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Vol. 15, No. 30 Week of July 25, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Waging a war of words

Alberta, Canadian industry locked in combat with environmentalists over oil sands impact; Corporate Ethics backpedals on one claim

Gary Park

For Petroleum News

It’s turning into a battle for hearts and minds that has no parallel in the history of Canada’s petroleum industry and is overshadowed on a global scale only by BP’s tattered and bruised image.

The end prize is the future of developing and marketing production from the Alberta bitumen deposits, generating billions of dollars in government revenues and thousands of jobs.

Exploitation of the vast oil sands resource in the remote, muskeg regions of northern Alberta went commercial in 1969 and gathered momentum against only occasional grumbles from First Nations and environmentalists. But that turned into worldwide notoriety in the least likely manner two years ago.

The discovery of 1,600 dead ducks in a tailings pond at the Syncrude Canada plant and the subsequent court ruling in June that found the oil sands consortium guilty of two environmental charges has become a landmark judgment that has smeared the industry’s gains in lowering greenhouse gas emissions, reducing water consumption and restoring land scarred by open pit mining.

The final penalties to be imposed on Syncrude won’t be known for some time as the court wrangling continues, but the court’s option of imposing a maximum fine per duck could run to C$500 million.

Ponds could become illegal

More serious still is the prospect that all provincially licensed tailings ponds — an essential component of mining operations — could be made illegal, which a Syncrude spokeswoman warned carries “serious ramifications for Canada’s mining industry.”

The case has spawned an all-fronts attack on the oil sands business, with attempts by U.S. environmental groups and state governments to boycott imports of crude derived from the oil sands, forcing the Alberta government to mount a counterattack.

The latest assault comes from Corporate Ethics International, a San Francisco-based group that has set up billboards in Denver, Portland, Seattle and Minneapolis, labeling Alberta as one of the “world’s dirtiest destinations” for travelers, rating the “tar sands” as “much worse” than the Macondo spill in the Gulf of Mexico.

“There is another oil disaster going on in Alberta every day and as more Americans become aware of it we believe they’ll be less willing to support the province with their tourist dollars,” said Michael Marx, executive director of Corporate Ethics, in a news release.

A video posted on YouTube juxtaposed scenes from the Canadian Rockies with images of dead ducks at Syncrude and claimed that “3 million gallons of toxic water leaks from these (tailings) ponds into nearby water systems and rivers every day” destroying a boreal forest the size of Michigan.

CAPP: Distorted claims

A spokesman for the Canadian Association of Petroleum Producers, said the campaign distorts claims that the area being strip mined in Alberta is double that of the United Kingdom when the area is smaller than that of most U.S. cities.

He urged Americans to visit Alberta and see for themselves the industry’s cleanup efforts.

But, as fast as the industry and Alberta government try to keep pace with the crusade, Corporate Ethics is poised to start spreading its message in Europe, even though the group has admitted its ads contain inaccurate information.

In a rare public concession, Corporate Ethics said misinformation in its website video resulted from an “editing error” that claimed the oil sands were being mined in an area twice the size of England, instead of less than 1 percent.

A spokesman for Premier Ed Stelmach said the distortion was like removing one flawed card “and the whole house falls.”

Keystone XL fight

On another front, the government tried and failed to get an opinion page piece by Stelmach published in the Washington Post, so it forked over C$55,800 for a half-page ad in the newspaper, answering a pitch made by 50 U.S. congressmen to Secretary of State Hillary Clinton, urging her to halt progress on TransCanada’s US$12 billion Keystone XL pipeline expansion from Alberta through Montana, South Dakota and Nebraska to Cushing, Okla., with an extension to Houston and Port Arthur, Texas.

Critics of the Keystone project, including Texas ranchers, have raised concerns about groundwater contamination and the impact on air quality.

“We’re picking up Canada’s trash and dumping it in Texas,” said Matthew Tejada, a spokesman for the advocacy group Air Alliance Houston.

Stelmach’s ad opened with the comment: “A good neighbor lends you a cup of sugar. A great neighbor supplies you with 1.4 million barrels of oil per day.” It then makes the case for Alberta’s contributions to U.S. energy security and the economic benefits of Alberta oil to the U.S. economy.

The ad notes that “only in Alberta will you find mandatory GHG (greenhouse gas) reporting requirements, legislation requiring mandatory GHG reductions and a price on carbon emissions.”

Opposition to ad money

David Swann, leader of the opposition Liberal party in Alberta, said it was reasonable of Stelmach to defend the oil sands as a “secure and stable supply,” but opposed spending thousands of dollars when other means of conveying the message should have been available.

“The reality is our government has not set the environmental standards that we can be proud of and that the international community can respect,” he said.

If anything, the Stelmach government intends to broaden its campaign, with Stelmach accusing Corporate Ethics of attacking about 100,000 Albertans whose livelihoods depend on the tourism industry.

“It’s not fair, it’s inaccurate and this is something we are going to push hard against,” Stelmach said.

“We will look at all options,” he said. “The goal of (Corporate Ethics) is to add fuel to the fire and sometimes your reaction supports their campaign.”

Stelmach insisted that by law the industry is not allowed to discharge tailings into waterways, adding that the Athabasca River has been monitored for more than 30 years with no evidence of an impact on the river or any other surface water traceable to seepage from tailings ponds.

“There are only so many places that we can go to access hydrocarbons and one of them is Alberta,” Stelmach said. “We are developing those resources responsibly; we are showing leadership in carbon and water legislation and in water recycling.”

Energy Minister Ron Liepert said the Corporate Ethics campaign is just another in a series of misinformed efforts by special interest groups that unfairly target the oil sands.

“Most Americans want security of supply, they want their sources to be developed in a responsible way and as long as that’s happening they’re satisfied,” he said.

The push by some individuals and organizations to “rid the world of fossil fuel reliance … is simply not going to happen,” he said.

Stelmach spurns joint campaign

No matter how determined Stelmach is to retaliate, he has spurned an offer by opposition parties in Alberta to mount a joint campaign.

A spokesman said the government is “well under way in terms of expanding our campaign,” and saw no benefit in developing a united strategy with the Liberals, Wildrose Alliance and New Democratic Party, but expressed the hope that all parties would “stand firm” against Corporate Ethics.

The level of anxiety has extended to the Premier’s Council for Economic Strategy, consisting of former legislators, business leaders and academics drawn together by Stelmach.

David Emerson, a former federal trade and industry minister, said Alberta’s “reputation with key energy customers has been damaged in recent years and relationships with communities near oil sands developments (especially First Nations communities) are strained.”

The council suggested the public needs to see measureable gains in how energy is developed and is no longer prepared to hear just good intentions.

“It may take a dramatic gesture to convince a skeptical public to applaud Alberta as a natural resource steward,” Emerson said.

Jim Gray, an upstream pioneer, said the council is seeking advice from experts around the world on “steps we can take.”

Total E&P Canada President Jean-Michel Gires said organizations attacking the oil sands are dangerous to the energy sector, noting their pitch has captured the attention of decision makers in Washington, London and other key cities.

However, Gires in June accused Alberta regulators of taking too much time to approve new oil sands projects.

He said Alberta’s process is “sophisticated,” not “cowboy style,” but the delays are unreasonable, compared with his experience dealing with regulators in France before he entered the oil industry.

“Why do we need five years to get regulatory approval for a new mine (at the company’s Joslyn lease) when it is not really the first type of mine we are developing,” he said, while welcoming indications from the Alberta and Canadian governments that they are seeking ways to streamline the approvals.

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