Points (5) through (8) are a continuation of the discussion that began in yesterday’s Blog entry. There are a range of challenges and threats facing Alberta’s Tar Sands projects.

(5) An environmental backlash: Bucket wheel excavating and huge tailing ponds of spent water and residual sulphur are scarring the landscape. The new SAGD (steam- assisted gravity drainage) technology does not impact the surface environment to the same degree. However, I recently read an oil executive’s comment that the new technology permits 90% of used water to be recycled. That’s fine, but what about the other 10%? These plants use an awful lot of potable water.

(6) A carbon tax: A carbon tax was just introduced in next-door British Columbia’s provincial budget. It is the first jurisdiction in North America to do so. The charge is proposed to be $15 per tonne of greenhouse gases. Alberta has already indicated that it may bring in a similar fee. However, others in the country are suggesting that the charge may have to be as high as $50 per tonne to bring about enough change for Canada to meet its Kyoto clean-air targets by 2020. At that level, the tax becomes considerably more prohibitive to new investment.

(7) A plunge in the price of oil: The rise in demand for automobiles in China alone makes a significant drop in the world price of oil unlikely over the longer term. Plus, there are ongoing geopolitical problems in many oil-producing nations. Furthermore, oil would probably have to drop below $60 U.S. per barrel (my own guess) to make much of an impact on Tar Sands investment.

(8) An alternative energy breakthrough: It is possible to imagine a new energy technology breaking away from the pack (e.g., diesel, solar, fuel-cell, biofuel, etc.) and reducing the world’s dependence on gasoline. Something may be percolating in the wings, but it’s not readily apparent as yet.

A means must be found to work through these eight issues in a co-operative and positive way. While it may not seem like it, there probably is only a limited window of opportunity for Canada to take advantage of the bonanza that has been offered up in the form of the “black-gold(en) goose” that is Alberta’s Tar Sands.

Alex Carrick

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