The Best of the Best

Imperial Oil's Kearl project is poised to open, bringing "green" bitumen to the world. This article appears in the September issue of Oilweek 

By Peter McKenzie-Brown

Imperial Oil has been a big player since Canada’s petroleum industry began. With roots that go back to southwestern Ontario’s 19^th century oil boom, in 1947 the company kick-started the industry’s modern era with its Leduc discovery.

Not so well known is that Imperial has been the consummate pioneer in the oil sands business. In the middle of the last century, the company joined the Syncrude consortium, which in 1962 applied to the Conservation Board for approval to proceed with the Syncrude project. The final decision to proceed with Syncrude didn’t take place until 1975. By that time Imperial had developed the cyclic steam stimulation, which now drives its Cold Lake project. Not so well known is that, as part of its early Cold Lake experimentation, the company conducted the first tests on steam-assisted gravity drainage – the technology of choice for in situ recovery in the Athabasca deposit. Today, SAGD is the source of about half of Canada’s bitumen production.

The folks at Imperial are getting ready to do it again. When commissioned at the end of this year, the Imperial-operated Kearl oilsands project will process oil from a mine 70 kilometres from Fort McMurray. Unlike all the other mine-based projects up there, however, Kearl won’t produce high-carbon oil. Indeed, the product flowing into American refineries will produce no more carbon emissions than those produced by the average barrel now refined in the United States.

The Kearl project is huge. When it reaches full capacity of 345,000 barrels per day around 2020, it will be one of the world’s largest sources of crude. And it will produce low-carbon bitumen for 40-50 years. It will achieve this apparent industrial miracle through advanced oil sand processing techniques and the production of diluted bitumen which doesn’t need to be upgraded. A significant later add-on will be power from energy-saving cogeneration for the provincial power grid.

Imperial’s long experience in oil sands development and management – not least as a charter member of the Syncrude consortium – means the company has depth and breadth of experience. According to Kearl’s designated media spokesman, Pius Rolheiser, “The project will use the best of the best technology.” One of those “best technologies” is high-temperature paraffinic froth treatment (HT-PFT).

Paraffinic Froth: To understand the oil sands revolution Kearl represents, you have to understand froth treatment. “After oilsand is mixed with hot water to liberate the bitumen from the matrix of sand, water, silt, and clays, the bitumen is separated from the resulting slurry,” science and technology writer Diane Cook explained. “In a flotation vessel, the bitumen is removed as a highly viscous mixture of oil, mineral solids, and water called bitumen froth. The froth is then diluted with a hydrocarbon solvent to reduce its viscosity and enhance separation from the emulsified water and solids.”

The earliest plants mixed oilsands with hot water and naphtha in a separation vessel to separate the bitumen from the water, sand and other wastes associated with the ore. The facility skims the froth from the top of the vessel to get a product for further processing. The problem with this approach is that the resulting bitumen blend can contain as much as 3.5 percent sediments and other impurities, which require further processing and upgrading before they can be transported in a regular pipeline.

The key to Kearl’s low-carbon achievement is to use paraffin rather than naphtha. Originally developed by Syncrude in partnership with NRC’s CANMET Energy Technology Centre in Devon, Alberta, high-temperature paraffinic froth treatment removes only lighter hydrocarbons from oil sands ore, leaving undesirable asphaltenes behind. Asphaltenes carry most of the very fine solid particles (“fines”) that create tailings pond nightmares for older plants. According to Rolheiser, through this process “we can return them as waste to the mine.”

Asphaltenes consist primarily of carbon, hydrogen, nitrogen, oxygen, and sulfur, as well as trace amounts of vanadium and nickel. Heavy, gunky hydrocarbons, they contain almost as much carbon as hydrogen. Thus, in the typical refinery, asphaltenes are a low-end product with few uses beyond road pavement and roofing tar. The fewer asphaltenes you pipe into the refinery, the more high-end products the refiner can ship out after processing.

As Cook explained when a Shell-patented version of the process went into use at its Athabasca Oil Sands Project, paraffinic froth treatment “produces a much cleaner, diluted bitumen product that contains less than 0.1 per cent residual water and solids. In this process, the contaminants are readily separated by gravity, without the need for energy-intensive centrifugation, and the light aliphatic solvent is easily recovered from the diluted bitumen without the use of a lot of heat…. As a result, the bitumen has a lower viscosity, which allows the bitumen to be transported by pipeline to upgraders or directly to market with a small amount of diluent added.”

It is in this area that the Kearl project is revolutionary. Although Shell recently applied this process at existing project, Kearl will be the first oilsands mine constructed entirely without reference to an upgrader. According to Rolheiser, “Kearl bitumen will be somewhat lighter than the other marketed diluted bitumen produced in the oil sands.” This is possible because of the higher-quality oil produced through paraffinic processing.

Proposal, Budget, Expansion: This project has been a long time coming. Mobil Canada acquired Lease 36 – the oldest of the leases – in 1952. Imperial acquired lease 87 in 1989. A decade later Imperial and Husky Energy bought lease 6. Once the two companies had the property in their collective hands, Imperial took the lands amenable to surface mining while Husky took the sections that were better developed through in situ technologies.

 Mobil made the first proposal for a Kearl mining and upgrading project in 1997, to be based on lease 31A – an adjacent lease that plays a smallish role in today’s Kearl project. After the 1999 merger of the two majors that gave ExxonMobil its name, the international giant holds 100% of the mining rights to leases 36 and 31A and a 30% interest in the project.

Rolheiser said his company’s affiliation with ExxonMobil has played a key role in project development. Through that storied giant, “Imperial has access to global technologies, assets and expertise. They have executed multibillion-dollar projects all over the world. They have an unprecedented research capability. Our affiliation with them gives us a lot.” Not only did ExxonMobil bring patents and engineering ideas to the table. “It also enabled us to leverage our own expertise.”

Imperial originally conceived Kearl as a three-phase development in its original proposal, with each phase producing about 110,000 barrels per day. It was that project that Imperial began scoping out in 2004/5, with the company then presenting its regulators with a cost estimate of $8 billion for phase one. Estimated costs later rose to $10.9 billion for that phase.

According to Rolheiser that’s because “As we got into the execution of the project (in 2011) we realized that there were some facilities that we didn’t need to duplicate, and in fact we could make the surface footprint somewhat smaller. So we re-configured the project into two phases (instead of three). So, what we’re building today for $10.9 billion is a different development than what we had envisioned building for $8 billion. It includes additional investments in things like tailings management to meet ERCB Directive 74, and regional pipelines (that we hadn’t originally planned for).”

The company plans to begin construction of the expansion phase, for which it has budgeted $8.9 billion, in 2015. After construction and debottlenecking, the full project will be on stream at the end of this decade. The project encompasses a 4.6 billion barrel resource, and Imperial expects initial development costs to total about $6.20 per barrel.

Rolheiser added, “We can now get to our license capacity of 345,000 barrels per day, which was our target when we originally envisioned the project. We’re just going to get there in a different way.” Kearl will operate near capacity for 40 to 50 years, so “commodity prices are likely to have a minimal impact on our planning. For projects like Kearl we really do take a very long view of things. We aren’t even thinking about year-to-year prices. Our current expansion plans are not contingent upon approval of any particular pieces of pipeline infrastructure. They aren’t dependent on whether Gateway goes ahead.”

Well-to-Wheels: According to a 2010 report by IHS CERA, a highly respected American think tank, the Kearl project will result in life-cycle greenhouse gas emissions similar to the average of oil refined in the United States. In Brussels last year, the Jacobs Consultancy, an international firm, gave a report to the Centre for European Policy Studies in which it reached the same conclusion.

These reports differ so markedly from those used by environmentalists because they compare full lifecycle emissions. If you want to make apple-to-apple comparisons of crude oil sources, this is an important concept. True well-to-wheels, calculations account for GHG emissions associated with every stage of a product’s life: extraction, processing, refining, distribution, and use. The IHS CERA and Jacob’s reports add those emissions, for example, to the product’s total. Adding these factors into the equation dramatically changes the GHG estimates.

The case of Nigeria’s Bonny Light oil is dramatic example. During refining, this high-quality oil (35° API with negligible sulphur content) produces relatively low levels of GHG emissions. However, the country’s practice of flaring associated gas during oil production hugely increases the lifecycle emissions of its exports. According to the Jacobs report, in recent years Nigeria has flared 27 cubic metres of natural gas for every barrel of crude it produced. This is the main reason that Jacobs’ full cycle calculation showed Nigerian light crude producing 7% more GHG emissions than the average slate of oils refined in the US.

Well-to-wheels GHG emissions for oil sands and conventional crude oils (kgCO2e per barrel refined products)
Crude	Well-to-retail pump	Well-to-wheels	% difference from average US crude consumed
Canadian oil sands: mining dilbit (Kearl)*	103.6	487.6	0
Average US barrel consumed	103.1	487.1	0
Average oil sands imported to US (2009)	133.5	517.5	6 %
California heavy oil	165.6	549.6	13 %
Nigerian light crude	135.2	519.2	7 %
Canadian heavy oil	82.6	466.6	-4 %
Venezuelan partial upgrader	157.6	541.6	11 %
West Texas Intermediate	54.6	438.6	-10 %

(Source: IHS CERA.)

By contrast, the Kearl project will produce GHG emissions that are virtually identical to those of the average barrel refined in the US, whether you are measuring those emissions at the retail pump or a vehicle’s exhaust (both marked in red on the table).

If you take the chart too seriously, it may seem that only WTI and Canadian heavy oil are greener sources of oil from a GHG perspective among the crudes listed in the table. However, it is worth noting that Canadian and Brent light oils, for example, are not listed. This illustrates the importance of comparing Kearl production to the average slate of oils refined in the US.

Of course, if it is fair game to add emissions from flaring natural gas in the Nigerian calculation, it is also reasonable to deduct them if a producer can make a credible case that its production practices actually offset GHG emissions. The Kearl project does this in two ways.

For one, it was designed without an upgrader – traditionally, a major source of GHG emissions for oil sands mines. Using paraffinic processing makes this possible: just mix the higher-grade bitumen with diluent and ship it by pipeline to an existing refinery. To put the significance of this innovation into context, consider that exports to the US from many countries will become more carbon-intensive as national oil companies export increasingly lower-grade crude – a phenomenon known as “the blackening of the barrel.”

The IHS CERA study forecast that “new mining projects without upgraders (like Kearl) will increase (American) imports of lower-carbon oil blends.” In 2030, the report suggested, “the average carbon intensity of oil sands blends (will) remain about the same as today.” This could mean that Kearl oil will become less carbon-intensive than the average refined in the US.

Kearl’s other big carbon-lowering tool will be the use of cogeneration. Environmentally and economically efficient, cogen involves the simultaneous production of electrical power and heat from a single fuel source. The oil sands industry has used cogen during bitumen production since the 1970s, so the practice is not new. In the quest for reliable self-sufficiency in power, all new mining facilities since then have used cogeneration, though generally aimed at little more than supplying their own projects.

Imperial will also install gas-fired cogeneration units at Kearl, selling some of its production into the grid, though details are still sketchy. According to Rolheiser “They will be added to the operation as a separate project (before 2020), but not as part of initial plant development.”

As the Kearl project moved through the approval and construction phases, most media discussed the project in the context of an anti-Kearl lawsuit from an environmental coalition (Imperial won the case), and concerns within the US about transporting huge modules on state highways. The pity is that, in general, they are unlikely to cover Kearl as an environmental triumph.

Where They Stand

Candidates for PC leadership weigh in on issues that matter to Alberta's energy industry

An edited version of this article appears in the October issue of Oilweek

By Peter McKenzie-Brown

As this magazine reaches your desk, Alberta’s Progressive Conservative party will be voting on a new leader. The six candidates for this position fit roughly into two groups. The progressives (Doug Horner, Gary Mar, and Alison Redford) make up one; the conservatives (Doug Griffiths, Ted Morton, and Rick Orman) comprise the other.

To help you decide how these candidates stand in the area of energy policy, Oilweek asked for written answers to a series of questions. We wanted to know where they stand on a national energy strategy, natural gas surpluses, bitumen upgrading in the province and the prospect of creating a super-regulator – a one-stop shop for all the province’s regulatory needs. We also wanted to know their best single idea for a change to the business environment.

Four candidates – Doug Horner, Gary Mar, Rick Orman and Alison Redford – responded. Despite repeated requests,. Griffiths and Morton did not, and they had few energy policy ideas on their websites. That’s why they aren’t getting covered in these pages.

1.          What are your thoughts about a national energy strategy?

Orman: “Interprovincial and federal-provincial action is required in some areas, as is meaningful consultation with a variety of stakeholders…. However, I also know that at the end of the day, governments must fulfill their constitutional responsibilities, and should avoid signing onto strategies cobbled together, no matter how well-intentioned. Under Canada’s constitution, responsibility for natural resources belongs to the provinces and if I become Premier I will not abrogate my responsibilities to ensure the interests of Albertans and our industry come first.

“On July 19th this year at the conclusion of the two-day Energy and Mines Ministers, I issued a statement saying I support an Alberta-first Energy Strategy. I also said I would support a broader based strategy but only if it provided Alberta’s energy industry with greater assurances there will not be overlapping regulatory processes. It would also have to enhance market access for producers, and addressed the harmful and inaccurate misconceptions about the energy industry. I suspect that these misconceptions may also be fuelling support for broader-based strategies, but let’s not let the tail wag the dog.”

Redford: “I support a Canadian energy strategy to ensure that Alberta’s resources reach every corner of the country, dispelling the threat of energy insecurity while netting the province strong returns. Alberta must lead the development and implementation of any such strategy. The oil and gas, after all, belong to us. Bitter memories of the Trudeau-era National Energy Program make acceptance of outside plans unacceptable.”

Horner: “It is time we move from reactive to proactive. Canada needs to unite around a comprehensive Canadian Energy Strategy that brings together industry, government, academia and special interest groups to define an integrated strategy for the country across all energy producing sectors and regions. It must be Canada-wide, as a provincial strategy only begs dispute, opposition and envy. With due process, scientific evidence and cohesive decision-making, a Canadian Energy Strategy will allow the country to stand united in its resolve to move all of our energy resources forward, and it will allow industry to understand the conditions under which it has the social right to operate. Alberta must be at the table and engaged with other Provinces and the Federal Government to develop an energy strategy that is fair and understands the jurisdictional authorities and responsibilities.”

Mar: “For a number of years, Canada’s economic, energy and thought leaders have discussed the merits of a coordinated national strategy around energy development that would allow provinces to find common ground toward energy policies. 

“As the world continues to advances its energy needs, this issue becomes of vital importance to Alberta and Canada as a whole, as energy is one the major drivers of our national economy.  

“(We support) the development of a national energy strategy, and feels that Alberta should take the lead role in collaborating with the federal government and other provinces in developing such a strategy. 

“In addition, Alberta needs to ensure we are able to receive the highest price for our products so that our royalty income, which is tied to the commodity prices, is maximized.  This can be accomplished by having export pipelines that not only supply the US but have the option to supply other countries.  This optionality will provide us with the best and highest prices as there will be opportunities to choose the highest price rather than the only price.

“(We support) expanding our markets through physical means as well as through advocacy.  The advocacy will be through Alberta’s ten existing international offices and through some new key ones in the BRIC (Brazil, Russia, India & China) nations.  Both of these will provide the opportunity for more customers and higher prices received for our valuable commodities.”

2.         What are the best ways to deal with the challenge of the surpluses arising from shale gas development? What role, if any, should government play?

Mar: “Commodity prices have always gone up and gone down. The government can smooth out the changes in royalty revenue which is why there is a need for the Sustainability Fund in the short term and the Heritage Fund in the long-term. 

“(We) will develop the Heritage Fund to $40 billion in the next ten years.  This will provide Alberta with the resources to diversify our economy.  By diversifying, the concerns about oil or gas price changes will also be muted.

“A stable, predictable and competitive fiscal and regulatory regime is essential for the maintaining Alberta’s reputation as a competitive jurisdiction for investment. 

“(We are) committed to maintaining the current royalty regime for conventional oil, natural gas and the oil sands.  This will ensure the energy industry has the confidence it needs to make long-term investments in Alberta.”

Redford: “The best way to keep natural gas profitable is to expand its uses and our customer base. I want to see gas increasingly used to generate electricity; it’s cleaner burning than coal and with our growing population requiring more power, gas offers a ready solution to both our environmental and demographic needs.

“When it comes to cultivating more customers, we should turn west to the Pacific Rim. Many Asian economies are looking for fresh energy resources to fuel their growth. I want to see pipelines carrying our natural gas westward to satisfy their thirst and reap enormous returns for Alberta.

“My government will do its part to help both. I will diversify the Alberta Government’s $2 billion investment in carbon capture down other avenues like natural gas-fueled electricity cogeneration to encourage the industry to further refine this technology and adopt it widely. I will also aggressively promote Alberta’s energy riches in East Asia and work closely with the British Columbia government to get approval for the necessary infrastructure. Finally, I will provide a comprehensive range of incentives to ensure that provincial companies can build the pipelines and transport the gas at competitive rates.”

Orman: “I believe we are in the midst of developing a new business model for Alberta’s natural gas resources. The Shale Gas plays in both Canada and the US have the potential of bringing on huge surpluses of gas in the near future, and in the integrated North American market place, we are seeing prices well below those of five years ago. Natural gas producers need new markets and working together we need to identify the infrastructure necessary to get us to new markets. As Premier this would be a priority of the government. The other changes affecting the future of the natural gas industry is the push to replace coal fired electrical generation with natural gas. That remains of course a business decision for the electrical generation industry. Today we are also seeing the transportation industry looking at natural gas fuelled cars and trucks. As with natural gas fired electrical generation, there is a positive environmental impact. The worldwide demand for liquid natural gas is one of the solutions that will be needed to meet the demand for energy over the next 40 years. Estimates show that as the population of the world increases, the demand for energy will continue to increase. The ability to export liquid natural gas off the West Coast will be fundamental to being able to service increased world demand.”

Horner: “Alberta has a geological challenge, a geographic challenge, an economic challenge and a fiscal challenge when it comes to natural gas. As gas prices have fallen and will remain low for the foreseeable future, these four challenges will continue to threaten the predictability and sustainability of our provincial revenue base. Much of this reality cannot be changed; however, the government can use the following levers of public policy to advance our position:

·         Support investment in applied research and technology prototypes that focus on economic extraction of natural gas;

·         Ensure a stable royalty environment that supports the profitable exploration and production of natural gas;

·         Support the development of the necessary infrastructure – linear, port and LNG production – to improve the speed and cost associated with exporting natural gas to new markets; and

·         Refrain from overheating the economy and increase immigration to ensure our wage rates keep our industries competitive, productive and profitable.”

3.         Should there be more upgrading of bitumen in Alberta? Should government facilitate?

Horner: “Yes – significantly more. My support for the Bitumen Royalty in Kind (BRIK) program has been unwavering, as it is designed to maximize the value of our energy resources here in Alberta. The Canadian Energy Research Institute estimates about half of potential revenue and more than half of potential jobs are lost when upgrading and refining is exported. A made-in-Alberta approach to upgrading bitumen prior to export can double the related GDP and increase wealth to Albertans.

“However, as our production increases the ERCB estimates that Alberta-based bitumen upgrading capacity will decline from 61% to 52% by 2016, which is well short of the stated government goal of 72%. We need to approve additional BRIK supply agreements similar to the existing North West Upgrader today, as we cannot wait until 2016 to await studies that further prove the business case that we know to be true today.

“For example, the $6.6 billion AFNEC (Alberta First Nations Energy Centre) initiative would become the only First-Nations-owned petroleum refinery dedicated to bitumen-based refining, would process 93,000 barrels of bitumen per day over a 30-year term, and would set a world-leading environmental standard with water usage, air pollution, and greenhouse gas emissions well below existing comparable conventional crude refineries. This is an example of ‘getting it done right.’”

Mar: “The Bitumen Royalty in Kind (BRIK) Program is aimed at fostering value-added oil sands development, enhancing the bitumen market in Alberta and sharing with industry in the gains, while working to mitigate the risks in processing bitumen to further value-added products.

 

“BRIK is still in its infancy and it will take some time to evaluate whether the Government of Alberta’s participation in the BRIK projects will achieve the objectives of increasing value-added bitumen upgrading in Alberta.

“(We) will follow through with the development of the current BRIK initiatives by North West Upgrading/Canadian Natural Resources Limited and the Enhance Energy Project and carefully evaluate the results that Albertans are receiving to ensure that the goals, objectives and outcomes of the initial BRIK projects are met.”

Redford: “There should be more bitumen upgrading in the province, but only if the market can sustain it. The government should not generally play a role in this sector except in special cases such as the Northwest Upgrader.”

Orman: “Today we upgrade roughly 62% of the bitumen produced in Alberta. When the Northwest Upgrader is operational additional bitumen will be upgraded within the province. We know there are very promising new upgrading technologies being developed by companies within the province; as these advance through the demonstration and piloting stages there will be additional options for producers with respect to how they will develop their bitumen. Some markets of course will continue to want raw bitumen shipped to them. The role of the Alberta government is to advocate value-added processing, encourage new upgrading technologies, create a stable and predictable business environment and let the open marketplace function.”

4.         Do you think there should be a single “super regulator” for renewable and non-renewable resources in Alberta?

Redford: “I want to see a single entry point into the regulatory system. This will require breaking down barriers between regulators so they are closely connected, allowing them to collaborate, share information and reach decisions more effectively and transparently, in less time and at reduced cost to companies. However, a degree of separation is still necessary to maintain distinct and unique regulatory specialties.”

Horner: “Establishing a super regulator for renewable and non-renewable resources is a tremendous step toward reducing regulatory bureaucracy, inefficiency and redundancy in our energy industries. We must maintain the highest level of productivity and competitiveness in our most significant industry, and a super regulator has the potential of reducing the costs of applications, monitoring and compliance if implemented effectively. This just makes sense.

“What does not make sense is the centralization and “super-boarding” of all ministerial responsibilities that it cannot manage. This approach mistakes a structural change for increased effectiveness. Support for an energy super regulator comes only with effective governance and the competency needed to support our world-class industry ... and we can make that happen.”

Orman: “My gut tells me that whenever government starts talking about a ‘Super Government Agency’ trouble is likely not far behind. We have the devastating example in health care in Alberta moving organizationally from model to model to model. This did nothing to improve frontline service delivery, and every Albertan is now paying the price. I know in the case of the single energy regulator a lot of work went into the development of the model being proposed. I am told though that support within government and within industry is very mixed. Morale in government is low so do you really want to introduce massive change at a time when there is a backlog of work including applications working their way through the review and approval process. Organizational change on the level we are looking at would be huge and one can easily envisage an exodus of staff, which will do nothing to speed up service or the quality of service for industry. I am prepared to keep an open mind on this but I will have to be convinced.”

Mar:  “A stable, predictable regulatory regime is essential for the energy industry to make important long-term investment decisions and maintain Alberta’s reputation as a competitive jurisdiction for investment.

“There is a need to modernize the energy regulatory system in Alberta. This does not mean reducing or relaxing regulations, rather it means reducing overlap and duplication to make the regulatory system more efficient and responsive to today’s realities.

“(We are) committed to moving forward with the implementation of the Regulatory Enhancement Project, and its efforts to create a new, single regulator for Alberta’s energy resource development industries. Done right, this project will deliver an efficient regulatory system that supports the province’s competitiveness while ensuring public safety, strong environmental management and respects the rights of landowners”

5.         If you could make a single change to the business environment for Alberta's energy industry, what would it be?

Mar: “See my response to Question 4, above.”

Redford:  “I would simplify the approval process for new technologies. The health and future of both Alberta and the energy industry depend on innovation. The sooner the government signs off on new advances, the sooner they can be put to use in the field.”

Orman: “A return to government that is knowledgeable, predictable, responsive and fair – starting with the repeal of Bill 36 the Alberta Land Stewardship Act (ALSA).”

Horner: “Beyond supporting a pipeline to the west coast, the change that would bring the most immediate positive change to the energy industry as well as our other industries is a new immigration agreement that puts Alberta in charge of determining the number of new immigrants to enter the province as well as the job categories which they can occupy. This is of the highest priority for the future prosperity of the province, and is a critical component to unlocking the potential of our province.”

Sizing them up

There is more to government than energy policy: Think health care and the environment, for example. Also, leadership is an ineffable quality that is almost impossible to measure. It reflects judgement, people skills and, ultimately, the efforts of the leader’s team.

Granting those limitations, the following tables summarize the experience of the six leadership candidates in terms of education, business background and legislative experience.

1.       Doug Griffiths

• Education: Degrees in Philosophy and Education.
• Work experience: Teaching.
• Legislative Experience: First elected in a 2002 by-election. Served on legislative committees and as Parliamentary Assistant to three ministers.

2.      Doug Horner

• Education: Diploma in Business Administration (SAIT).
• Work experience: Bank manager; moved to Nebraska to look after international marketing and sales of specialty grains for ConAgra; returned to Calgary to set up an agribusiness trading company.
• Legislative Experience: First elected in 2001. Ministries of Agriculture and Rural Development; Advanced Education and Technology; Deputy Premier; born into a multi-generational political family.

3.      Gary Mar

• Education: Bachelor of Commerce, Bachelor of Laws
• Work experience: Lawyer.
• Legislative Experience: Served in the Legislature from 1994-2006. Ministries of Learning; Community Development; Environment; Health and Wellness; International and Intergovernmental Relations. Alberta’s Washington-based Minister-Counsellor (2007-2011), with a mandate to champion Alberta’s energy interests.

4.      Ted Morton

• Education: BA in political science; MA and PhD in political economy.
• Work experience: Professor at U of C; assignments as visiting professor, some of them international.
• Legislative Experience: Elected in 2004. Ministries of Sustainable Resource Development; Finance and Enterprise.

5.      Rick Orman

• Education: BA, Eastern Washington University
• Work Experience: Co-founded a land services business; Manager of Land and Contracts at Signalta Resources; founded Nexus Resources Ltd. in 1982; in 1994 founded Kappa Energy Company, which merged with Vanguard Oil; in 2003 co-founded Exceed Energy and served as Vice-Chairman until 2005; presently on the board of Daylight Energy.
• Legislative Experience: Served in Legislature 1986-1993. Ministries of Career Development and Employment; Labour; Energy. Lost 1993 PC leadership campaign to Ralph Klein.

6.      Alison Redford

• Education: Law
• Work experience: Technical Advisor on constitutional and legal reform issues in various parts of Africa for international government bodies; one of four International Election Commissioners to administer Afghanistan's first parliamentary elections; assignments in Bosnia and Herzegovina, Serbia, Namibia, Uganda, Zimbabwe, Mozambique, the Philippines, Vietnam.
• Legislative Experience: Held PC staff positions in Ottawa for Secretary of State Joe Clark and in the then-Prime Minister’s office (1989-90). Elected to the Legislature in 2008; Ministry of Justice and Attorney General. 

Sharing the Road

As the Pembina Institute's sixth executive director in 25 years, Ed Whittingham believes in the organization's ability to work with industry to improve sustainability. This article appears in the February issue of Oilweek

By Peter McKenzie-Brown

Twenty years ago the Newmarket Ontario Rotary Club offered 17-year-old Ed Whittingham the opportunity to become an international exchange student for one year – a privilege reserved for young men and women who will represent their country well, and who can clearly articulate themselves and their interests. In Whittingham’s case, he could already articulate a deep concern for the environment.

Assigned to a small city in Japan, his experience was transformational. “Rotary sent me at a formative time in my life, and I came of age there. I will always be grateful for that experience. I loved the people and the culture.” He studied for a year there as an undergrad, and went back on other occasions. “I worked on an assembly line there, in a lumber yard and as a clerk in a convenience store. I also fell in love with my wife Yuka there.” Today he can communicate fluently in spoken and written Japanese, and he and Yuka have two young children – Beck (age six) and Alice (age four).

Whittingham received his BA from McGill University and an MBA in international business and corporate sustainability from York University’s celebrated Schulich School of Business. Yet virtually all his professional experience in Canada has been with not-for-profit environmental organizations.

Such is the cosmopolitan background of the Pembina Institute’s sixth executive director, who began his term on January 1st of this year, as the organization began preparing to celebrate its 25th anniversary. His unusual background is appropriate, given the unusual nature of the organization he leads – an organization now celebrating its 25th anniversary.

Pembina was the first environmental organization to express concern about the oilsands, back in 1986, but it has always supported the notion of oilsands development. “I think there’s a real opportunity to responsibly develop the oilsands – to develop it in a way that doesn’t impair key environmental thresholds – for example, the Athabasca River, critical air sheds, and critical habitat.” Doing all this, he says, “can and should provide healthy jobs for Albertans.” He says he opposes “command and control regulation (like that used during) the National Energy Program. It unnecessarily and unfairly destroys people’s livelihoods.” Whittingham believes a collaborative, business-friendly model “is doable. I meet with industry people a lot and I find that many of them think it’s doable, too.”

He acknowledges that these views “put us offside with some other environmental groups,” but doesn’t much care. It’s consistent with the organization’s mission to “advance sustainable energy solutions through innovative research, education, consulting and advocacy.” The organization’s vision is “a world in which our immediate and future needs are met in a manner that protects the earth’s living systems; ensures clean air, land and water; prevents dangerous climate change; and provides for a safe and just global community:” not much there to argue about.

The Pembina Institute is a unique Alberta success story. Founded in 1986 by Rob McIntosh – a high school teacher living in the rural community (population 7,000) of Drayton Valley – that small town on Alberta’s Cowboy Trail is the homeland of an organization which now employs 60 “faces” in Whittingham’s word – 50 fulltime – in offices in Vancouver, Yellowknife, Drayton Valley, Calgary, Toronto and Ottawa. Pembina even has a US policy bureau in Washington, DC.

The institute focuses on four key issues. “In internal parlance we call them rocks” he says, as in the rocks upon which they build their organization. The oilsands are one rock. “Our position is one of responsible oilsands development, not shutting down development.” Another is climate change: “How can we help create a low-carbon economy?” The others are transportation – looking at lower-carbon transportation systems, an effort that includes policies on optimal community organization, for example. “We also do a lot of work around renewable energy and energy efficiency,” which together represent the fourth rock. The institute prepares policy documents, serves as an advocate and has a strong educational mandate.

There is more, however. “Every one of these rocks involves policy research and advocacy, but they also involve consulting.” And this is one of the curious features of the Pembina Institute: it is a not-for-profit organization, but only half of its revenue comes from the Pembina Foundation (chaired by Rob Macintosh, who founded the Pembina Institute) and other such organizations. “The other half comes from consulting provided by our content staff. (Our rocks) provide consulting services to federal and provincial governments, to corporate clients and to municipalities and first nations.”

Most of Pembina’s consulting staff are “passionate and talented engineers.” Since he joined the institute about six years ago, Whittingham has been the principal exception. This is not to say he isn’t passionate and talented; he just isn’t an engineer. In a self-effacing way, he says his BA stands for “bugger-all,” while his MBA is a “masters in bugger-all.”

Ask Whittingham what he’d like to accomplish during his term as executive director, and he’s pretty straightforward. Most people move on from this job after about five years. Marlo Raynolds (who just finished his term) was the exception – he was the ED for seven years. “At the end of five years I’d like to leave behind a healthy organization – that’s number one. Secondly, each year in our planning we develop a list of goals; I’d be very happy if we achieved half of our ambitious policy goals. In a broader sense, I’d like to be able to believe I had made a difference on the climate change issue” – the notion that CO2 emissions from human activity are heating up the planet. At the end of his term he’d “like to see Canada firmly on the path to making realistic cuts in CO2 emissions – cuts that are in line with the science.”

On the question of the views of climate-change sceptics, who reject much of this thinking for the first time in the interview he deviates from his characteristic mild-mannered ways. “Twelve thousand refereed journal articles support the science,” he says. He was a delegate at the global CO2 conference in Cancun late last year, where “the US Department of Defense gave a major presentation on it. Using their own science, they told us they recognize it as a problem, and they are looking for ways to protect the US from its effects.” One potential problem they identified was change in global fish stocks – a major source of protein for the world’s growing population. Another was major migrations of refugees in response to deteriorating farming in rural areas. This could have a serious impact on the US border with Mexico. Reflecting another concern addressed in that presentation Whittingham asks, “What are the military implications if melting ice in the Arctic opens up sea lanes?”

“What I would like to say to the sceptics is this: ‘Climate change is real. Get over it. It’s happening.’” He stresses again that the presenters at that session “were not dreadlocked, Birkenstock-wearing, pot-smoking pinko commie liberals. They were commanders from the American military, and they were telling us how they are planning to protect the US from the effects of climate change.”

When you walk away from a discussion with Whittingham, you have a lot to chew over. The organization is clearly committed to carbon emissions as a deep and immediate concern. But as an organization it is tremendously practical: The Pembina Institute preaches low carbon outcomes but it also teaches how to achieve them in economically sensible ways.

In print, this writer has occasionally taken exception to the institute’s facts and to its interpretations of the facts. However, there is no gainsaying the organization’s collective commitment, intelligence and talent. As importantly, the Pembina group of environmental organizations – several are now affiliated with the Pembina Foundation – in general take a practical and somewhat business friendly approach to environmental concerns.

In this 25th anniversary year it is appropriate not only to salute Whittingham as the Pembina Institute’s new executive director. It is equally appropriate to salute the organization’s founder, Rob Macintosh, who after two and a half decades is still at the wheel. Differences notwithstanding, one can only hope that Pembina’s second quarter century will be as successful – and as provocative – as the first.

Fighting Words: Oil Sands Antagonists Square Off

Image via Wikipedia

Big Business and environmental activists square off over the oil sands. Has the truth been caught in the crossfire? This article appears in the November issue of Alberta Venture.

By Peter McKenzie-Brown

It has been a year in which Alberta’s oil sands have gotten attention for all the wrong reasons, itsl environmental record under attack from seemingly every possible direction. In addition to the usual rabble of environmental organizations and activists, the oil sands have been the subject of consumer campaigns from communities and corporations south of the border, each claiming to be greener than the next. Worse still, there’s no reason to believe the war of words will die down anytime soon between non-government organizations and crusading retailers on one side and their targets in industry and government on the other.

Early last summer, the small city of Bellingham, Washington, passed a resolution saying the city would boycott fuels derived from Alberta bitumen. As it ended, Walgreen – a large American retailer – did the same. These were just the latest of many efforts over a number of years to stop or slow down oil sand development by boycotting fuels that come from the oil sands. Although these campaigns got a lot of press, they were small potatoes in the big scheme of things.

For example, the US Congress has already passed a law banning some government agencies from directly promoting energy projects that will emit greater greenhouse-gas emissions over their entire life cycle than conventional oil. US legislation from 2007 prevents some federal agencies from entering into fuel contracts that encourage unconventional energy development. And California regulations require fuel suppliers to reduce the emissions from the fuel they sell – and to account for those emissions right back to the original source of production, including emissions in Alberta.

Returning to the small potatoes, a particularly robust attack recently came from Lush Cosmetics – a UK-based franchise which, according to its website, “offers over 300 luxurious, ethical and indulgent bath and beauty products made by hand with fresh, organic ingredients.” In July, the company’s North American operations took on the oil sands.

According to Bruce Anderson, an Ottawa-based senior associate with Harris/Decima Research and a senior advisor to NATIONAL Public Relations, this was part of the company’s effort “to present its own brand credentials to the marketplace.” Lush has embraced a series of environmental issues – for example, they also ran a short campaign on sealing. “What is remarkable about (these campaigns) is that they are less about the specific issue than about Lush as a brand.”

Prepared by an American advertising firm, the company’s website video describes the oil sands as “the largest and most destructive project on Planet Earth” – a “toxic sacrifice zone the size of England.” “The tar sands suck water, suck money, suck energy,” it continues. “The tar sands poison water, poison wildlife, poison forests. The tar sands destroy coastal cities. The tar sands destroy Canada’s rep(utation). The tar sands kill native people. The tar sands kill old people. The tar sands kill young people.” The culprits, the video explains, include big oil, big banks and the politicians in bed with them. The company’s preferred solution is to “Shut the f*cker down.”

Not surprisingly, this incendiary attack attracted the attention of representatives from government and industry. In a statement, Canadian Association of Petroleum Producers (CAPP) president Dave Collyer said “activities like this protest blur the lines between fact and fiction and add nothing to the serious dialogue occurring among reasonable people seeking solutions to our energy challenges.”

Alberta cabinet minister Iris Evans called the company’s North American head office in Vancouver to straighten out CEO Mark Wolverton on the facts of the matter. The soap company then put out a news release saying that “Minister Evans acknowledged that today’s industry has the technology to pull oil from the tar sands without creating toxic tailings ponds yet continues to issue permits for development that include new tailing pond projects.”

The Lush Cosmetics campaign illustrates the action/reaction nature of the public relations battles that the oilsands tend to provoke, but it also underscores the dilemma the industry is facing. “The oilsands campaigners are looking for situations in which corporations are facing some kind of reputation risk,” according to Bruce Anderson. “What I have found is that companies want to lighten their environmental footprints, like consumers do, and they do regard their reputations carefully. But at the same time they need to make information-based and practical decisions.”

The emotional and divisive battles over the oil sands reflect, in part, fundamental changes in our society. New technologies have made inexpensive media campaigns not just possible but powerful, and people are more receptive to green messages. The general decline in public regard for the first and second sectors of society – business and government – has been well documented. And the third sector, which includes the ENGOs leading the charge, is growing rapidly. To a large extent this is because of the proliferation and growth of ENGOs – not-for-profit environmental enterprises which have grown in number and financial strength over the last 20 years. And the third sector includes the environmental non-government organizations (ENGOs) which, at their best, represent knowledgeable, concerned citizens who are passionate about such issues as pollution and the environmental impact of industrial development; it is growing rapidly. Combined, these ingredients make up a recipe for conflict.

Who are the players, then? On one side there is government and industry, who argue that oil sands development contributes to energy security, economic growth and the trade balance, and that the stewardship of the environment is effectively being looked after by provincial and federal regulatory bodies. Somewhere in the middle are critics like the Pembina Institute and the Alberta Wilderness Association, which have focused mandates and take credible steps to improve oil sands development. At the other end of the spectrum are organizations like Natural Resources Defence Council, the Sierra Club and Greenpeace, which want fundamental social and environmental change.

And despite the preponderance of plaid and patchouli oil among their more militant members, these activist organizations aren’t necessarily short on resources. Jerry Bellikka, director of media relations for the premier’s office, argues that many anti-oil sands organizations work with significant budgets. “They are often well funded. (Some ENGOs) have told us that when they do one of their campaigns they get lots of donations. Whether it’s accurate or not, we don’t know; they don’t give us access to that sort of information directly. But what we do know is that these are very well-funded campaigns. Greenpeace is an excellent example.”

Last year Greenpeace had total worldwide income of about US$267 million, and directed about US$35 million to off-oil climate and energy campaigns. To illustrate the rapid growth of ENGOs, it is worth noting that global income for Greenpeace in 1993 was only US$34 million. Like other third sector organizations, ENGOs are rapidly proliferating in number.

Not all ENGOs are created equal, though. For example, Corporate Ethics International gained a great deal of media attention within Canada by creating a misleading website video and making a miniscule advertising buy – a few billboards in four American cities followed by even less advertising in Britain. Their message was that prospective tourists should punish Alberta for developing the oil sands by not visiting the province. News stories, talk shows and editorials agonized over the story, which proved to be riddled with inaccuracies.

In contrast, Greenpeace has used published reports, boots on the ground and a flair for the dramatic to become a distinctive protest voice in the province. The organization conducts at least one high-profile public relations event each year. Most recently it involved unfurling from the Calgary tower a banner with the message: “Separate Oil and State.” According to Jerry Bellikka, a spokesman for the premier’s office, “we in the provincial government are not really sure what their motivations are. It’s another silly stunt from an organization known for silly stunts.”

Greenpeace activist Mike Hudema begs to differ. “We hung the banner in Calgary because that’s where the industry is headquartered. Our message is that the relationship between the industry and government is too close. Industry shouldn’t be allowed to regulate itself. Companies are allowed to have endless (environmental) exceedences without being punished.”

Surprisingly, says Simon Dyer, the director of the Pembina Institute’s oil sands program, the warring statistics around oil sands development are mostly “accurate. Some will speak to the fact that oil sands operators are investing billions of dollars trying to deal with tailings waste (true), while others will say that successful reclamation of these toxic lakes…has never been demonstrated (also true).” Dyer represents the middle ground among the critics, and he’s concerned that PR has taken over the debate.

“As long as this is framed as a public relations battle the debate is going to continue to deteriorate,” he says. “Mudslinging is going to continue from both sides. Reputationally, Alberta and Canada and the oil sands are going to receive scrutiny and the issues are going to continue to grow.” The Pembina Institute’s position is that “There are issues around oil sands development that need to be addressed. The best way to allay criticism is to engage the critics, find the root of the problems that are causing those concerns, and demonstrate through actions how those are being addressed.”

“Right now,” Dyer says, “the public relations machine is ramping up on both sides of the debate, and those of us who are actually interested in ensuring that oil sands development is conducted in a responsible way are finding that our voices aren’t being heard. (The protagonists should) demonstrate that you are willing to solve the problems associated with oil sands development with action.”

Environmental specialist Carolyn Campbell with the Alberta Wilderness Association tells a similar tale. “Our approach is to work through public awareness, discussion and persuasion, but we don’t hesitate to use legal recourse where that’s necessary,” she says. “We are very dissatisfied with some of the environment-related actions going on in this province. I think the government needs to look at itself to see why stunt-oriented organizations are focusing on Alberta. Other paths (to environmental change) have not been effective.”

There are a lot of “pressing issues” around the oil sands, she says. “The province made a cumulative-effects commitment in the late 1990s focused on the Wood Buffalo municipality area,” she says. The idea was “to set up multi-stakeholder groups to manage the effects of oil sands development, to set thresholds and limits that the fairly fragile boreal ecosystem in northeast Alberta can sustain…. We don’t feel that’s been honoured. The pace of leasing and project approvals has completely swamped the recommendations of that cumulative effects group.” The Pembina Institute’s Dyer agrees. “I think the Alberta government is getting bad advice by the people who are telling them just to spend more money on public relations. The oil sands do not have a PR problem (but) a problem around management and cumulative environmental effects.”

The ENGO third sector has been vocal and articulate. What about the other two sectors, business and government?

Given the size of the prize, business and government are wagering relatively little on public relations, but that is changing. CAPP launched a $10-million campaign in the spring. Earlier this year the Oil Sands Leadership Initiative (OSLI) – a consortium of Suncor Energy Inc., ConocoPhillips Canada, Nexen Inc., Statoil Canada and Total E&P Canada – formally invoked a mandate to improve the oil sands industry’s reputation by “demonstrating and communicating environmental and social and economic performance and technological advancements.” This year, OSLI’s budget is $10 million.

These initiatives are the exception, however. Except for highly-focused campaigns directed at public consultation sessions and other constituencies when they are applying for development licenses, the sectors with the most to gain have done little PR. Resource developers, energy companies, construction firms, trade councils and other parts of the industrial sector that identify with the oil sands have largely remained silent. So controversial have the oil sands become that producers forbid rank-and-file employees to talk to media about the business, even when they are technical experts.

That lack of engagement provoked a stinging rebuke from retired EnCana CEO Gwynn Morgan, highly respected as a progressive voice of industry. In a Globe and Mail column in September titled “leaders must counter bogus oilsands spin” Morgan, based on his years as a CEO, concludes that corporations need to ensure that what they say stands up as truthful in the face of intense scrutiny, while ignoring the critics’ innuendo and distortions.

“But,” Morgan wrote, “I also learned that you don’t win games back on your heels playing defense. Industry leaders need to do more than sitting behind the blue line trying to block shots. They need to take their oilsands story and skate hard up the ice.” And if industry remains reluctant to move the plate into the other end of his own, the provincial government is doing what it can to record the puck in the meantime. One sign: the Alberta government’s recent $268,000 advertising campaign, which included two series of newspaper ads – one for the dailies, the other for community papers. Of course, that is only part of the province’s effort. “In a way silly stunts (like those of Greenpeace) work in our favour,” says provincial spokesperson Jerry Bellikka, “since traditional media respond to that kind of thing with calls to reliable sources like us.”

Bellikka describes two prongs of Alberta’s response to the attacks on bitumen development. “We have developed a campaign aimed at Albertans themselves, many of whom have worked in the energy industry and we want them to (help us) tell it like it is.” That’s the newspaper advertising campaign.

In addition, he says, “Where there is an outright misrepresentation, we attack it directly. When they say the oil sands are destroying an area the size of England, we say ‘No, (the amount of land being directly affected is) smaller than London. In fact, it’s 0.016% of the boreal forest in Alberta.’ It’s true that oil sands production is the fastest-growing source of CO2 in Canada, but the air around oil sands plants is much cleaner than, for example, the air in Ontario’s Golden Horseshoe.”

For its part, the industry sounds like it’s ready to stop playing defence. The industry is the other. According to CAPP vice president of communications Janet Annesley, “We have spent a long time being framed as villains by environmental organizations, and we have been trying to prove them wrong. That was not an effective approach. We have to show Canadians our business. We have to show them the kinds of people who work in our companies and the solutions we find to problems in a difficult business. We need to exit the discussion about who is right and focus on doing good work.”

Harris/Decima’s Anderson agrees. “Most customers and consumers these days – at least in in the world I live in – understand that energy has some environmental impact somewhere. For them, the only wrong answers about the environment are intransigence and indifference on the matter of environmental impact. You need to show them how you are mitigating the problems.”

Annesley describes the off-oil NGOs as being driven by an agenda, but says she doesn’t fully understand what that agenda is. “They really seem to think that Big Oil is the only thing standing between society and a renewable energy future. That doesn’t make any sense, but they do seem to believe it.”

She continues, “We fundamentally beg to differ. The solutions are not available today. We know that energy demand is increasing, that energy resources are declining and that much of the conventional energy available is in countries that are very difficult to do business with. We know that energy supplies must diversify. We know that energy development is under greater scrutiny than ever before. And we know that the industry has to meet the planet’s growing energy needs in ways that are increasingly environmentally accountable. That is the rock and the hard place in which we sit.”

Given its precarious position, Roger Gibbins, the president and CEO of the Canada West Foundation, thinks a little humility would serve the industry well. “The oil sands proponents will to some degree always be on the defensive on the environmental front,” he says. “The oil sands industry has a lot of negative images to deal with. The industry has to acknowledge that its work has had an adverse environmental impact in the past, and begin there. I think that if the industry is a bit repentant, and admits it hasn’t done the best job in the past, it will be in a better place to win people’s minds and hearts. Just arguing with environmentalists doesn’t have that effect.”

That’s a message that seems to be finding an audience. In September, Marcel Coutu, the CEO of Canadian oil Sands and the chairman of the board at Syncrude, reached out to the grandfather of Canada’s environmental movement, David Suzuki, and asked him to broker a truce between the two sides. “Instead of having this polarized discussion about (non-governmental organizations) thinking we’re this, and industry thinking we’re that,” Coutu told the Edmonton Journal, “why don’t we get together and find out what the common ground is, and agree to what is best practice and go forward that way, instead of wasting so many resources on both sides, with the media in the middle trying to communicate messages?”

Suzuki scoffed at the offer, though, declining the invitation to play go-between. Which side will take the next step remains to be seen.

Perception, Reality and Transparency

Image via Wikipedia

Industry is working to improve its communications, but more importantly its actual performance

This article appears in the October issue of Oilsands Review

by Peter McKenzie-Brown and Deborah Jaremko

The oilsands industry is under near-constant attack from environmental groups and other non-governmental organizations (NGOs) bent on putting an end to “the most destructive energy project on earth.” The phrase “stop the tar sands,” and the moniker “dirty oil” are well known, and not taken lightly. The Alberta government and various industry organizations are taking on the challenge of battling negative perception with the facts about existing development, but also with something even more powerful — commitment to do better, and to prove it.

The “Big Lie” and the Age of the Internet
As Adolf Hitler was dictating his book Mein Kampf in 1925, he coined the term “the Big Lie.” A propaganda technique, the Big Lie refers to a falsehood so “colossal” that no one would believe that someone “could have the impudence to distort the truth so infamously.” Hitler used the technique to good effect through his years of tyranny. However, in established democracies things are different. Government, media, academia and business are all held to account, and among those organizations anything like the use of the Big Lie encounters widespread derision.

“Government tends to be constrained by fact,” says Alberta government spokesman Jerry Bellikka, with withering irony. “We are held to account for what we say. If we were to knowingly put out misinformation, academics, environmentalists, opposition politicians, the public and traditional media would hold us to account. When the premier is talking about emission reductions in the oilsands, if he does not say ‘per barrel,’ he is called on it right away.”

But in emergent web-based media, accountability is self-imposed. Most of the influential NGOs use reasoned arguments and collaborate with government and industry as they advocate for their causes; the Pembina Institute comes to mind. However, some major environmental groups use those media without much regard for facts. Therein we may find the 21st Century version of the Big Lie.

“[Some] people are making pretty outrageous claims,” says Bellikka. “What they want is a reaction. It’s one thing to have a discussion based on fact and current data. It’s another thing to put out inflammatory material, not much of which is accurate...it’s to get a reaction and that’s what these campaigns are designed to do. They are based on emotions, on wild accusations. Yet these same groups call governments the propaganda machines.”

The message presented by anti-oilsands groups in various forms — from feature-length documentaries and short YouTube videos to online games and protest actions — is one of environmental and social degradation that has been called as much as “Armageddon.”

“We want to lift the lid on the horrors of oil exploration taking place in a country that has a reputation for being the cleanest in the world,” says Michael Marx, executive director of Corporate Ethics International, the group behind the recent ReThink Alberta campaign. The initiative, spread through the web and via billboards in four U.S. cities as well as London, England, encourages potential tourists to Alberta to reconsider their travel investment until the tar sands industry is no more. “Tar sands mining in Alberta has not only caused irreparable damage to the environment but the health of local communities which have seen a dramatic rise in rare cancers linked to the same compounds found in tar sands operations.”

The dramatic proliferation in the number of groups like Corporate Ethics International, and the growth in public and private grants and contracts flowing to them, have enabled NGOs to become powerful political forces. In a sense, they are now filling a credibility vacuum that has been developing for 20 years. Poll after poll has shown declining confidence in such institutions as government, business and traditional media. This has created great demand for independent information and analysis, which NGOs can easily deliver through web-based communications.

“They do not work with small budgets. They are often well-funded,” notes Bellikka. “[Some NGOs] have told us that when they do one of their campaigns they get lots of donations. Whether [that is] accurate or not, we don’t know; they don’t give us access to that sort of information directly. But, what we do know is that these are very well-funded campaigns. Greenpeace is an excellent example.” Last year Greenpeace had total worldwide income of about €200 million ($272 million), and directed about €28 million ($38 million) of that to off-oil climate and energy campaigns.

From Defence to Proactive Discussion and Education
Although often characterized by highly exaggerated and even inaccurate claims, it is more than big budgets and social media wizardry that grants off-oilsands groups a position in public perception. The truth is that the concerns are not entirely unfounded — oilsands development undeniably does negatively impact the environment. It is communicating the actual extent of this impact that has been the challenging burden of industry and government, but now that mission is being taken a step further.

“We have spent a long time being framed as villains by environmental organizations, and we have been trying to prove them wrong. That was not an effective approach,” says Janet Annesley, vice-president of communications for the Canadian Association of Petroleum Producers (CAPP). “We have to show Canadians our business. We have to show them the kinds of people who work in our companies and the solutions we find to problems in a difficult business. We need to exit the discussion about who is right and focus on doing good work.”

She says that according to CAPP polls, 74 per cent of Canadians say that the industry should be developing the oilsands. “Our strategy should be to say, ‘Yes, Mr. and Mrs. Canadian. You are right. And that is exactly what the industry is doing today.’ The advertising campaign we launched last June is simply following that plan.”

Annesley describes the off-oil NGOs as being driven by an agenda, but shares some consternation about what that agenda is. “They really seem to think that Big Oil is the only thing standing between society and a renewable energy future. That doesn’t make any sense, but they do seem to believe it.”

She continues, “We fundamentally beg to differ. The solutions are not available today. We know that energy demand is increasing, that energy resources are declining and that much of the conventional energy available is in countries that are very difficult to do business with. We know that energy supplies must diversify. We know that energy development is under greater scrutiny than ever before. And we know that the industry has to meet the planet’s growing energy needs in ways that are increasingly environmentally accountable. That is the rock and the hard place in which we sit.”

The industry is widely understood to offer economic benefits to Canadians, she says, and “we are widely understood to be reliable suppliers of energy. However, we are not widely understood to be providing environmental solutions. That’s where we need to focus. We need to be talking about the issues of economic benefits; energy security and environmental care in a balanced way, but that conversation shouldn’t begin with someone dangling from the top of the Calgary Tower [a recent Greenpeace action].”

Roger Gibbins, president and chief executive officer of the Canada West Foundation, sums up the problem nicely. “The oilsands proponents will to some degree always be on the defensive on the environmental front,” he says. “The oilsands industry has a lot of negative images to deal with. The industry has to acknowledge that its work has had an adverse environmental impact in the past, and begin there. I think that if the industry is a bit repentant, and admits it hasn’t done the best job in the past, it will be in a better place to win people’s minds and hearts. Just arguing with environmentalists doesn’t have that effect.”

CAPP’s Responsible Canadian Energy program
In announcing the winners of its Steward of Excellence awards this spring, CAPP launched a new program dubbed Responsible Canadian Energy, which is designed to be a platform from which the industry, unified, can demonstrate and communicate its commitment to responsible resource development.

“The way the world sees us is defined by our performance. The linkages between stewardship and the reputation of the energy sector have never been clearer,” says CAPP president David Collyer. “This is not at all about communicating our way out of a problem. It never has been and it won’t be in the future. We certainly need to focus on communications to improve awareness and understanding, but it is essential that this be underpinned by ongoing improvement. In a world that is always moving and changing, we can’t stand still. We have to do better, and we will.”

Collyer continues that, “For some, the oilsands is the economic saviour of a recession-weary country. For others, oilsands development symbolizes a world that has grown far too dependent on fossil fuels. In reality, the oilsands is neither. The truth, as they say, is somewhere in between. CAPP and its members fully recognize that the reputation of this increasingly important industry is determined by two things: performance and communication. We also know that both must be delivered consistently and authentically over time.”
CAPP says a performance report based on the Responsible Canadian Energy initiative will be issued this fall, with 2010 serving as the baseline year as producers “refine and advance” the program. The report will include data on environmental and social performance, and will be followed by a white paper in December 2010 based on an energy dialogue series in Canada and the United States.

The Oil Sands Leadership Initiative
One of the worst-kept secrets in the oilsands industry is under wraps no longer — that is, the Oil Sands Leadership Initiative (OSLI), a consortium of five major players with a self-described “laser focus” on improvements in environmental performance.

With a $10-million budget for 2010 (expected to double or triple in the coming years), Suncor, ConocoPhillips, Nexen, Statoil and Total have a mind to change the bitumen game.

Gordon Lambert, Suncor’s vice-president of sustainability, explains that OSLI has been up and running for about a year and a half, with 2010 as its first official operational year. He says that the group’s genesis was a recognition of the need to accelerate the pace of environmental performance measurement and improvement, while understanding that in order for continued success in this particular space, the needs of the whole outweigh the needs of each individual company.

“We compete in some areas of the business. We don’t compete in reducing our environmental footprint,” says Lambert. “We felt we could make more progress by working collectively than by working individually. The more ideas you get on the table, the better the chance of success.”

The OSLI charter outlines working groups designed to address water management, carbon management and energy efficiency, land stewardship, sustainable communities, technology breakthroughs and other focus areas as agreed on by its steering committee.

One of the first initiatives that OSLI is working on is a $2.5-million feasibility study into a potential new water distribution plan for the Athabasca oilsands region. Dubbed the Regional Water Solutions Study, Lambert says the idea is to work out whether it is environmentally and economically viable for oilsands producers in the area to reuse water left in mining tailings as steam generation source water for local in situ projects. The notion is not as “blue-sky” as it may sound — Suncor itself already uses its tailings water from mining operations to supply its Firebag steam assisted gravity drainage project. However, Lambert says applying it on a regional scale would require a broad consensus — the subject of the feasibility study.

Another key OSLI initiative is OSTECH, a “technology identification structure based on a web portal.” The group says that through this portal, inventors, entrepreneurs and the general public will be able to submit projects and ideas that can be further developed within OSLI. Lambert says it will be a one-window system for the member companies to share in evaluation of the new technology ideas that are presented to them, reducing duplication of due-diligence efforts.

“Innovation and the oilsands go hand in hand. It has always been that way,” he says. “New ideas are coming forward all the time.”

A key part of OSLI’s mandate is transparency around advancing its performance improvement efforts, which is one of the reasons it did not publicly herald its initial creation.

“We’ve been cautious of waiting to communicate on results and action versus intent,” says Lambert. “In 2011, you will see us stepping out more visibly.”