Friday, July 23, 2010

Books on the Oilsands: A new cottage industry

Books about the oil sands were once few and far between; today they are part of a cottage industry, and often written by people with an axe to grind.

Such is the case with the latest installments, each of which boasts a green theme. However, it would be difficult to imagine three more diverse approaches to such a challenging topic.

• Alastair Sweeny, Black Bonanza: Canada’s Oil Sands and the Race to Secure North America’s Energy Future John Wiley & Sons Canada Ltd., 2010
• Satya Das, Green Oil: Clean Energy for the 21st Century? Sextant, 2009
• Gordon Kelly, The Oil Sands: Canada’s Path to Clean Energy? Kingsley Publishing, 2009

This article appears in the August issue of Oilsands Review
By Peter McKenzie-Brown

Black Bonanza
For a rollicking good read with a clearly defined message, Sweeny’s Black Bonanza really hits the mark. To get the flavour of his offering, consider two of many questions he raises in his preface. “Why are millions of people obsessing about carbon dioxide, a trace gas in the atmosphere, 3 percent of which is due to human emissions?... Why are government officials demanding that billions of dollars be spent to control this gas that is so essential to plant growth, while real pollution concerns cry out for solution and scores of our fellow citizens starve to death or die from preventable diseases?”

A historian by education and a writer by occupation, his chapters on the development of the oil sands are particularly worth reading. He captures people’s lives well, and has quite the instinct for the compelling quote.

Sweeny is on a mission, however. His message is that the oil sands present a tremendous strategic advantage to North American energy security, and they should be developed immediately. Canada would benefit enormously as it became an energy superpower, and North America would remain an ascendant geopolitical entity as it used a combination of crude oil security, economic strength and technical expertise to develop the inexhaustible energy of the sun. While the text is riveting, as the book winds up its message begins to fall apart. To make his case convincing, Sweeny must destroy the foundations of the climate change and peak oil debates.

He does pick holes in the conventions of climate change theory. Some of his arguments are historical: the Little Ice Age of around 1600, which followed the Medieval Warm Period of a millennium ago – and neither of which was connected to greenhouse gases. Others are statistical: carbon dioxide makes up 391 parts per million of atmospheric gases, of which 12 parts per million come from human activity. Other arguments use conspiracy theories to explain the sources of public concern: to a certain extent, he pooh-poohs climate change science as the work of people with vested interests in government grant machines. This is not exactly respectful of the scientific method and scientists, who together have contributed so much to contemporary civilization.

Sweeny’s efforts to dismiss peak oil are equally dicey. The gist is that there is plenty of oil in the world’s unconventional oil deposits, which of course is true. The point at issue is whether those deposits can be developed in time to replace depleting supplies of conventional production. On that question, the jury is still out.

The author successfully argues that Alberta’s oilsands have been demonized because environmental NGOs need easy, controversial targets to use in their annual fund-raising campaigns. Similarly, celebrities and politicians know they can get press by visiting Fort McMurray and proclaiming that the mines and plants look like something out of J.R.R Tolkien’s fictional Mordor, so they do.

The statistics Sweeny uses to defend the oil sands from the critics are compelling. He claims that each year America’s single-biggest coal-fired electrical generating plant spews forth 25.3 million tons of carbon dioxide contaminated with sulphur dioxide. That compares to about 40 million annual tons of relatively clean CO2 emissions from the Athabasca oil sands. Furthermore, Canada – the world’s poster child for dirty oil and GHG emissions – is responsible for 1.9% of global greenhouse gases. By comparison, green Europe emits 13.8%, the US 20.2% and China 21.5%. And so the argument goes.

Sweeny’s book is worth the read. As a gadfly, he counterbalances much of today’s conventional wisdom. Of equal interest for the bookworm, it’s an entertaining read from start to finish. The same cannot be said of the effort by Satya Das.

Green Oil
“Beyond a few purblind ravers,” says Das, “no rational person denies the reality of climate change.” Given the author’s background in journalism (notably with the Edmonton Journal), this mess of a book is particularly surprising.

He does not have a coherent message. In the absence of such a message, he parrots endless buzz-word laden passages from provincial government and ENGO reports – mostly on the importance of provincial stewardship of its resources, and strategies for governmental success. Painful to read, this book offers little except a sense of what higher-echelon bureaucrats conclude in their strategic planning meetings.

Self-published by the consultancy Das helped to found, this book’s main purpose is probably to drum up business. In fact, it is only in the context of his understanding of the roles of the public and private sectors that this publication makes much sense. “The principal role of government is to set a strong and effective policy framework,” he proclaims. However, “in every instance, the private sector role is to proceed robustly and vigorously to create wealth and value within the direction set by government.” As a private-sector entity advising government on policy issues, it’s safe to assume his firm is proceeding robustly and vigorously in the aforementioned direction.

This book is a stinker. Buyer, beware.

The Oil Sands

Gordon Kelly’s book is long, sometimes dry and technical, occasionally rambling. However, it’s also the most comprehensive and current study of the oilsands available. For anyone wanting a crash course in the oilsands, it’s a godsend. For anyone wanting a complete and current reference, it’s the only game in town.Kelly draws deeply from technical reports without taking shrill or ideological positions. For the most part he reflects the industry’s collective wisdom about the state of the oil sands. Fortunately, he also offers innovative ideas worth serious consideration.

Well into his 70s, Gordon Kelly had a long and diverse career in the petroleum industry – much of it as an ex-pat – and still works as a consultant. An engineer with an MBA by training, his understanding of the petroleum sector runs deep. It is therefore worth noting that his review of peak oil is comprehensive, and that he takes the issue quite seriously.

“A major theme of this book,” he says, “is that the world could run short of oil before new sources of mobile power are available. That is why the oil sands are needed and why it is important that Canada start the search for new alternative power sources now.”

Unlike most peak oil advocates, Kelly doesn’t see a probable decline in oil production as a function of scarcity. Rather, he sees it as a social problem. “Environmentalists are becoming more aggressive against oil and nuclear power because they really believe biofuels, windmills and solar panels can save the planet from GHG climate change. Politicians demand GHG curtailment because it makes them look ‘green’” he writes, “but it adds to the cost and time to build projects. Adding ‘Cap and Trade’ penalties to curb GHG emissions has reduced the money available for adding more capacity in Europe and may be expanded to North America. Project approval hearings drag on for months or years. Court challenges add to the delay....The world has lots of oil, but politics (will) block the (industry’s) ability to develop it fast enough.”

When we pass the peak in oil production (Kelly guesses the year will be 2015), “the shortages will be only a small percentage of demand, but for those who do not get the oil, it will be a crisis. History suggests it will be the poorest countries.”

Besides acknowledging peak oil as a reality, Kelly sees climate change from greenhouse gases as a threat. In that context, he puts forward some refreshing proposals on making Canada a leader in alternative energy.

In effect, he argues in his concluding chapter that Alberta should diversify from an energy-based economy into an energy-based economy. The oilsands and Alberta’s existing energy infrastructure provide a formidable base from which province and country can constitute a global clean energy superpower.

Concerned about the need to develop new sources of energy, Kelly conjures up the ghost of a creation of Alberta’s Lougheed years. Introduced in 1975, the Alberta Oil Sands Technology Research Authority invested $670 million over a 15-year period – all of those funds matched by private dollars. “AOSTRA was not government research but private research supported by the Alberta government,” says Kelly. “There is a big difference between the two. The private sector (had) to be willing to invest 50% of the cost in a project before Alberta (would commit) to the investment.”

According to Kelly, the program was so successful that it led to the construction of more than $100 billion in oilsands plants, so far. That is a stretch, perhaps. However, even if he is off by 75% (with rising commodity prices and associated inflation being mostly responsible for Alberta’s recent oilsands investment), the province’s AOSTRA investments generated highly leveraged results.

Today, he says, the province should introduce an AOSTRA-style program (Kelly calls it the Alberta Energy Research Project, or EARP) to encourage investment in alternative energy, arguing that research incentives could take advantage of the province’s existing expertise to create next-generation technologies. This is not far-fetched, he argues. BP is already “a large supplier of solar energy, while Chevron is the largest supplier of geothermal energy. Shell has a hydrogen division. Suncor has windmills and a biofuel operation.”

If you are interested in Alberta’s and Canada’s energy future, this is a fine tome. It’s too long, perhaps, and in some places could use a bit of cosmetic surgery. Even so, it is worth the time you invest in reading it.
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