Alberta oilsands to propel Canadian economy for 25 to 30 years, report says

EDMONTON – Many Canadians don’t realize how vital the Alberta oilsands are to the national economy, and the need for a public dialogue based on facts is critical to the success of the industry, says the co-author of a report by a leading financial advisory firm.

“The oilsands are going to be the economic engine for the country for the foreseeable future, for the next 25 to 30 years, and it is akin to the impact of building the national railway in the 1880s,” said Marc Joiner, a partner at Deloitte in Toronto.

“There was dissent back then about spending all that money on the railway, but now we ask how could you not have done that. It is the same with the oilsands.”

The firm’s report, Gaining Ground in the Sands 2013, outlines 10 obstacles and opportunities and cites the need for a national debate and some kind of unified action and direction, perhaps along the lines of the Canadian energy strategy being promoted by Alberta Premier Alison Redford.

“In Eastern Canada we don’t understand or appreciate how significant the oilsands are to our economy and the benefits that are going to be reaped,” Joiner said in an interview.

On the flip side, he said the public doesn’t understand that environmental impacts are not being ignored by industry.

Joiner said an absence of factual information leads many people to hold anti-oilsands views based on second hand knowledge that is not accurate.

“Our report never suggested this process of increasing literacy on energy would be easy and there is no silver bullet. But it has to happen,” he said. “We have to find a way to engage the dissidents, because with facts, opinions can be changed or at least moderated.”

The Deloitte report lists some facts about the oilsands, including the estimated generation of $2.1 trillion in economic benefits over the next 25 years and 905,000 jobs across Canada by 2035. Outside Alberta, about $5 billion each year in supplies and services will be flooding into the province, primarily from B.C., Ontario and Quebec, states the report.

Deloitte agrees with the Asia Pacific Foundation, which noted that government revenues generated from the energy industry were close to $22 billion in 2011 “and provides indispensable support for the social programs Canadians value.”

A lack of pipeline capacity has already forced Alberta’s crude to be heavily discounted in its only market, the U.S. Using the average discount of $19 per barrel, Canadian producers and governments are losing $27 million in revenue each day, said the report. The situation will improve if the Keystone XL pipeline is built to the Gulf coast, but downward pressure will continue within a couple of years as U.S. oil production continues to increase.

American production is already booming so fast that the pipelines will be full and the U.S. will become the world’s largest oil producer by the end of this decade, a fact that reinforces the need to develop other markets, primarily in Asia.

“We are trying to be an instigator for discussion with this report, which has gone to industry and governments,” said Joiner. “But I think the oilsands firms will have to be the proponents of change and invest in this dialogue with politicians.”