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Click here for the Canadian Academy of Engineering’s policy document: http://www.cae-acg.ca/wp-content/uploads/2014/06/CANADA-July9.pdf
In June, a ship carrying about 600,000 barrels of crude from Alberta’s oil sands arrived in Bilbao, Spain, by way of Houston, Tex. The circuitous journey by rail and tanker to Spanish oil giant Repsol’s Bilbao refinery made economic sense, given the price discount on Canadian crude.
Despite European hostility toward “dirty” oil from Canada, refiners there may look more to Alberta for supply as price differentials and sanctions on Russia whet their appetite for cheaper grades from across the pond. But what looks like just another market opportunity for Alberta producers is also a telling example of Canada’s failure to maximize the value of its resources.
The promoters of pipeline projects in various stages of development insist the completion of these conduits is the key to eliminating transportation bottlenecks that have depressed the price of so-called Western Canadian Select oil. And while that is partly true, the “success” of these projects would still mean the export of unprocessed Alberta bitumen beyond our borders.
The skilled jobs, technological development and economic activity involved in upgrading our oil resources into value-added petroleum products would still occur outside Canada. Governments here would forgo billions of dollars in tax revenues for schools, health care and infrastructure. And our collective identity as resource bumpkins, rather than slick innovators, would be reinforced.
Many oil industry types insist that the economic case for upgrading and refining Alberta bitumen domestically is weak. That the cost of building new upgrading capacity here is prohibitive and that Big Oil multinationals operating in Alberta have plenty of excess refining capacity outside Canada.
Still, consider how much Canada will be leaving on the table if virtually all new oil sands output is exported raw, which is the current plan. The Canadian Association of Petroleum Producers’ latest forecast projects that oil sands output will more than double to 4.8 million barrels per day by 2030, from 2.3 million barrels in 2015. The lost potential for value-added in Canada will be in the trillions.
Passing up on the chance to become a centre of excellence for oil processing also means passing up on the opportunity to develop our human capital. Policy makers in Alberta and Ottawa should be spending their time ensuring the province’s oil wealth leads to the creation of jobs higher up the value chain. Instead, they’re fretting about short-term vacancies at fast-food outlets.
For the rest of this article, click here: http://www.theglobeandmail.com/globe-debate/we-need-to-refine-our-oil-sands-ambitions/article19985646/#dashboard/follows/