Front Burner - An enormous open-pit mine and the future of the Alberta oilsands

Episode Date: January 29, 2020

Right now, there’s a proposal for a massive oilsands project awaiting approval from Justin Trudeau’s cabinet. The Teck Frontier mine is thought to be one of the largest oilsands mines ever proposed in Alberta. It’s projected to bring in billions of dollars of federal and province taxes. It’s also expected to have significant environmental impacts: from the destruction of old-growth forest, to an increase in carbon emissions. Cabinet has until next month to make a decision on whether or not to give it the greenlight. What happens next could act as a litmus test for the future of the Alberta oilsands. Today on Front Burner, Sharon Riley, Alberta energy and environment reporter with The Narwhal, explains the Teck Frontier oilsands mine.

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hello, I'm Jamie Poisson. So earlier this week, Alberta Premier Jason Kenney sent a message to the Prime Minister. It was basically this. If you say no to the tech frontier mine, you're saying no to the future of the Alberta oil sands. I've been very clear to the

Prime Minister. If they say no, then they are signaling his earlier statement that he wants to phase out the oil sands. If you haven't heard of this project, you should know it's a big one. Thought to be one of the biggest open pit oil sands mines ever proposed in the province. It's projected to bring in billions of dollars in federal and provincial taxes. And as you might have guessed, it's also expected to have significant negative environmental impacts. Trudeau's cabinet has until next month to make a decision on whether or not to give it the official green light. And like Premier Kenney implied, what happens next could be a litmus test for the future of the Alberta oil sands themselves.

Today, I'm speaking with Sharon Riley, Alberta energy and environment reporter with the Narwhal, about the fateful tech frontier oil sands mine. This is Frontburner. Hi, Sharon. Hi, Sharon. Hi, Jamie. First of all, I know this project is a big one, but how big? Put this into perspective for me. Yeah, you're right. This is a big project and it has a long lifespan. So this is a project, just to give you some context, it'll be in northern Alberta, just outside of Wood Buffalo National Park. And it's a proposed major investment in Alberta's oil sands. And just before we talk about the mine itself, I think it's important to

talk about the oil sands and what a substantial part of Canada's oil production they represent. So the oil sands accounted for over 60% of Canada's oil production in 2018. That's a lot, that's according to National Resources Canada. So in the oil sands, there are already seven open pit mining projects in Alberta. Those would be the more famous names you may have heard of, like Syncrude and Suncor. Frontier's tech project wants to be the next. And it'll be, as you said, one of the largest, if not the largest oil sands open pit mines ever proposed in Alberta. Right. And how long is it projected to operate for? The proposal says that they'll have their first oil producing in 2026. It'll operate for 40 years and it'll take about another 20 years for them to clean it up. So this is a mine that we're

looking at. We'll cover most of the century. Long term. And we say this mine is big. So, you know, I think it's supposed to be like double the size of Vancouver. Is that fair? Yes. It's about 29,000 hectares. That'll be its footprint. And that to be double the size of Vancouver. Is that fair? Yes, it's about 29,000 hectares. That will be its footprint. And that is about double the size of the city of Vancouver. And it would produce about 260,000 barrels of bitumen every day at its peak. Okay. So the future of this project is, as I mentioned at the top of the show, in the hands of the federal government as we speak. as I mentioned at the top of the show, in the hands of the federal government as we speak. And it got there with the recommendation of a joint panel of federal and provincial regulators who found this project was in the public interest,

though they conceded that there would be significant adverse effects. And I want to get to those adverse effects with you in a moment. But first, why did they find this project in the public interest? What's the benefit here? I mean, to put it simply, the benefit is money. The panel took tax projections of how much money this project will bring in in the long term. It's over around $70 billion in economic benefits in terms of royalties and taxes to the various levels of government. They also are talking a lot about job creation. So the mine would, according to the company, create 7,000 jobs during construction, require another 2,500 workers during operation. And they have more estimates, you know, lots of billions of dollars in figures where they say that this will contribute $2.1 billion to Alberta's annual GDP. It'll increase household income by another $2 billion. It's just expected to have a lot of huge economic impacts if it goes ahead.

I know this is something Alberta Premier Jason Kenney has been touting. He's a big supporter of this project, right? Last month, when Alberta's Premier sat down with the Prime Minister in Ottawa, the proposed Tech Frontier Oil Sands megaproject was among the first topics discussed. That would create 10,000 jobs, $70 billion in revenue for governments to pay for health care and education. Okay, so let's go back then to those significant adverse effects the regulatory panel mentioned. What are the sort of immediate effects the building of this mine would have on the environment in this part of Alberta? Great, so as I mentioned, it's about 29,000 hectares.

That would be its footprint. As you can imagine, that is currently mostly a forested area. So that would all need to be removed for it to be an open pit mine. So the panel found that close to 3,000 hectares of old-growth forests would be removed for the mine to be built. They also said that wetlands cover about 45% of the area they looked at that would be drained and removed. And then importantly, they also looked at peatland, which is seen as an important carbon sink. And they found 3,000 hectares of peatland would be destroyed by the

mine's construction. And the panel found that would be an irreversible loss. So that's not something you can put back after you're done producing the mine. And define carbon sink for me. Right. So peatland is just an important place where carbon is stored. So when you remove peatland, you release a lot of carbon dioxide into the atmosphere. Okay. And you mentioned that this would be a forested area. Would this affect wildlife as well? I would imagine that it would. For sure. Yeah. There are a couple of free-roaming, disease-free herds of wood bison in the area. I imagine that's why Wood Buffalo National Park has its name.

The Athabasca Chippewan First Nation is concerned about the Ronald Lake Bison herd. The herd is listed as threatened. This is the only place that hasn't been touched yet. You mean to tell me they're that greedy for goddamn power of money to go and damage the environment? They're also caribou, which are in the news a lot lately for being at risk. And then a number of other species, migratory birds, bats, lynx, all sorts of species that would be affected, according to the panel. Fourteen Cree, Dene, and Métis groups have signed participation agreements with tech resources.

Joining us is Ron Quintel, president of the Fort Mackay Métis. The fact that the environmental aspect of things is the number one priority, I think ultimately slingshotting this thing forward by way of the community endorsing it. At least one chief admits signing the deal wasn't easy. All the other First Nations are signing on with tech. Where does it leave us? I would have loved to fight, but there has to be a time when you have to draw the line. to draw the line. When we talk about the clearing of this wildlife,

what does the company say about what they would do after the lifespan of the mine is spent? How will they recover, if at all, what was lost? Alberta has regulations in place for what reclamation or the cleanup of oil sands mines of this scale should look like. One thing to note, just as an aside, is that Alberta's oil sands in the last 50 years have only received what we call reclamation certificates for about 1% of the total land that was disturbed. The industry will say that they've made efforts for about 6%, but just haven't received the final regulatory certification yet for that land.

So what reclamation looks like can vary from project to project, but the company should be replanting trees and trying to restore wetlands as best they can and making it habitat that is habitable for species like wood bison and caribou and lynx and those that were there before. As you can imagine, it's a very difficult process. You can't put back an old growth forest to the way that it was. It's a long process. I would imagine hundreds of years. Tech for its part says that it's given about 20 million dollars for indigenous groups to conduct their own research into this mine. They will also be supporting the groups as they call on the Canadian government

to create a buffer zone around Wood Buffalo National Park. So we have these immediate adverse effects and then of course there's this big question over any sort of oil and gas project which is carbon emissions and climate change. So sort of the big picture. And I know that the company behind this tech says their project represents best in class for greenhouse gas emissions from oil sands developments. But let's talk about the effect this project will have on Canada's ability to meet its climate targets, should it all go forward, right? Because you can't have one of these mines without emissions. Right. And the first thing I would address in that is that the idea that the project

is best in class has been disputed by a number of environmental groups and also by Environment and Climate Change Canada itself and its submission to the panel. So the project is, depending on who you ask, going to be responsible for about four megatons of carbon dioxide emissions per year, maybe up to six, depending on how you calculate it. And to put that into context, you have to go back a bit and look at Canada's international commitments that we made in Paris at the climate conference in 2015. So when you kind of do the math on that, you find that the entire country in 2050 can be emitting 150 megatons of emissions. So that means the frontier mine, just one oil

sands mine in one province would be, you know, three or four percent of the total carbon budget of the country. Wow, just this one mine could be three or 4% of total carbon emissions. Right. In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Given this description, what you've described,

how important this is to Alberta's government, but then the potential environmental impact, I imagine that this is putting the Trudeau but then the potential environmental impact. I imagine that this is putting the Trudeau government in quite a bind here. After all, he wants to present himself as this environmental champion. His government has even pledged to bring Canada to net zero emissions by 2050. We created an approvals process that is much more rigorous. We are going through that process right now, and that process will result in a decision, but I'm not going to prejudge what that decision might be.

And a timeline for that? Is this not clear? Not entirely clear, but they're working on it within the respected timelines. Right. It's definitely a political bind for the Trudeau government. It's probably not at the greatest time for them politically either when we have seen this setup of a lot of conversations around Western alienation

and Alberta feeling as though Canada is against the Alberta oil industry. But I think even before we talk about that, it's important to take a step back and question whether or not this mine would ever actually be built, even if it did get approval. Right.

This is another complicating factor, but it seems incredibly significant to me, what you're about to talk about. Yeah. So the company itself, Tech, which is putting forward this proposal in their own annual reports, this is something we've seen by shareholders and the general public, released this past February, says that there is uncertainty whether it'll ever be commercially viable to produce any portion of the resources in the frontier mine, even if they do get approval. And the reason they're saying that is because we don't know what oil prices will be in the future.

They've obviously looked at this. They've made a lot of projections, looked at international agencies and different projections for oil prices in the future. But they're using prices in their economic analysis of this project that are quite high. So in one example, in some documents they submitted in 2016, they specifically said what they thought the oil price would be by 2020. So here we are now. It's 2020. They projected that the oil price would be $80 or $90 per barrel. That's U.S. That's West Texas Intermediate.

So we can go and look and see what it is right now. And it's not. It's not. U.S. benchmark West Texas Intermediate down another 2%. The cause, of course, is the spread over the weekend of the coronavirus. Well, it's 52-78. I'll get it on the screen now. So there is a scenario here in which this mine is approved by the federal government, but then it doesn't get built after all because it's just not all that financially viable.

Producing oil from Alberta's oil sands is expensive. So you need a certain break-even price in order to make it even worth it to start putting shovels in the ground to build the mine. You know, I'm interested in getting your perspective here. I feel like we spend a lot of time talking about the politics around this, you know, talking about this government in particular and how they're trying to walk this line between these two opposing things, right? Climate change and the oil and energy industry in Alberta.

Do you ever think we spend so much time talking about the politics of this all and not enough time talking about this side of things, about the fact that this is also dictated by the market? Yeah, there's uncertainty even within the oil industry whether this type of project is something that's going to be profitable in the future. So a lot of Canadians might not have noticed it in the news, but last year, or 2018, which I guess is two years ago now, there was a new oil sands mine that did open in Alberta. It's called the Fort Hills Mine.

The Honourable Amarjeet Sohi, Minister of Natural Resources. With the opening of this facility, Fort Hills points to the brighter future, this facility, Fort Hills points to the brighter future with more middle-class jobs and more economic growth, all while advancing environmental sustainability. And when that mine was announced and when they had their grand opening, there were a lot of different headlines at the time. Is this the last great oil sands project or is this the kickoff to another big oil sands boom? And we heard even from the Suncor chief executive at the time, he was speculating to reporters. It's unlikely that there will be projects of this type of scale again. What do you think all of this says for the future of the oil sands?

as for the future of the oil sands? Yeah, I mean, it's a tricky political conundrum that the Trudeau government is in right now. Like I said, they have to first decide whether or not they think this decision is a purely symbolic one. So are they just deciding whether to symbolically let this mine go ahead or not, even though they think it never will,

based on economic conditions. But then they also have to decide what sort of a statement are they sending to Canadians, to Albertans, and to the world. On one hand, we have this question of Canadian unity and a lot of skepticism in Alberta that the Trudeau government is really fighting for Alberta's oil industry and Albertan workers. But we also have a major climate question here. Trudeau has already been criticized for being too much talk

and not enough walk when it comes to tackling the climate crisis. So for a lot of people, if he was to greenlight this proposal, it's just more evidence of his lack of commitment to a major issue from the last election and around the world. Gathered outside the Tech Resources Calgary office, it was two groups squaring off. The short-term advantages of the jobs and the income that this mine will offer will be far outweighed by the climate devastation that the whole world will experience. I'm out here today to support Canada Energy and support Canada Oil and Gas,

to support the two and a half million people who work in the resource sector. Right, and I find it very fascinating that this could be a purely symbolic decision. And it feels sort of lose-lose. Alberta, if they don't greenlight it, and they will disappoint environmentalists and people who care about the climate change question if they do greenlight it. Yeah, and if he were to greenlight the project, and I'm thinking about this from a context of Jason Kenney and the Alberta oil industry, Trudeau could attract less anger from the oil patch by

giving the project the green light. But I don't think that he's exactly going to be celebrated all of a sudden. If we look back, he did buy the Trans Mountain Pipeline, and that hasn't exactly earned him a lot of new fans among Jason Kenney's base in Alberta. On the streets of Calgary, with construction of the Trans Mountain Pipeline now underway, focus has shifted to a new oil and gas project. So he is in this sort of very, very tricky, as you said, lose-lose possibly situation. Right. Putting aside all the political stickiness here, what does it say to you about the future of the oil sands if the project is approved but then not built because of the market?

Right. And I mean mean I think it's important to distinguish between the different types of oil sands extraction so that's only about half of oil sands production right now are these big open pits we also have in-situ production and there have been a lot of approvals in recent years for projects in the in-situ realm so when we look at sort of the cumulative effects of if all the projects that have already been approved were built, we see sort of an astronomical growth in the total emissions of the oil sands. And Alberta is supposed to be, according to a legislation that was passed under the NDP government, limiting the total emissions of

the oil sands to 100 megatons. When you think of that number, if you recall what we're supposed to be producing by 2050 in Canada, it's a limit of 150 megatons across the whole country. It's a pretty substantial impact that we have to consider. Right, coming from just one area. What does all of this say to you about Alberta's resource sector more broadly, not just the oil sands? Yeah. I mean, I think for a lot of Albertans, there's been a lot of, I don't want to say hurt and anger, but I'm going to say hurt and anger in recent years over a perception that Alberta's oil industry is no longer supported across the country. And we see as a result of that in a lot of places, rather than a push to

move forward with an energy transition and an attempt to jump on the bandwagon of steering away from oil and gas extraction, we see a bit of a pushback or a digging in our heels. Right, a doubling down on the resource sector, would you say? Yeah, I would say that. So it's difficult to say what will happen in coming years. We have a premier right now who is also doubling down on the oil and gas industry in the province. So a lot of people who have had those feelings for a while are feeling really validated. But, you know, the market does talk in Alberta.

And if we do see a greater push for other forms of energy to be produced or if we see that oil prices do decline to the point that it's just no longer profitable or worth it to continue extracting from the oil sands, it's possible that we might see a big transition in Alberta. Okay. Well, Sharon Riley, thank you so much for being with me today. Thank you, Jamie. All right. So before we go today, just one more thing. We've talked on the show before about the conservative leadership race, who might be running and how they might differentiate themselves from the outgoing leader, Andrew Scheer. Well, on Tuesday, conservative leadership candidate Peter McKay put out a statement saying that he wants to march in Toronto's Pride Parade, adding,

Mr. Scheer had been criticized by some in his own ranks for avoiding Pride marches. Aaron O'Toole, another leadership hopeful, also put out a statement yesterday saying he'd march in Pride parades too, but will skip Toronto's until they change their policy on allowing uniformed police officers to participate. That's all for today. I'm Jamie Poisson. Thanks so much for listening to FrontBurner and talk to you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.