Klein: ‘Baghdad Burns, Calgary Booms’
Someone emailed me this morning asking me why I hadn’t mentioned what is happening in northern Alberta right now with regards to the exploitation of the oil sands. I thought that, some time ago, I had linked an article by Naomi Klein penned for The Nation entitled Baghdad Burns, Calgary Booms, but perhaps my mind is playing tricks on me and I simply bookmarked it on my del.icio.us page. In any event, Klein’s piece is excellent, so I’ll let her do the talking…
“The invasion of Iraq has set off what could be the largest oil boom in history. All the signs are there: multinationals free to gobble up national firms at will, ship unlimited profits home, enjoy leisurely “tax holidays” and pay a laughable 1 percent in royalties to the government.
This isn’t the boom in Iraq sparked by the proposed new oil law–that will come later. This boom is already in full swing, and it is happening about as far away from the carnage in Baghdad as you can get, in the wilds of northern Alberta. For four years now, Alberta and Iraq have been connected to each other through a kind of invisible seesaw: As Baghdad burns, destabilizing the entire region and sending oil prices soaring, Calgary booms.
Here is how chaos in Iraq unleashed what the Financial Times recently called “north America’s biggest resources boom since the Klondike gold rush.” Albertans have always known that in the northern part of their province, there are vast deposits of bitumen–black, tarlike goo that is mixed with sand, clay, water and oil. There are approximately 2.5 trillion barrels of the stuff, the largest hydrocarbon deposits in the world.
It is possible to turn Alberta’s crud into crude, but it’s awfully hard. One method is to mine it in vast open pits: First forests are clear-cut, then topsoil scraped away. Next, huge machines dig out the black goop and load it into the largest dump trucks in the world (two stories high, a single wheel costs $100,000). The tar is diluted with water and solvents in giant vats, which spin it around until the oil rises to the top, while the massive tailings are dumped in ponds larger than the region’s natural lakes. Another method is to separate the oil where it is: Large drill-pipes push steam deep underground, which melts the tar, while another pipe sucks it out and transports it through several more stages of refining, much of it powered by natural gas.
Both techniques are costly: between $18 and $23 per barrel, just in expenses. Until quite recently, that made no economic sense. In the mid-1980s, oil sold for $20 a barrel; in 1998-99, it was down to $12 a barrel. The major international players had no intention of paying more to get the oil than they could sell it for, which is why, when global oil reserves were calculated, the tar sands weren’t even factored in. Everyone but a few heavily subsidized Canadian companies knew that the tar was staying put.
Then came the US invasion of Iraq. In March 2003, the price of oil reached $35 a barrel, raising the prospect of making a profit from the tar sands (the industry calls them “oil sands”). That year, the United States Energy Information Administration “discovered” oil in the tar sands. It announced that Alberta–previously thought to have only 5 billion barrels of oil–was actually sitting on at least 174 billion “economically recoverable” barrels. The next year, Canada overtook Saudi Arabia as the leading provider of foreign oil to the United States.
All this has meant that Iraq’s oil boom has not been delayed; it has been relocated. All the majors, save BP, have rushed to northern Alberta: ExxonMobil, Chevron and Total, which alone plans to spend $9-$14 billion. In April, Shell paid $8 billion to take full control of its Canadian subsidiary. The town of Fort McMurray, ground zero of the boom, has nowhere to house the tens of thousands of new workers, and one company has built its own airstrip so it can fly in the people it needs.
Seventy-five percent of the oil from the tar sands flows directly to the United States, prompting Brian Hall, an energy consultant with Colorado-based IHS, to call the tar sands “America’s energy security blanket.” There is a certain irony there: The United States invaded Iraq at least in part to secure access to its oil. Now, thanks partly to economic blowback from that disastrous decision, it has found the “security” it was looking for right next door.
It has become fashionable to predict that high oil prices will spark a free-market response to climate change, setting off an “explosion of innovation in alternatives,” as New York Times columnist Thomas Friedman wrote recently. Alberta puts the lie to that claim. High prices have indeed led to an R&D extravaganza, but it is squarely focused on figuring out how to get the dirtiest possible oil out of the hardest-to-reach places. Shell, for instance, is working on a “novel thermal recovery process”–embedding large electric heaters in the deposits and literally cooking the earth.
And that’s the Alberta tar sands for you: The industry already contributing to climate change more than any other is frantically turning up the heat. The process of refining bitumen emits three to four times the greenhouse gases produced by extracting oil from traditional wells, making the tar sands the largest single contributor to Canada’s growth in greenhouse gas emissions. Nonetheless, the industry plans to more than triple production by 2020, with no end in sight. If prices stay high, it will soon become profitable to extract an additional 141 billion barrels from the tar sand, which would place the largest oil reserves in the world in Alberta.
Developing the sands is devouring trees and wildlife–the Pembina Institute, the leading authority on the tar sands’ environmental impact, warns that boreal forests covering “an area as large as the State of Florida” risk being leveled. Now it turns out that the main river feeding the industry the massive quantities of water it needs is in jeopardy. Climate scientists say that dropping water levels are the result–fittingly enough–of climate warming.
Contemplating the collective madness in Alberta–a scene even the Financial Times has labeled “some dystopian fantasy”–it strikes me that Canada has ended up with more than Iraq’s displaced oil boom. We have its elusive weapons of mass destruction too. They are out near Fort McMurray, in the jet-black goo beneath the earth’s crust. And with the help of trucks, pipes, steam and gas, these weapons are being detonated.”
If it turns out that I have already posted this - for those of you that do email me about various things, please learn to use the search engine. It’s that little rounded box in the upper right hand corner of the website and it’s fairly easy to use.
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June 26th, 2007 at 12:09 pm
You did, in fact, post about this.
June 26th, 2007 at 1:10 pm
Yes, I remember reading this awhile back.
-Max
June 26th, 2007 at 1:39 pm
yes you mentioned it.
June 26th, 2007 at 2:12 pm
this article is vastly over exaggerated and biased, Alberta’s actions are not perfect, in fact much is of it is exploitative and without any restraint but this article fails to point out the fact that the industry is changing due to popular support for better conservation and less disparity. Linking Alberta to Iraq implies some damaging accusations and enforce my thinking that this article is more a vendetta than a letter of awareness. I don’t think the oil industry is doing enough to compensate what they damage but stretching the truth is not going to help anything.
June 26th, 2007 at 2:24 pm
Seems Shane beat me to the punch, but yes, you posted an article about this about two weeks ago. People really need to learn about that there search function.
June 26th, 2007 at 2:46 pm
Contemplating Alberta with my fellow Calgarians leads to a sole conclusion, and that is that it is poison and needs to be washed away.
June 26th, 2007 at 2:53 pm
Repeat or not, it is news to me and fascinating. I have great respect for Naomi Klein, and I don’t think mentioning the connection between Iraq, oil prices and Alberta is at all inappropriate. This is a good example how it is easy to overlook what is going on in one’s own backyard.
June 26th, 2007 at 3:58 pm
[quote comment="16998"]Contemplating Alberta with my fellow Calgarians leads to a sole conclusion, and that is that it is poison and needs to be washed away.[/quote]
Here’s one “fellow Calgarian” that disagrees.
The connection between Alberta’s oil boom and Iraq is tenuous, but it is still there. The boom in Alberta was already going on, but the fear and speculation in the market after Iraq was invaded caused prices to rise, and Alberta experienced an intensification of its oil boom, as techniques and systems which normally couldn’t pay themselves off were now capable of doing so.
The same, or similar things are happening in other parts of the world as well, and I think I may have commented on this before. The reason the boom is so big in Alberta is because we are right next door to the US, which is a goliath market for oil and gas. Couple that to the inherent Canadian market for oil and gas, and you’ve got yourself a market situation that’s so hot, it sizzles.
I’m currently working from the frontline in the boom, and it’s gotten so drastic now, that oil companies are seeking to tap reserves that are located right next to populated areas. Most of the oil pockets in this area are sour wells as well, so there is significant risk to public safety, but with the market in its current state, the threat to some human lives is justifiable in the face of the near-limitless profits that can be garnered from the sale of oil.
I’m seeing some real innovation in the fields of “green” production when it comes to oil and gas, but really, it’s just an economic free-for-all, and the provincial government is loathe to tamper with any kind of market or environmental controls. If old Ralph was still in, I’d be making a “Klein vs. Klein” quip, but that’s no longer the case, so I’ll refrain.
However, despite the madness, this province is still my home, and after the oil industry runs itself through on its own blade, there will (and by will, I mean should) be enough money in the system to do some kind of good.
Now, what kind of good that will be, remains to be seen. Alberta doesn’t exactly have the best reputation for helping their own.
June 26th, 2007 at 4:43 pm
“please use to learn the search engine”
Feeling tired today?
lol
June 26th, 2007 at 8:54 pm
With an $8.5B provincial budget surplus, it puts a whole new meaning to the phrase “making a killing”.
A thought that wakes me up at night in a cold sweat is that there are people here in Calgary hoping the war goes on forever, just so they can make their payments on that sweet new Ferrari they just bought (that they can only drive for 5 months out of 12).
Onward Christian soldiers….
June 26th, 2007 at 9:40 pm
This pretty much hit it on the head. There are a few exagerrations in there but all in all it’s pretty good. I have lived @ ‘ground zero of the boom’ for most of my life, 31 years to be exact. I am just now in the process of buying my soul back from big oil. Although I don’t drive a Hummer or go on a couple of all-inclusive vacations a year, the job I have held for the last 7 years has afforded my family and I the opportunity to move on to a modest, albiet more fulfiling life. It wasn’t my decision to move here, I was only 3 and the opinions weren’t too informed at that time but it is my decision to leave. I have watched this community change, at first for the good and more recently spin out of control.
The local govenment begs and pleads for them to slow the progress down and yet they approve project after project. It’s almost as though no one is listening. Fort McMurray has become like a big work camp with no sense of community or control of the speed and direction. Personally I think that the US has come to the conclusion that it more politically correct to invest in the oil sands then it is to fight the war in Iraq. Don’t know if we can stop it now, I’m just glad that I’m getting off the ride.
June 27th, 2007 at 11:39 am
[quote comment="17018"]that there are people here in Calgary hoping the war goes on forever, just so they can make their payments on that sweet new Ferrari they just bought (that they can only drive for 5 months out of 12).[/quote]Calgary’s hospitable season has already extended by at least a month since I was a kid. I remember back in the mid 80’s without question I would be trick or treating in a snowsuit, walking on ground cover (or hoar frost if there had been a recent chinook). Our winters have become much harsher, and a good deal less predictable, but they are certainly shorter. This is a good and bad thing. For the last two years we have met our annual precipitation expectations for winter/spring, but it has come in the form of destructive blizzards and floods.
It’s strange: Alberta stands to gain from global warming. Floods, Blizzards, and dustbowl conditions on the east/southeast parts of the province aside, our summers are getting longer, our weather all around feels more temperate (just throws an occasional temper tantrum), and huge tracts of land stand to become arable (read: profitable). It makes it hard to keep the worldwide problem at the front of your mind, and it’s hard to convince the people around you that it’s a big deal, when you’re standing in the one place in the world that stands to gain from both the cause and effect, even if the rest of the world will suffer, and big time.
June 28th, 2007 at 3:34 pm
calgary has changed a lot in the last few years, i can barely stand it here anymore. while the current market does leave me with a lot of job options, the overall attitude of the residents leaves a LOT to be desired. you wouldn’t believe the number of people here who think global warming not a problem accelerated by humans and is a scam for money, right now i’m debating with a couple of good friends and family members that global warming is in fact a problem that we are all a part of. I guess its easier to ignore a problem when you just call it fake and the money keeps rolling in