Wildcat growth in oil patch begins to trouble Albertans
Review finds many want the pace slowed
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DAVID EBNER
CALGARY -- The oil sands boom that's brought billions of dollars to Alberta has also brought anxiety to a significant number of citizens, some of whom are questioning the rapid pace of development as the provincial government nears the end of a long oil sands review.
Roughly $100-billion is slated to be spent over the next decade in the oil sands, which could triple production. That has average Albertans worried. Of more than 100 submissions from regular people during the first phase of the review, almost all of them expressed concerns about the pace of development, the environment or other questions, with many calling on the government to slow things down.
In 2005, the Alberta government proposed a plan to promote oil sands mining over other priorities such as the environment in northeastern Alberta. That was met with opposition, so the government decided to organize a provincewide review. With the process nearing a conclusion, the review panel visits the northern town of Wabasca today. Tomorrow, it stops in Fort Chipewyan, located downstream from oil sands epicentre Fort McMurray.
Donald Kvill, a geology professor at Athabasca University, said in a submission to the review that he has followed the oil sands since the 1960s and is happy Alberta has such a large resource, but he warned, "The exponential growth is now becoming troublesome . . . [and] carries with it incredible environmental problems, many of which have not been worked out yet, and we do not need the additional revenue."
Another submission, from citizen Dave Kalbfleisch, said: "I was once impressed by the larger-than-life technical marvel that is oil sands mining. As an investor, I found the oil sands story to be very enticing. But when we look beyond the financial picture, oil sands development is a very sad story indeed. I'm not impressed by the giant trucks any more."
The concern is similar to that expressed in a poll conducted by Environics Research Group, whose results were published in late March. The surveys, which polled 1,001 Albertans in late February and early March, found that almost nine out of 10 citizens feel quality of life in the province is good or excellent but also showed that 51 per cent of people said they aren't better off because of the boom.
"Albertans are of two minds," said Tony Coulson of Environics. "If you ask them collectively, they say it [the boom] is great, but if you go down to the personal level, it's less positive, they point out the challenges, the growing pains."
Mr. Coulson said there is a particular divide between the rich and the rest, with 23 per cent of households with annual income of less than $60,000 saying their lives are worse because of the boom, compared with 11 per cent of households making more than $100,000 that felt the same way.
Despite the worries of some Albertans, the province's new Premier, Ed Stelmach, doesn't want to slow down oil sands growth.
"There's no such thing as touching the brake," Mr. Stelmach said after becoming Premier in December. "The economy, growth -- that will sort itself out. We just want to make sure that we're globally competitive."
The public portion of the oil sands review ends in Calgary on April 23-24. A final report is expected to be filed with the government at the end of June. In a preliminary 12-page report outlining general thoughts, the 17-member committee that did the work said the priority is "maximizing the commercial value of the oil sands" at the same time as maintaining an "orderly pace of development."
Oil sands has quickly become a cornerstone of Alberta's economy, which until now has mostly been underpinned by natural gas. Oil sands generated an estimated $2.5-billion in royalties for the fiscal year ended March 31, up from $950-million a year earlier, though still less than half the $5.6-billion natural gas pulled in for 2006-2007. Oil sands also produced $1.9-billion in sales of exploration rights in 2006.
The question of whether oil sands producers pay enough royalties is the subject of a separate review, which begins April 23.
For investors, the main worry is how various potential changes could hit oil sands companies, according to a March report by UBS Securities. The brokerage said the next year "will see a high level of volatility" as questions such as royalties and environmental issues are answered. UBS did note that oil sands stocks already seem to reflect the potential for such change.
