February 2, 2007 - The implication being made by some is that Mark Holland telling Charles Adler about using the oil sands "responsibly...making sure that we can actually meet our international commitments to reduce greenhouse gas emissions" is somehow paramount to a 21st century version of the National Energy Program. This gentleman, for example, took this website to task for asking what was wrong with employing a strategy of sustainable resource mangement within Alberta:

"What the hell? The Liberals are going to tell the oil producing provinces that they can only get so many barrels a day? What? A liberal...from the West doesn't understand what that statement means? What it represents to Alberta and Saskatchewan?"

First, let's get some facts straight before chants of "NEP Part 2" inevitably begin.

It is a fact that Alberta itself is not maximizing its own profit potential from oil sand extraction. According to the Pembina Institute's new report entitled Thinking Like an Owner, despite "record oil prices, record oil sands production and record profits for oil companies, the royalty return to Albertans for each barrel of oil sands oil declined by 32% between 1996 and 2005." Albertans received $3.39 in royalties for each barrel of oil sands oil in 1996 and only $2.29 in 2005.

Why is this, one may ask?

Well, oil sands companies pay a 1% royalty rate to Alberta until projects are paid for and turning a profit. After that, companies pay only 25% on the "net" revenue - less than the royalty rates for conventional oil and gas projects in Alberta. Widespread and convenient cost overruns by these companies currently mean that royalty rates continue to remain at the 1% level.

In fact, the federal government's tax break allowing oil sands companies to write off 100% of their capital investments in the form of an accelerated capital cost allowance (ACCA) has cost Ottawa up to $1.65 billion.

Let's be clear...Alberta's flawed royalty scheme is financially hurting the province far more than what Mr. Holland is suggesting.

Secondly, the environmental impacts of the frenetic pace of extraction is most definitely taking it's toll on the country's greenhouse gas emissions.

More than 80% of oil sands reserves are too deep to mine, and must be extracted with so-called in situ (or in place) techniques. Deep oil sands cover a vast area of Alberta - approximately 138,000 km2, which is 50 times the area of the surface mineable oil sands zone. This equals 21% of Alberta, or a land area approximately the size of Florida. According to another Pembina Institute's report called Death by a Thousand Cuts: Impacts of In Situ Oil Sands On Alberta's Boreal Forest:

• Amount of this land that will be cleared for deep oil sands extraction: 8.3% or 2,960 km2
• Length of roads, pipelines and power lines: 9,472 km for already leased deep oil sands areas
• Amount of boreal forest cleared if all deep oil sands are developed:
11,454 km2
• Length of roads, pipelines and power lines if all deep oil sands leases are sold: 441,600 km, or 11 times the circumference of the Earth
• Amount of Alberta developed for oil sands if all oil sands deposits are leased: 21%

The clearing of forests to this magnitude impacts the province's natural abilities to offset emissions from the extraction process, which is hugely significant and will continue to be over the next two decades. Check out these statistics:

• Each day 600 million cubic feet of clean natural gas is used to produce oil sands - that's enough to heat more than three million Canadian homes
• Producing a barrel of oil from the oil sands produces three times more greenhouse gas emissions than a barrel of conventional oil government's ability to manage the environmental impacts
• Oil sands development is projected to contribute 41-47% of the projected business-as-usual growth in Canada's total annual emissions between 2003 and 2010.

Resources might be a constitutionally recognized provincial responsibility, but the environment still remains a federal one, meaning that those decrying the federal government's encroachment on the manner in which the oil sands are developed are only looking at half the story.

Holland didn't speak about a tax grab, nor did he mention anything about sharing the revenues more equitably. He did, however, talk about the cost to our GDP if we did not develop the resources in a sustainable manner. His concern was also directed towards our environmental footprint that will impact many generations to come.

Those that want to pump oil with reckless abandon are failing to see the bigger picture, and using politics to jump down the throat of a guy factoring balance and longevity into the equation.

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