ExxonMobil’s huge Kearl Lake oilsands north of Fort McMurray are becoming a stranded asset from previously over-inflated values to a liability. French colossal fossil Total is writing off 9.3 billion in stranded assets in Alberta. Nobody got the memo.
Like Alberta Premier Jason Kenney who is plowing ahead like there isn’t any crisis, Exxon was aching to spend large chunks of cash on oil and gas projects while other companies are learning to diversify. Even BP, one of the largest fossil fuel companies in the world, is learning to divest, as they put 5 billion into renewable energy projects every year to at least 2030. It’s starting to look like Alberta’s theme song comes from ‘Asleep at the Wheel’ but unlike the American country music group, Kenney isn’t winning any Grammy Awards for his performance.
Exxon’s senior Vice President Neil Chapman thinks this is just a temporary setback for them. Jason Kenney and Mr. Chapman are just waiting for the taps to get turned on again, but guess what? It isn’t happening. Think about it. Do you really think BP would be spending 5 billion per year for the next five years if fossil fuel demand was going to make any significant increase? No.
Bad Investments And Bad Timing
Kenney has been making one bad investment after another and international lenders and investors have warned him. He doesn’t hear anything. He thinks if he can just tap into old age and union pensions, he can hold on a little longer.
The timing is all wrong too. The Heritage Trust Fund has almost been bled dry. Oddly enough, Norway, who years later based their trust fund on what they saw in Alberta, has banked almost 1 trillion dollars. Colleen Collins, who worked in Premier Peter Lougheed’s office when our trust fund was set up, said it was meant to transfer the province’s oil wealth to future generations, not serve as a rainy day fund or as a vehicle for diversifying the economy. But successive, mostly Conservative governments, failed to stick to the savings plan that was set up for the fund.
Although it takes money to make money and jobs, Mr. Kenney hasn’t been short on promises. Most of those promises have fallen through and blaming it all on a pandemic only goes so far. Last June, he announced a $600 million dollar infrastructure investment he claims will create 50,000 jobs. He said it would be the “largest infrastructure build in Alberta history.” It was to be the a bold new Recovery Plan and more corporate tax cuts, although the last tax cuts failed to deliver any of the jobs he had promised the last time.
In the bold new plan, he predicts global oil and gas prices will recover to a West Texas Intermediate Benchmark of at least $60 a barrel within 12 to 18 months following the return to global demand post-COVID.
The plan also claims that in that environment, Alberta’s oil and gas sector is set to thrive as long as we can build new pipelines to get our product to market. This is why we invested $1.5 billion to ensure Keystone XL broke ground this spring – creating 7,400 high-paying jobs in Canada this year alone. How these figures were arrived at is unknown. Trans Canada, the company behind Keystone XL, claims most of the jobs will be going to Americans.
The Recovery Plan is big on promises but vague on implementation. And, the number don’t add up.
It doesn’t all have to be doom and gloom. Energy Mix publisher Mitchell Beer, mentions the Pembina Institute that released a report in Alberta that hardly gets any notice. From their June report, they show an analysis of the four key areas of Alberta’s economy found that 67,200 jobs can be created over the next decade. This represents a significant portion of Alberta’s labour market – it is equal to 67% of the total workforce of the mining, and oil and gas extraction industry in 2019. These jobs – and others in emerging sectors – show the significant potential for stable, prosperous jobs for Albertans in a more diversified economy.
It doesn’t mean oil and gas jobs aren’t included in the plan. There’s just less of them with a keen eye on the future economy we will be working with.
“Alberta’s largest employers, trends indicate continued challenges ahead. Jobs centred on decarbonizing our economy (like reducing methane emissions) and addressing liabilities (through well cleanups) represent a chance to retain existing job numbers and remain competitive.”
Additionally, there is The Institutional Investors Group on Climate Change (IIGCC), the European membership body for investor collaboration on climate change, and the voice of investors taking action for a prosperous, low-carbon future. Based on the Paris Aligned Investment Initiative (PAII). They provide the first-ever practical blueprint for investors to maximise the contribution they make in tackling climate change and achieving net zero emissions globally by 2050. It’s free for anyone to download.
Alberta has the resources and people to help diversify the economy so we don’t have to become a “Have Not” province. It calls for a willingness by the government to look at other avenues of investing in a future that doesn’t depend on oil & gas. Time and money are running out. We can’t continue to live in the 20th century. The world is moving on, with, or without us.
