Published by Senator Grant Mitchell on 03 November 2009
Years ago, when I was in the Alberta Legislature, I was given a tour of the Syncrude Oil Sands operations. It was impressive in many ways. Its magnitude even then was overwhelming. There was a true spirit amongst the people working there that they were part of a great pioneering adventure and something special.
I remember asking about the cost of production versus the price of oil. I was told that a barrel of Oil Sands oil was costing about $15 to produce, excluding capital costs. At the time the price of a barrel of oil was about $10. The company was losing about $5.00 a barrel and that did not include the cost of the plant and equipment. Total losses per barrel were probably in the order of $15 per barrel. But we did not hear anything about giving up because it made no economic sense to continue. No, there was a profound resolve to work at improvements until the oil sands became economically viable. And today, the oil sands are indeed very economically viable.
Great leadership is like that. It attacks the seemingly impossible and finds a way.
Yet, over and over we hear that it is too expensive to deal with the GHG emissions of the oil sands; that it will reduce competitiveness with other oil producers. Current estimates place the cost of capture and storage of one tonne of carbon from an oil sands plant at $30 to $40. That is not insignificant. We have to be ever vigilant of the industry’s competitiveness and of not singling out Alberta for unfair energy treatment. But this cost need not be insurmountable either. Government has to collaborate with the oil sands industry and provide leadership to ensure fairness. I am convinced that with the right protections and leadership, just as they have worked the production costs of oil sands oil into a competitive framework, the industry will find ways to dramatically reduce the price of capturing and storing a ton of carbon. Or they will find ways to avoid a good portion of their carbon emissions altogether.
There is a history of great resistance to environmental action argued on the basis of cost, only to find that when action is undertaken, costs and time required are dramatically less than anticipated. It will be the case for us if we could only get started. And, in this case, if we are the first off the mark, we will have something to sell the rest of the countries of the world when they catch up to our insight and leadership.
Oh, for some insight and leadership.