Baghdad Burns, Calgary Booms
By Naomi Klein // The Nation
http://www.thenation.com/doc/20070618/klein
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.
