After French petroleum giant Total wrote off C$9.3 billion in stranded assets in the tar sands/oil sands, the Jason Kenney government had the option of treating the announcement as a wake-up call, not a cheap shot. And Albertans were hurt first and worst when their government made the wrong choice, The Energy Mix publisher Mitchell Beer argues in a post for The Narwhal.
After Total’s announcement last week, “the reaction from the oil lobby and its allies in the Alberta government was swift, fierce, and entirely predictable,” with the Canadian Association of Petroleum Producers accusing the colossal fossil of “somewhat virtue signalling” and Alberta calling the company “highly hypocritical,” Beer writes. And indeed, “it isn’t as though Total, France’s biggest company and one of the world’s seven fossil ‘supermajors’, is suddenly embracing a rapid transition off carbon”—not when it’s also just signed a US$20-billion deal for a massive liquefied natural gas (LNG) project in Mozambique.
But the question is whether Total is somehow singling Alberta out for special treatment.
“The fallback assumption among Canada’s political class is that companies like Total, Deutsche Bank, and Zurich Insurance Group are just out to get Alberta, falling prey to the supposed foreign-funded radicals whose influence Premier Jason Kenney’s government is now apparently having trouble tracking down,” Beer writes. “But what if the rest of the world is reading the numbers while elected officials in Ottawa and Alberta cling desperately to their own spin? What if there’s no virtue signalling or hypocrisy in Total’s decision, just a hard-nosed business assessment?”
The other two co-owners of the massive Fort Hills tar sands/oil sands mine, Suncor Energy and Teck Resources, had already declared losses on the project, he notes. And Total’s announcement had the feel of “bean counter dryness”, in contrast to the triumphant tone of the company’s Mozambique release.
“The weakness of investments in the hydrocarbon sector since 2015, accentuated by the health and economic crisis of 2020, will result by 2025 in insufficient worldwide production capacities and rebound in prices,” the company wrote. “Beyond 2030, given technological developments, particularly in the transportation sector, Total anticipates oil demand will have reached its peak.”
With those factors in mind, along with the company’s own 2050 carbon neutral pledge, “Total has reviewed its oil assets that can be qualified as ‘stranded’, meaning with reserves beyond 20 years and high production costs,” the release continued. “The only projects identified in this category are the Canadian oil sands projects Fort Hills and Surmont.”
In other words, Beer writes, “nothing political to see here, folks. Just listening to the evidence and following where it leads.” But “in Alberta, where everything fossil-related is hyper-political, that kind of analysis leaves both major parties in a serious bind. They’re caught between their own overheated support for an expanded oilsands industry and a global economic reality that is driving down the province’s fossil economy, triggering huge cuts in health and community services that depend on it, and now threatening to eviscerate rural municipalities’ tax base.”
Beer points to the potential for 67,200 green economy jobs the Kenney government is ignoring, the $2 billion in energy savings and carbon reductions it could have seized if it hadn’t killed off the province’s energy efficiency agency, and a new economic diversification strategy that is “long on spin, generous with corporate tax cuts, and short on detail.” Even if that package of policies helps Kenney’s push for re-election, “it won’t deliver the jobs Albertans need, the strong economy they’ve come to expect, or the greenhouse gas reductions their future (and everyone else’s) depends on.”
Ultimately, Beer concludes, “Alberta’s politicians have the option of taking an announcement like Total’s as a wake-up call, rather than a cheap shot. They’ll be failing their constituents until they start getting that judgement call right.”
Click here to read the rest of Beer’s post, or to subscribe to The Narwhal’s weekly newsletter.