireballs into the night sky. Burning oil gushed out of the cars and poured into storm sewers. Flames shot out of manholes, basements, and chimneys. Immediately the conflagration took out thirty commercial buildings, and the entire downtown (another thirty-seven buildings) was later condemned. Forty-seven people were killed, many at a bar where they had tried to outrun what one survivor described as a “tsunami of fire.” The purling Chaudiere River, famous for its trout fishing, was polluted with 25,000 gallons of oil.
The nightmare at Lac-Mégantic became a potent symbol of the danger of transporting oil by rail, but it has not slowed the trains from Alberta and North Dakota to the Eastern seaboard. Opponents call them “Bomb trains.” There have been other serious collisions, though none fatal. And it’s not just the hazard that makes rail a poor alternative to pipelines. It’s also more expensive. To move a barrel of oil from Alberta to the Gulf Coast, it costs about $18.50 by train, compared with $10.50 by pipeline. Trains are also less predictable, susceptible to bad weather and competing traffic.
Natural Gas in the Wild West
Leaving Hardisty in the rearview mirror, I drove south, loosely following the proposed route of the Energy East pipeline, through the heart of the Western Canadian Sedimentary Basin, the energy-rich geological formation that extends across Alberta and into British Columbia to the west and Saskatchewan and Manitoba to the east. Dead plankton at the bottom of an ancient sea provide Canada with its enormous energy wealth, in the form of oil and natural gas. A half day’s drive brought me to Medicine Hat, a pretty little city where the muddy Saskatchewan River flows through a tree-lined downtown, past neat brick shops and homes.
The city’s proper name comes from a Blackfoot tale about a punishing winter, when game was scarce and people were starving. Water spirits in the river gave a young man a holy bonnet made of eagle feathers endowed with special powers, in exchange for the sacrifice of the young woman he was with. The hat amplified the man’s hunting prowess and saved his people from starvation, but at a terrible price. Perhaps there is an echo of that story in Medicine Hat’s more mercenary nickname: Gas City, named after the 150-square-mile reserve of natural gas discovered here in 1904. Gas was so plentiful in the early 20th century that the streetlights burned day and night because it was cheaper to leave them on than to pay someone to extinguish them.
In addition to the vast wealth of the Athabasca tar sands, the entire Canadian sedimentary basin is rich in natural gas. Canada is the world’s fifth largest producer, and for decades it shipped virtually all of its product to the United States. About a decade ago, the supply seemed to be dwindling, but in 2008, the fracking boom swept across formations on both sides of the national border. Canadian production rebounded but exports declined, as Americans suddenly had enough of their own, so the industry found itself with a glut. Today the North American market for natural gas is in a shambles. There is so much gas out there that it routinely sells for $3 per million BTU and recently has even dipped below $2.
The global picture changed in 2011, when the Tōhoku earthquake and tsunami knocked out part of Japan’s supply of nuclear energy. The Japanese began buying natural gas on the international market and quickly sent the price in Asia soaring from $11 to nearly $17 per million BTU. The Asian market has come back down to earth — now under $10 — but it is still attractive to Canadian producers, especially since other suppliers are potentially constrained by geopolitics in Russia and Ukraine. “If you can produce at $8, which is what Canadians produce at, and lock it in, life is good,” said Michal Moore, a professor of energy policy at the University of Calgary. “If we build pipelines to B.C. and build ports, we’ll have access to these rich and deep Asian markets. Sending gas out, that’s what I would bet on.”
The problem is that Canada has almost no export facilities on the West Coast, since it has always traded directly with the United States. As with the tar sands, the future of Canada’s natural gas industry now depends on building infrastructures in the face of intense opposition — in this case, not only the pipelines that would convey natural gas from the interior but also the special port facilities that would convert the piped gas into liquid natural gas for efficient ocean transport. (Deeply chilled to minus 260 °F, liquid natural gas takes up just 1/600th of the volume; it is then warmed up and turned back into gas on the other end.) There has been a frenzy of permit applications to build natural gas infrastructure in British Columbia, but only one LNG facility is projected to come online by 2020, with potentially two more by 2025.
The government can’t be sharp in their dealings with us anymore. They can’t come in with a bottle of whiskey and buy off our leaders.
And those projects are far from a done deal. To build pipelines, energy companies must negotiate with dozens of First Nations for right of way across the rugged province, and most of them oppose LNG infrastructure. Among these is Lax Kw’alaam, also known as Port Simpson, one of several Tsimshian communities on the coast near the city of Prince Rupert. The band of about 3,600 people made headlines earlier this year when they rejected a $1.1 billion dollar offer from the energy companies, refusing to accommodate a Pacific Northwest LNG terminal and TransCanada pipeline, due to concerns about the impact on the eelgrass-rich Flora Bank, a nursery for young salmon at the mouth of the Skeena River. Negotiations continue. The $36 billion dollar project would be the largest development in British Columbia history. B.C. Premier Christy Clark estimated it would generate $260 billion in royalties and taxes over thirty years and could replace the provincial sale tax. Meanwhile, Chevron and Woodside Petroleum negotiated with sixteen First Nations to get approval for the Pacific Trail pipeline that will end at a new LNG facility in Kitimat. Construction has just begun, despite worries about a glut in the natural gas market that have dampened enthusiasm for pipeline projects.
Canada’s Supreme Court handed First Nations a powerful tool last year, when it ruled that aboriginal governments must consent to projects that cross their land, not merely be consulted. The decision increased their leverage greatly. And yet the court did leave a sizable loophole: Projects can go forward without First Nations’ consent if they meet “a compelling and substantial public interest.” Exactly what that means remains to be tested.
Grand Chief Ed John, an attorney, believes the decision heralds a new era in relations between the First Nations and federal government. “It means good faith on the part of everyone,” he said. “That’s the foundation of engagement. The government can’t be sharp in their dealings with us anymore. They can’t come in with a bottle of whiskey and buy off our leaders. Or trinkets and beads, for that matter.” Nevertheless, he believes that the LNG pipelines will get built. “There is strong support for development in our communities, people looking for contracts and jobs. And we want to make sure where there are jobs, our people will get hired and they won’t bring people in from other places.”
So the future of Canada’s energy infrastructure is uncertain, beset by many powerful forces. Albertans stunned the nation earlier this year, in May, when they voted resoundingly for a majority government under New Democratic Party leader Rachel Notley, ending forty-four years of Conservative rule in the province. Notley had campaigned against tar sands expansion, promising to raise royalties on the oil industry and end provincial support for Keystone XL. Ultimately, the fate of that project will hinge on American politics and global economics, rather than on the support of the Alberta government. Still, the NDP victory remains a major embarrassment for Prime Minister Harper, who rose to power in the province and draws much of his political support there.
Next week, on October 19, Canadians will go to the polls for the first federal elections in four years. Oil is trading at less than half the price this time around. The vote is seen largely as a referendum on the Canadian economy, which is in recession, and Stephen Harper’s Conservative government faces a serious challenge from his NDP and Liberal opponents. Harper is a full-throated supporter of pipeline expansion despite the climate impact, such a strong booster that he sometimes seems to be channeling Rob Ford, the wildly dysfunctional, crack-smoking ex-mayor of Toronto, who insisted on remaining in power in the face of undeniable evidence, international scorn, and plain common sense. Harper has banned scientists from talking about climate change and has taken to calling the tar sands “ethical oil,” because it is produced in a democracy and not a Middle East dictatorship. NDP Leader Tom Mulcair and Liberal Justin Trudeau have more nuanced views on pipeline expansion. “Opposing these pipelines systematically in advance is just as wrong as supporting them in advance,” Mulcair said, in an August debate.
Filthy rich in oil and gas, yet blocked from realizing those riches by vast distances, a lack of infrastructure, a declining market, and international disdain. Said the energy economist: ‘It’s tragic.’
The politics hardly matter if oil remains $45 a barrel. Moore, the energy economist, doubts that any new oil pipelines will move forward anytime soon. He believes existing pipelines will support current production at the Alberta tar sands (1.5 million bpd), while the depressed price of oil and growing awareness of the climate imperatives will discourage further development.
Canadians — long caricatured for mild-mannered politeness — are not used to their nation being regarded as an international pariah. Now that the global politics of climate change are aligning against the tar sands, some Canadian leaders have modulated their tone. In a recent meeting of the provinces on Canadian Energy Strategy, the oil industry was barely mentioned, and support for new bitumen pipelines was tepid at best. Instead, the provincial leaders talked energy efficiency, renewables, and new transportation. At a recent climate summit, Alberta Environment Minister Shannon Phillips said that the “days of denial are over,” and that “there is a great appetite for action on climate change in our province.” Where does that leave the oil industry? Or, for that matter, the Canadian economy? That remains to be seen. The decline of eastern Canada’s manufacturing sector will make it harder for the region to weather the loss of jobs in the energy sector.
For now, Canada is at an impasse — filthy rich in oil and gas, yet blocked from realizing those riches by vast distances, a lack of infrastructure, a declining market, and international disdain. “They can’t get their product to market,” said Moore. “It’s tragic.”
That’s one person’s assessment. On the other hand, say climate advocates, if the oil companies manage to build enough pipelines to expand the tar sands, we may all find ourselves witness to a tragedy of a different order.