Baghdad
Burns, Calgary Booms
By Naomi Klein
03 June,2007
The Nation
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.
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