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Page added on July 4, 2017

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The End of Growth in the Tar Sands. So Now What?

Production

A managed decline of the tar sands isn’t a popular idea in Alberta, or in Canada for that matter. The idea of sunsetting the tar sands industry is about as polarizing as it gets. The problem is that people have been led to believe that a managed decline undercuts a booming oil industry that is on the cusp of bouncing back after a few bad years. It’s not. The only real alternative to a managed decline is something much worse: an unmanaged decline.

Almost everyone understands that the world will eventually wean itself off of fossil fuels, hopefully sooner than later. A rarely discussed consequence of this is that there is no reasonable scenario in which the high cost tar sands sector remains the last man standing as the transition takes hold. Indeed, this dynamic appears to be already in play.

In a new briefing note published Thursday, we use industry data to provide a snapshot of a tar sands sector on the precipice of decline. It won’t necessarily be a surprise that capital expenditure (capex) for new projects has taken a downturn in recent years, but it may be a surprise that there is currently no commitment to project construction beyond 2020.

Figure 1 (below) shows the steep decline in project approvals since 2013. Note that in 2017, no new capacity has been approved to date.

Figure 1: Tar sands capacity additions by approval year

Screen Shot 2017-06-28 at 2.06.58 PM

Figure 2 (below) shows the annual capex spent on developing new tar sands production capacity since 2000. Projected capex beyond 2016 only includes investment in projects that have already been approved. This capex ends in 2019 as currently under construction projects begin production. For that to change, new projects will have to be sanctioned by oil companies.

Figure 2: Tar sands capex in new project construction/development

Screen Shot 2017-06-28 at 3.45.20 PM

This is a dramatic change of events in a sector that just a few years ago was anticipating major expansion and sustained growth. Instead, the sector is facing the end of any significant capex in new growth, and the challenge of trying to squeeze a profit out of projects that were sanctioned in a $100 per barrel world in one that is instead moving towards decarbonization.

What matters now is that decision makers, thought leaders, and citizens wrap their heads around this new reality. If there is a failure to step in and manage the inevitable decline in the sector as production dwindles and profits shrink, workers, communities, and the economy are going to be the ones that suffer.

Companies and industry advocacy groups (like CAPP) are quick to point to rising production as a sign of resilience, but the only production growth that is happening is a relict of decisions made several years ago before the oil price crash. These projects are still lumbering toward their start-up dates because of the long construction timelines that are common to the sector. What is less discussed is the exodus of major international oil companies that have seen the writing on the wall, leaving a handful of Canadian companies holding the reins of an industry that has likely boomed for the last time.

Because tar sands projects are so capital intensive, take a long time to build, and produce for many decades, investors need to feel confident that oil prices are going to be sustained at high enough levels to make massive up-front capital expenditures worth it. This isn’t the picture that they see right now. In the near-term, U.S. shale production is likely to keep a lid on prices as the U.S. frackers continue to drill-baby-drill no matter the harm they cause. Goldman Sachs analysts currently expect prices to stabilize around $55 for the foreseeable future. This is at least $20 below the price needed to trigger significant new activity in the tar sands.

In the longer term, the combination of climate action, electric vehicles and clean technology development and the push in Europe and Asia for cleaner air, are poised to radically change the oil market forever. The boom and bust cycle we have seen for the last century and a half may just be a bust.

Suggesting, as government and industry are doing, that the best course of action in response to a struggling economy is to build more infrastructure that requires sustained high oil prices and assumes a global failure to address climate change is not only misleading but reckless, and risks blowing up a bubble of debilitating stranded assets.

Before anyone suggests that there is a silver lining in that the climate work here is done (i.e. the end of the tar sands is happening anyway), do not speak too soon. The fossil fuel industry specializes in making itself seem indispensable, and they will be digging in their heels over the coming months and years to do as much climate damage as possible while they still can. The evidence can be seen in the increasing clamour to ditch regulations and support new infrastructure.

The movement has done incredible things to delay and stop infrastructure, and those battles will continue as the industry continues to use convoluted arguments to demand new pipelines (for example).

managed decline is highly preferable to an unmanaged one, but it requires recognition that the decline part is inevitable, which is the conversation we hope to trigger.

Read the full briefing note here and the press release here.

Common Dreams



29 Comments on "The End of Growth in the Tar Sands. So Now What?"

  1. Cloggie on Tue, 4th Jul 2017 11:56 am 

    The End of Growth in the Tar Sands. So Now What?

    Offering pumped hydro facilities for (future) US wind and solar parks.

    http://st.gde-fon.com/wallpapers_original/615589_moraine-lake_banff-national-park_ozero_goryi_peyza_5182x2901_www.Gde-Fon.com.jpg

    Have a talk with the Norwegians:

    http://www.spiegel.de/international/europe/norway-wants-to-offer-hydroelectric-resources-to-europe-a-835037.html

  2. Cloggie on Tue, 4th Jul 2017 12:00 pm 

    Apparently tar sand province Alberta isn’t very prominent in the mind of diversity clown and certified airhead Trudeau:

    https://www.youtube.com/watch?v=V-CLt3xzH-E

    And if pumped hydro will strand over self-styled environmentalists, Canada can always contemplate starting the export of camel-dung:

    http://www.eurocanadian.ca/2017/05/century-initiative-wants-to-make-canada-a-global-nation-through-massive-increase-in-immigration.html

  3. Apneaman on Tue, 4th Jul 2017 12:33 pm 

    clog fag, do you mean Canada can consider becoming migrant Europe?

    Europe migrant crisis: Italy threatens to close ports as ministers meet

    http://www.bbc.com/news/world-europe-40470102

    Italy calls on European countries to take migrant ships as country struggles with record numbers

    http://www.telegraph.co.uk/news/2017/07/02/italy-calls-european-countries-take-migrant-ships-country-struggles/

    Thank Christ for the Atlantic ocean. Y’all euro losers get more illegal migrant refugees in a month than Canada takes in a year. The difference being the Canadian authorities screen them first, whereas you get what you get and you seem to be getting plenty of radical Muslims and explosions and shooting and white folk getting run down in droves with terrorist death race drivers.

    Sweden is home to 2,000 Islamist extremists – TEN TIMES the number before Europe’s migrant crisis

    Chief of domestic spy service says there are 2,000 Islamist fanatics in Sweden
    Number is a nearly 10-fold increase in less than a decade Anders Thornberg said
    Comes after a jihadist mowed down pedestrians in Stockholm in April, killing five

    http://www.dailymail.co.uk/news/article-4661390/Sweden-home-2-000-Islamist-extremists-says-spy-chief.html

    clog, in another year or two you will be begging to come settle in the wide open spaces of Canada…..if the migrants haven’t gotten you yet.

  4. Apneaman on Tue, 4th Jul 2017 12:55 pm 

    Clog, want to know how BIG Canada is?

    Alberta’s oil sands underlie 142,200 square kilometres (km2) of land in the Athabasca, Cold Lake and Peace River areas in northern Alberta.

    The area of the Neatherlands is 41,543 km²

    Population of Europe 2016 = 738,849,002

    Population of Canada 2016 = 36,286,378

    Geographic entity Area (km2)
    Europe (excluding European Russia) 6,220,000 km2

    Canada 9.985 million km²

    https://i.redd.it/o3qd1wdrqebx.png

    https://www.youtube.com/watch?v=dom7VlltBUc

  5. Cloggie on Tue, 4th Jul 2017 1:39 pm 

    Thank Christ for the Atlantic ocean. Y’all euro losers get more illegal migrant refugees in a month than Canada takes in a year.

    TalmudTurd, Europe is 500 m, US/UK resource Canada merely 35 m, so don’t compare an elephant with a fruit fly. Canada is currently the (former) western country that takes in the most foreigners per capita and is dying to become Chinese.

    Canada takes in a staggering 1% of its population per year. Europe in contrast took 1.5 million in disaster year 2015-2016 or 0.3%, normally far less than that. So you thank Yahweh all you want for nothing, because Canada is immigration country #1 (which you love, since you and your tribe want to destroy white Canada and the US for that matter).

    Italy meanwhile is sick and tired of all these migrants. The Dutch news no longer calls then refugees and is making sounds that this needs to stop. Now the proposal is to station European border guards on the southern border of Libya, in consent with Libya.

    Meanwhile Austria has completely sealed off its border. The mood is changing in Europe. Canada is invited to die all by itself. Has been nice knowing you, but Mother Nature has no mercy with losers.

    clog, in another year or two you will be begging to come settle in the wide open spaces of Canada…..if the migrants haven’t gotten you yet.

    You don’t know what you are saying:

    http://vancouversun.com/news/local-news/douglas-todd-almost-7-in-10-metro-residents-will-be-non-white-in-two-decades

    Canada is experiencing the fastest rate of ethnic change of any country in the Western world, say international demographers.

    ROFL.

    And you folks are going to be blamed for it, with the usual consequences.

  6. Apneaman on Tue, 4th Jul 2017 2:24 pm 

    clog queer, you are comparing apples to oranges. The Canadian governments legal and vetted immigrants based on their policy/plan VS hoards of unknown (persons & numbers) refugees getting on inner tubes and crossing the med and illegally entering Europe at a combined staggering cost to euro taxpayers. How many billions of euros have y’all spent building fences and rescuing and feeding? Unlike the Canadian governments/elites plan Europeans is a BOMB. Unlike Europe, I don’t see any immigrants blowing up subway stations running people over and going on shooting sprees every month in Canada either. You’re confused clog because you view all migrants as evil and white genociders and all the rest of your blind hysterics. They are to blame for everything since there is no such thing as a biological imperative leading to overshoot and run away climate change or the 6th mass extinction and another dying humans constructed system in it’s last days. Nope, it’s all the fault of migrants and jews and liberals. It’s that simple – Retard simple.

    US/UK resource? What is that? Last time I checked they were two different countries separated by a big fucking ocean.

    In two decades 7 in 10 humans will be extinct, say the laws of physics, chemistry & biology – not “international demographers”.

    I laugh my ass off at the Asians buying up that land that will soon be underwater. Many of them live in a low lying area called Richmond. It’s basically at sea level same as the Vancouver international airport – gonna be a diving site in 20 years.

    Richmond, British Columbia
    Richmond
    Highest elevation 12 m (39 ft)
    Lowest elevation 0 m (0 ft)

    https://en.wikipedia.org/wiki/Richmond,_British_Columbia

    I really do hope you stay alive as long as possible so you can ‘continue’ to watch overshoot, run away climate change and the 6th mass extinction crush your child like fantasies of a future that is a physical impossibility in spite of what “international demographers” and “Statistics Canada” the UN, World Bank, IMF and econ 101 – AKA new world order- mouth piece legitimizers project.

    Seems like another clog contradiction to consistently call “the deep state/ new world order” liars then use their numbers as evidence for arguments when it’s convenient for you.

    Are not “international demographers” the UN? Along with the World Bank, IMF, IBS, and western governments are they not what make up the deep state? The new world order? How many of these institutions are staffed with highly educated Jews? All of them and in the top jobs, so why do you trust them at all?

    Again with just a slight amount of scrutiny all your contradictory arguments come tumbling down.

  7. Not Sure on Tue, 4th Jul 2017 2:41 pm 

    Vancouver international airport diving site in 20 years? Let me guess you think we are going to flood the world because of ‘climate’?

    then why is it measured sea level’s have risen 2 to 4 cm per year since they have kept record? ? The rate of sea level rise has been consistent for centuries and STILL is.

  8. MASTERMIND on Tue, 4th Jul 2017 2:44 pm 

    So US shale ponzi is about to burst soon. Saudi Arabia is going bankrupt and will implode soon. And the tar sands are soon closing up shop as well.

    Anyone seen Plan B laying around?

  9. MASTERMIND on Tue, 4th Jul 2017 2:49 pm 

    Simple really….when the World Economy Collapses everything shuts down…the end….were
    talking about grids down all over the world and 7.5B people dropping like f*** flies in
    short order…The collapse will be absolutely horrible..There is no collapse or horror movie ever produced that has even come close to imagining what the collapse of BAU might look like. I’m talking about everycorporation and every social program going bankrupt at once.I’m talking about people eating people. I’m talking about the Worst Catastrophe to ever happen in the history of mankind. Nothing has ever, or will ever come close.

    (Meadows 1972) (Ehrlich 2013)
    (Motesharrei 2012) (Jefferson 2015)
    (Ebrahimi 2015)(Chapman,I 2013)
    (Korowicz 2012) (Tainter 1990)
    (Diamond 2006)

  10. Apneaman on Tue, 4th Jul 2017 2:57 pm 

    Not Sure, I’m sure you’re a fucking retard. A white American male conservative tribal monkey?

    Greenland ice sheet meltoff quickens sea levels rise

    ” Ocean levels rose 50 percent faster in 2014 than in 1993, with meltwater from the Greenland ice sheet now supplying 25 percent of total sea level increase compared with just five percent 20 years earlier, researchers reported.”

    http://nation.com.pk/snippets/29-Jun-2017/greenland-ice-sheet-meltoff-quickens-sea-levels-rise

    Miami Beach to begin new $100 million flood prevention project in face of sea level rise

    “The city will embark on a $100 million project to raise roads, install pumps and water mains and redo sewer connections during the next two years across a swath of single-family homes in the La Gorce and Lakeview neighborhoods of Mid-Beach. A sizable chunk of a citywide effort estimated to cost $400 to $500 million, the work is meant to keep streets dry in the face of sea level rise.”

    http://www.miamiherald.com/news/local/community/miami-dade/miami-beach/article129284119.html

    There is no stopping it and the pace will quicken – it’s nonlinear same as with the warming and species dieoff.

    You should be spending what little normal time you have left with your family on your little independence day. Not many celebrations left for the humans.

    BTW, not providing links/evidence to back your assertions is a dead give away that you have nothing. It’s also dishonest.

  11. DerHundistlos on Tue, 4th Jul 2017 3:14 pm 

    @ Not Sure

    Oh my. A rapid global heating denialist ventures forth with easily refutable information. When will the denialists learn………

    In at least the third such study published in the past year, scientists have confirmed the rate of sea level rise is increasing- not constant by any stretch.

    What was a 2.2 millimeter per year rise in 1993 was a 3.3 millimeter rise in 2014, based on estimates of the mass changes of a number of key components of sea level rise, such as the melting of the Greenland and Antarctic ice sheets, the study in Nature Climate Change found. Same researchers state further sea level acceleration will continue in intensity.

    Further, your statement that the rate of sea level rise has been consistent for centuries is patently FALSE. For the previous 2.000 years prior to 1900 sea levels remained constant.

  12. shortonoil on Tue, 4th Jul 2017 3:20 pm 

    “Anyone seen Plan B laying around?”

    They had one, but it got left on a napkin at the local bar. As soon as they finish searching through the dumpster, they will let us know.

  13. shortonoil on Tue, 4th Jul 2017 3:23 pm 

    OH, found it!

    It says, “most of them don’t make it”.

    Wonder what that could mean?

  14. Hubert on Tue, 4th Jul 2017 4:11 pm 

    I seriously doubt these creeps are ever going to clean up this garbage.

    https://www.youtube.com/watch?v=Sjia7BsP4Bw

  15. Cloggie on Tue, 4th Jul 2017 5:53 pm 

    Looks like a certain board member will soon hear the call of duty:

    https://www.yahoo.com/news/next-middle-east-war-hezbollah-121718969.html

  16. onlooker on Tue, 4th Jul 2017 6:06 pm 

    Nope Hubert. 100 years or so from now any survivors will recall our world civilization only via the lingering poisons , rubble, scarred Earth and plastic and techno crap slow to decay

  17. Lucifer on Tue, 4th Jul 2017 9:08 pm 

    There will be some survivors after the collapse, but all they will be is scavengers on the cursed earth. Some of the humans that are left will wonder why God let this happen.

  18. dissident on Tue, 4th Jul 2017 10:23 pm 

    @Apneaman,

    You are peddling BS. Family reunification with essentially welfare bums is one of the biggest sources of immigration. All that rubbish about vetting and skills but qualified immigrants end up driving taxis for a living.

    Cloggie is right on the money with the observation about 1% immigration by population in Canada per year. The greater Toronto area is becoming clogged with traffic since the government clowns never considered the need to scale up the infrastructure due to an influx of around 150,000 per year.

    Immigration is clearly a racket. A way to fake up GDP growth by simple bulk increase instead of real development. That Canada will become a strife ridden Babylonian nightmare in the coming decades is the least of the concerns of our dear leaders.

  19. Makati1 on Tue, 4th Jul 2017 11:32 pm 

    Lucifer, after the crash, there will be billions going about their lives with little change. My farm neighbors will hardly notice. They just got electric last year and no internet. I doubt that they waste money on newspapers. Their daily goal is survival, not how the West is dying. They could care less.

    Tell me a Bangladeshi will care? A Hindi trying to live another day? Such a life is typical, not the exception, for billions. Westerners have a very distorted idea of poverty. They still have welfare, food stamps, and a dozen or more other taxpayer teats they suck on. When those fail, and they will, THEN the pain will be obvious to ALL Americans as it will be unavoidable. Cities will burn and chaos reign. It will make the current Chicago troubles seem like Paradise. Wait and see.

  20. Yadayada on Wed, 5th Jul 2017 6:08 am 

    I love that relaxed “everyone understands the world will be weaned off fossil fuels” line. One way of looking at it.

  21. BigMind on Wed, 5th Jul 2017 6:45 am 

    Clog, that’s one really small elephant, or one really large fruitfly!

  22. Lucifer on Wed, 5th Jul 2017 8:04 am 

    Mak, those billions going about their lives, that you talk about, most of them will perish along with the rest of the world after the collapse, just trust me on that.

  23. Kenz300 on Wed, 5th Jul 2017 11:05 am 

    Tar Sands, a gret way to lose money.

    Look how fast coal stocks dropped and took investors with them.

    Tar sands are next.

  24. Hubert on Wed, 5th Jul 2017 1:14 pm 

    The irony of building a billion dollar oil pipeline with no oil to push through…. =)

  25. Mike Hawkins on Wed, 5th Jul 2017 3:35 pm 

    Wow you guys are deep. Great arguments all around. Least enough to sit back and contemplate. Most of the views said, I have already. Best way out of this mess is a culling. Not by man,a fair calling done by mommy nature. May the strongest survive.

  26. onlooker on Wed, 5th Jul 2017 3:48 pm 

    May the strongest survive.–That also could infer the most adaptive. In unity they’re is strength. The lone wolves are mal-adaptive

  27. bobinget on Wed, 5th Jul 2017 4:41 pm 

    Not once did any poster here mention Venezuela’s ‘tar sands’.

    (tar) = pejorative. (oil sands)= positive view.
    Now, if you didn’t already, you understand the code.

    Orinoco and Alberta’s deposits represent man’s last resort of proven reserves.

    Alberta: having just completed projects started
    almost a decade ago at great cost, any further
    developments may wait another decade till needed.
    (translated, triple digit prices for extended periods).
    The remainder of the post doesn’t mention oil

    Russia and China bought and paid for Venezuela’s
    massive heavy oil reserves.

    In the biggest energy take-over in history, China’s future is made rock solid by Saudi Arabia’s militarizing oil surpluses. By abrogating
    their OPEC responsibility of ‘swing’ suppliers, SA bankrupted Venezuela, placed Nigeria in danger,
    done untold harm to millions of displaced persons.

  28. Makati1 on Wed, 5th Jul 2017 6:20 pm 

    onlooker, you are correct. That is another reason I am living in a country where ‘togetherness’ is still dominant.

  29. Kenz300 on Thu, 6th Jul 2017 10:02 am 

    How do you turn $100 million dollars into $1 million dollars.

    Invest in tar sands.

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