Estimates from Alberta’s Energy Resources Conservation Board show the percentage of oilsands bitumen upgraded here will plummet to 52 per cent by 2016, dramatically lower than the 72 per cent target Stelmach pledged the province would achieve by that same year.
“Shipping raw bitumen is like scraping off the topsoil, selling it and then passing the farm on to the next generation,” Stelmach said in 2006 when he was running for leadership of the Conservative party. “What value does it have?”
The ERCB projections were completed in December 2010 and released to the Alberta Federation of Labour in April.
The figures show bitumen production will nearly double by 2019, growing to 506,000 cubic metres a day from about 265,000 in 2010. Upgrading capacity will also double, growing to 256,000 cubic metres a day from 154,000 in 2010.
However, because the upgrading capacity will not keep pace with extraction, the percentage of bitumen shipped out of country for processing will grow dramatically, bottoming out at 50 per cent in 2018.
“The figures show clearly this provincial government has made one of the biggest about-faces on public policy in Alberta history,” Alberta Federation of Labour president Gil McGowan said Monday. He released the figures while energy ministers from across the country met in Kananaskis to discuss a new national energy policy.
“Instead of promoting Alberta-based upgrading and focusing on value-added job creation, (Stelmach) and his ministers have spent the past two years supporting massive bitumen exporting projects,” McGowan said, highlighting the proposed $13-million Keystone pipeline to the United States and the $5.5-billion Northern Gateway pipeline to Kitimat, B.C., which will ship bitumen to China and India.
“Thousands of jobs that could be created here will be lost to places like the United States and China. From our perspective, this represents a betrayal of the public trust, plain and simple.”
McGowan suggested the province “attach some strings” to oilsands deals by demanding oil companies build upgraders alongside extraction facilities.
Stelmach spokesman Cam Hantiuk said the province wants the percentage of Alberta-upgraded bitumen to be higher, but said unprecedented oilsands development will bring jobs and strong growth to the province’s economy.
“We obviously wanted to upgrade as much bitumen in the province as we can, and that was one of Premier Stelmach’s commitments,” Hantiuk said, adding “the overall amount of bitumen upgraded at home is certainly lower than we would like it to be.
“What we’ve seen, though, is an unprecedented and almost unpredictable level of investment in oilsands development. As a consequence, while the percentage of upgrading has gone down, the value and the jobs created is the same or higher than we would have anticipated.”
Hantiuk rejected suggestions the government has changed course. “Our focus remains the same, it hasn’t changed at all. Our focus is on creating jobs for Albertans.”
Hantiuk said the high Canadian dollar has made it uneconomical for companies to build upgraders in Alberta and that attaching strings to extraction facilities is “a great way to kill investment in the province” — a sentiment echoed by industry observers.
“The bottom line is that despite the government’s best intentions . . . it just hasn’t been economically feasible” for companies to build upgraders in Alberta,” said Joseph Doucet, a professor of energy policy at the University of Alberta School of Business. “They don’t think they can make money upgrading bitumen in Alberta.”
He said this is partly because Mexico and Venezuela are sending less heavy crude to refineries on the Gulf Coast, opening up capacity at those facilities. Those established refineries can be retrofitted to upgrade Alberta crude for far less than it costs to build a new facility here, Doucet said.
The government could offer incentives or inducements so the private sector would build an upgrader in Alberta, he said. “The question then becomes what are the jobs worth per worker?”
Travis Davies, Canadian Association of Petroleum Producers spokesman, said recent projections from the Canadian Energy Research Institute show the number of Alberta jobs related to oilsands development will grow to 905,000 by 2035, compared to 75,000 jobs in 2010.
“There is appreciable job growth in Canada,” he said. “How do you fill those jobs? Labour is going to be a challenge.”
A report released in May by the Alberta Competitiveness Council said the looming labour shortage is the Achilles heel of the provincial economy and industry should brace for a chronic scarcity of workers.
Origin
Source: Calgary Herald
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