February 2010
There is a new business reality in the oilsands industry—a new era of more aggressive regulation with infractions that result in higher costs both financially and in corporate reputation. That’s according to Ron Kruhlak, an environmental and regulatory lawyer with McLennan Ross LLP, the company behind oilsandslaw.com. Summarizing environmental prosecutions in Alberta in the first nine months of 2009, he notes four cases with penalties totalling $1,481,000—up from a 2008 total of $12,000, and $582,000 the year before.
The perception of Fort McMurray, Alberta, over the past few years has been that of a boom town on the frontier of the Wild West. Companies laid claim to massive parcels of land, shipped massive pieces of equipment up Highway 63, built massive operations, and began recovering massive deposits of bitumen.
Three years ago, after a mini black gold rush to acquire oilsands leases in the Peace River area, the smallest yet still hugely substantial Alberta deposit, so much development was anticipated that Peace River Oil initiated plans for the area’s first upgrader. Those plans are gone, and there hasn’t been one new oilsands lease sold in the Peace River region since December 2008. Once again, as in the past, the area has become “next-year country.”
Two years ago the tiny town of Lac La Biche, located 220 kilometres northeast of Edmonton, would not have been able to even contemplate spending $48 million on one of Alberta’s largest recreational complexes. But now, thanks to the economic boost that the former town of 2,800 people is experiencing as a result of nearby oilsands development—and, just as important, to a decision by local politicians two years ago to create a new regional municipality—the Lac La Biche multiplex is taking shape.
While many parts of Alberta saw their economies go into a serious slump last year, with energy industry-related and other economic activity grinding to a near halt, the communities in the province’s second-largest oilsands deposit barely noticed the downturn.
As the United States considers climate legislation that could target the Canadian oilsands industry and send it into a tailspin, the country should perhaps reconsider the value the unconventional oil provides south of 49th parallel. Oilsands production does much more for America than offer growing crude volumes to fuel its massive energy needs—the industry also provides significant employment and a boost for the country’s gross domestic product (GDP).
Safety training is valuable and essential, but not as useful as it can be when one is forced to repeat the same safety course over an over again. Yet this is often the case in Alberta, where workers go though variations of the same safety training only weeks apart as they move from job site to job site.
Alberta business leaders need to be more active in the direction of the province—so says Tim Shipton, president of the non-partisan Alberta Enterprise Group (AEG). During the last boom, partly as a function of how busy they were, Shipton says leaders in all sectors were not as involved in overall strategy as they should have been, and his goal is to ensure that their presence at the table is stronger in the future.