Teck Resource‘s Sunday night decision to abandon its Frontier oilsands mine proposal appears to have shocked both supporters and critics of the project.
Teck announced its decision amid weeks of blockades in solidarity with B.C.’s Wet’suwet’en First Nation and days before the federal cabinet was expected to make a decision on the project. And the announcement, which will see the company ditch the plans for its $20-billion project in Fort McMurray, Alta., quickly sparked back-and-forth accusations over who should bear the blame and what it means for Canada.
“What it said to me is there’s a level of uncertainty in Canada right now around the development of our resources that just makes companies wary of trying to bring big investments here,” said Richard Masson, a fellow with the University of Calgary’s School of Public Policy and vice-chair of the World Petroleum Council.
Despite the application, though, it was never entirely certain that the mine would go ahead, even if it was approved.
Teck CEO Don Lindsay had previously cited low oil prices and a lack of pipelines as big challenges for the company that could impact its decision on whether to move forward in the event it got federal approval for the project.
Now that it has formally abandoned those plans, here’s what we know about why.
What Teck Resources says
Teck announced its withdrawal of the application in a brief press release Sunday night.
Lindsay wrote a 745-word letter describing the decision as “difficult” and said he was “disappointed” to get to this point.
“Teck put forward a socially and environmentally responsible project that was industry leading and had the potential to create significant economic benefits for Canadians,” Lindsay wrote, noting the company views the work it did to get Indigenous support for the project as an important “foundation” for the future.
But ultimately, Lindsay said the lack of certainty from multiple angles forced the company’s hand.
“Global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products,” he said.
“This does not yet exist here today and, unfortunately, the growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved.”
“In that context,” Lindsay continued, “it is now evident that there is no constructive path forward for the project. Questions about the societal implications of energy development, climate change and Indigenous rights are critically important ones for Canada, its provinces and Indigenous governments to work through.”
Lindsay did not specify what he would like to see in terms of a framework “that reconciles resource development and climate change,” as he described in his letter. The federal government has a carbon tax in place and several provinces have come up with their own versions of such efforts.
The federal government and provinces also have various programs in place to offer grants to businesses in the clean technology sector.
However, his comments echoed some of the questions raised in a recent poll on divisions across the country on energy projects.
Forty-nine per cent of respondents to an Angus Reid poll released earlier in February supported the Teck Frontier project. Forty per cent opposed it and few were confident it would actually get built.
Just 16 per cent said they believed it would be completed and among those who opposed the project, even a pledge by Teck to make the mine carbon neutral by 2050 would change their minds.
While nearly 90 per cent of Conservative voters indicated support, more than half of Liberals and two-thirds of NDP voters opposed it in results that suggest a divide across the political spectrum and across Canadian regions.
The poll also noted that Teck itself has said the project would only be profitable if oil prices rose to around $75 US per barrel.
They’re currently around the $50 per barrel mark, though, down by half from the $100-per-barrel price when the company first proposed the mine.
What the critics of the government say
Any decision for or against the project was always going to alienate someone.
Prime Minister Justin Trudeau has for years insisted that “the environment and the economy can go hand in hand.”
But he has increasingly come under fire from both the left and the right, with each having argued he isn’t doing enough to either protect the environment from energy development and pollution or ensure that energy development is going ahead, particularly in Alberta’s oilsands.
Even within his own party there have been recent reports that the Teck Frontier proposal was a lightning rod, with some caucus members speaking out to warn that approving the project could not be squared with the party’s environmental promises.
The mine would have produced roughly 260,000 barrels of oil each day and four million tonnes of greenhouse gas emissions every year.
That output would have lasted for 40 years, the predicted lifespan of the proposed mine.
With the project application now withdrawn, the main source of criticism appears to be from Conservative and Western critics.
Alberta Premier Jason Kenney tweeted on Sunday night that the decision was “deeply troubling” but also falsely claimed that the company had cited “public safety concerns” as a factor in that decision.
In fact, the letter sent by Teck did not make any mention to “public safety concerns.”
While a statement issued by his office with that claim was pulled from the government website, it remained up on Twitter from the premier’s account.
A subsequent statement by the premier’s office on the Government of Alberta website said there had been an “error” in its earlier statement.
That second statement called the decision by Teck a “grave disappointment” and directly linked it with the weeks of blockades against which Trudeau has been criticized by Conservatives for not speaking out strongly enough.
“Teck’s decision is disappointing, but in light of the events of the last few weeks it is not surprising,” the statement from Kenney’s office said.
“It is what happens when governments lack the courage to defend the interests of Canadians in the face of a militant minority. The timing of the decision is not a coincidence.”
It went on to state that “inaction in the face of illegal blockades”has created uncertainty and that Teck’s situation suggested that the regulatory approval process “values politics over evidence.”
Like Kenney, federal Conservative Leader Andrew Scheer also falsely cited “public safety concerns” as a factor, which the company did not say in its letter. He also pointed to broader political unrest and inaction on the blockades as factors.
While Teck did not directly cite the blockades or use the phrases “political instability” or “political unrest” in its letter, Lindsay certainly did point to uncertainty as a key hurdle that the company just could not overcome: in particular, he raised questions over whether social consensus exists for similar projects.
Lindsay warned that other projects could soon face the same choice without clarity on how the government plans to move forward with energy development and balancing the need to reduce greenhouse gas emissions.
“Without clarity on this critical question, the situation that has faced Frontier will be faced by future projects and it will be very difficult to attract future investment, either domestic or foreign,” Lindsay concluded in his letter.
“Teck has not taken this decision lightly. It is our hope that the decision to withdraw will help to create both the space and impetus needed for this critical discussion to take place for the benefit of all Canadians.”