To paraphrase the great writer Samuel Langhorne Clemens, better known as Mark Twain: “Rumors of my death have been greatly exaggerated!”
And so it is with the tar sands, one of the hottest debates in the energy industry. Its growing army of critics argue this highly polluting technology will help tip the world towards climatic catastrophe. Its defenders talk of energy security, even if short-term energy security means long-term climatic insecurity and chaos.
But as The Economist pointed out yesterday, “Critics of the exploitation of Canada’s tar sands watched gleefully this year as the collapse in the oil price did what their opposition could not: dent the oil industry’s enthusiasm for this mixture of sand and bitumen”.
However the rumours of the death of tar sands are exaggerated. The Economist notes that “a year after crude markets began their slump, however, there are green shoots appearing in the ravaged muskeg soil.”
Most worrying of these is the agreement earlier this week by PetroChina, the state-owned Chinese oil firm, to pay C$1.9 billion for a majority stake in two tar-sands projects.
The Chinese company has bought a majority stake in the privately owned Athabasca Oil Sands Corp, marking the largest venture by China in the Canadian oilsands to date. The Chinese will acquire a 60 per cent working interest in the MacKay River and Dover oilsands projects.
“This deal shows that the biggest energy company in the world has chosen Athabasca as their partner,” chief executive and president Sveinung Svarte said in a conference call on Monday. ” They clearly told us that’s because they like our assets the best and, obviously, they (the oilsands) are the crude oil story.”
The two in-situ projects sit on approximately five billion barrels of bitumen that have yet to be developed, and are part of Athabasca’s almost 10 billion barrels of bitumen reserves.
What is also worrying is that demand for crude from the tar sands is also growing.
The Economist points out that Canada’s share of the American oil market could grow to 37% by 2035 from 19% last year. Output from the tar sands could reach 6.3m b/d by then, the consultancy believes.
All this, argues The Economist “makes the downturn in the tar sands less a collapse than a pause for breath.”
OK the Chinese had already bought into the tar sands but Petro China’s deal signals that this fight over climate and resources is only just beginning and not ending.