Alberta is at a crossroads with our major industry – energy production. Over the past several years the Alberta economy has had the rug pulled out from under it with unconventional natural gas extraction (fracking) moving our largest trading partner from a net importer to an exporter of this environmentally friendly fuel.
The price of natural gas is just now starting to recover from its recent lows but the focus has moved from natural gas as a heating fuel for U.S. markets to trans-ocean export as liquid natural gas or LNG. Fortunately there is a growing local market for refining into natural gas liquid byproducts.
Fracking has also created an oil boom in the United States with the Bakken field in North Dakota. Some speculate that the U.S. could become a net exporter by 2020.
Getting Alberta resources to market is a major concern with the delay in the approval of the Keystone pipeline across the U.S. border and through to the Gulf Coast. Approval of the Enbridge Gateway pipeline to our own west coast is becoming more doubtful everyday with environmental, aboriginal land claims and political concerns clouding the horizon. It is doubtful that it will ever be approved without major delays and modifications to the current proposal.
Oilsands production is slated to double by 2020, but could Alberta be caught with shut-in oil and natural gas by the end of the decade because of lack of access to markets? One bright spot on the future of energy production is the approval of the North West upgrader, or refinery as it is now labeled.
Five years ago we had as many as 10 upgraders ready to go ahead but with the economy doing an about face in 2008 things changed overnight. Through the sheer determination of North West and CNRL and particularly its prime proponent, North West’s president Ian MacGregor, this insightful project is now going from the drawing boards to the construction phase.
With the current discount of $25-30 below West Texas crude prices and a further discount of another $20 below world prices, it is time for the energy industry and government to rethink our overall energy strategy for Alberta’s future.
The Alberta energy industry needs to look closely at the North West/CNRL project and the dilemma we could be faced with if things continue to go bad for us. Why can’t we upgrade and refine more of our products here in Alberta? There has to be more profit in shipping refined products than raw bitumen. And with the stigma attached to the possibility of environmental disasters, approval may never be granted for shipment of raw bitumen across the difficult terrain in our neighbouring province, not to speak of the stormy seas.
There appears to be more support every day for processing our natural resources here at home and shipping refined products to markets in Eastern Canada, the United States and Asia. We all need to get on board with this sentiment and ensure that our future is in fact as bright as it once was.
Ken Allred is a former St. Albert Alderman and MLA.
