CANADA IS THE 4th LARGEST OIL PRODUCER IN THE WORLD AND THE LARGEST SUPPLIER OF OIL TO THE USA.
HOW DID WE GET HERE?
This outstanding Canadian success story is primarily due to the rise of the Alberta oil sands. However, it was not always so. The Alberta oil sands industry struggled in the 1980's and early 1990's.
Then, a few key initiatives were implemented that revitalized the oil sands industry. These initiatives were originally conceived, developed and proposed by a few foresighted individuals.
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A STRATEGY THAT CHANGED CANADA - THE DEVELOPMENT OF THE OIL SANDS
Excerpts from my letter to Syncrude of July 27, 1990, re Syncrude Corporate Strategies.
It is significant that, more than thirty years later:
- all but one of these strategic recommendations have been successfully implemented, and as a result
- Canada is now the 4th largest oil producer in the world, and the largest foreign supplier of oil to the USA.
The conventional oil industry in Alberta is now entering a period of decline in terms of volumes, revenues and profits. It has served as the primary "engine" of provincial economic growth and stability for the last 40 years. Similar roles have been performed in other areas by Hydro Quebec, Ontario Hydro and the German brown coal industry, to name a few examples. In each of these cases major economic and social benefits including jobs, energy self-sufficiency and markets for industrial products have been created by these strategic industries. As the conventional oil industry declines in Alberta, it will be necessary to find a suitable replacement. I believe it is entirely appropriate for the oil sands industry to fill this role.
We are at a critical point in the oil sands industry. Our future could consist of, on the one hand, two struggling plants, Syncrude and Suncor and little else, or alternatively, a thriving series of plants and major expansions eventually producing over half of Canada's crude oil supply and serving as Alberta's primary engine of economic growth and stability.
- Allan MacRae, P.Eng., 27July1990
HOW THE OIL SANDS INDUSTRY WAS REVITALIZED AND CANADA BECAME THE 4TH LARGEST OIL PRODUCER IN THE WORLD.
I primarily initiated the following changes through the Syncrude Canada Ltd. Owners’ Committees:
I wrote a Strategic Vision that the Alberta oil sands could become the primary economic engine of Alberta, and most of the key initiatives that achieved that goal, including:
• New Crown Royalty Terms for the oil sands, initiated in 1988 and implemented in 1997, with Gordon Willmon;
• New Corporate Income Tax Terms for the oil sands, implemented in 1985 (Class 28) and revised in 1997 (Class 41), with Helder Mendes and Dave Devenny;
• A 50% low-cost production increase at Syncrude Canada Ltd. that reduced unit operating cost by 30%, implemented in 1985, with Dave Devenny and Carl Stephenson;
• The acquisition of new oil sands leases for Syncrude that enabled major expansion of production, initiated twice in the 1980’s, implemented in the 1990’s, with Dave Devenny;
• Technical innovations and reduced costs.
The fourth major initiative that revitalized the oil sands was SAGD technology to economically unlock the deep oil sands, developed by AOSTRA and others.
The initiatives listed above were instrumental in the revitalization of the Alberta oil sands and the emergence of Canada as the fourth-largest oil producer in the world, the largest foreign supplier of oil to the USA and for decades the strongest economy in the G8 countries . Over $250 billion in new capital ($500 billion or more in today’s dollars) was invested and approximately 500,000 new jobs were created across Canada. See my website https://Energy-Experts-International.com/ for details and supporting documents.
Alberta Premier Ralph Klein and Cabinet Minister Pat Black were primarily responsible for enacting the new Alberta Crown Royalty Agreement for the oil sands. The new province-wide Royalty compensated Alberta for the extraction of its oil sands with a 25% Deemed Net Profit share, which replaced a hodge-podge of different gross and net royalty structures, different for each project.
Prime Minister Jean Chretien, with strong support from Cabinet Minister Anne McLellan, enacted the Class 41 Corporate Income Tax rule that improved our Class 28 tax rule from the mid-1980’s. Both Class 28 and Class 41 provided a 100% CCA rate on qualifying investments but Class 41 also included in-situ oil sands projects.
With these new Royalties and Taxes, the Alberta and Canada governments shared a ~50% interest in profits from the oil sands, without having to invest one penny!
Syncrude Canada Ltd. owners, senior management, employees and contractors deserve much credit for the hard work, competence and determination to make this happen.
This 2017 article from the Calgary Sun describes our successful turnaround of the Alberta oil sands and the Canadian economy. I’d like to publish my original documents that proposed the major changes to Alberta Royalties, Income Taxes, and technical matters, but after all these years my Confidentiality Agreement still stands.
WHEN THE OILSANDS HIT PAY DIRT
Chris Varcoe, Postmedia News, September 25, 2017
In this historical image from 1996, Anne McLellan, then PM Jean Chretien, Eric Newell
and Pat Black raise their hands after the Declaration of Opportunity was signed.
More than 1,400 oilpatch workers, corporate executives, provincial leaders and the country’s prime minister assembled 21 years ago in northern Alberta to grasp a brass ring of opportunity, pledging to "realize the potential of the oilsands opportunity for the benefit of all Canadians."
On June 3, 1996, Canada’s Declaration of Opportunity for the oilsands was signed, kicking off an unprecedented era of expansion for the world’s third-largest oil reserves.
With a new uniform royalty rate in place by the Alberta government, and tax changes adopted by Ottawa, daily oilsands production was projected to nearly triple to 1.2 million barrels.
Production soared from 445,000 barrels per day in 1996 to top 2.4 million barrels per day last year. It’s expected to hit three million a day by the end of this decade — fully 150 per cent above initial targets.
Capital investment in the oilsands soared to an eye-popping $262 billion from 1996 until 2015. Another $190 billion was spent on operations.
Royalty payments to governments topped $38 billion.
A report by energy consultancy IHS Markit estimated 478,000 jobs — or three per cent of every job in the country — were tied to the oilsands’ boom by 2012. That was more than 10 times higher than the declaration’s target.
Armed with its oilsands bounty, Canada catapulted into position as the world's fifth-largest oil producer, ahead of OPEC kingpins like Iraq, Kuwait and Venezuela.
“For years and years and years, the oilsands was regarded just as this fringe,” says Daniel Yergin, a Pulitzer Prize winning author and world-renowned energy analyst with IHS.
Government policy changes moved the oilsands into a new direction. Instead of having each project negotiate its own royalty deals, Alberta’s new generic regime, along with the accelerated writeoff of costs by the federal government, were designed to give investors certainty, helping offset the large investment risks.
The declaration set the foundation for an explosive period of expansion.
People across the sector believe a combination of factors — high oil prices, attractive rules for investors, and new technology to access bitumen deposits too deep to mine — all coincided to usher in the largest industrial boom in modern Canadian history.
In 18 years, oilsands output increased almost five-fold, “an amazing achievement,” says Yergin.
ALBERTA’S TWO-DECADE DECLINE
In recent decades since the above major improvements were implemented, successive Alberta and Canadian governments have failed to make any further progress to improve Canada’s economy, and have in fact done great harm, riding high on the prosperity created by their predecessors but inexorably deteriorating the fundamentals of that success – an appalling series of ethical and intellectual failures.
In the Alberta oil sands, Premier Ed Stelmach made incredibly destructive changes to oil and gas Crown Royalties. The Royalties for conventional oil and gas were quickly returned to their former structures. but Stelmach’s destructive “sliding-scale” oil sands Royalties remained in place, and as I correctly predicted more than a decade ago, these changes have sterilized future growth in the oil sands, Canada’s primary economic engine. Stelmach’s sliding-scale royalties were imbecilic and counterproductive, and are the primary reason why growth has stopped, downtown Calgary offices are empty and our young professionals have departed.
In Ottawa, the corrupt Liberals and NDP cancelled my oil sands Class 41 tax in committee when Stephen Harper had a minority government. They probably did this just to harm Alberta, because my tax rule was hugely profitable for the federal government – it derived new taxes from money that would never have been invested without that tax rule, and cost the federal government nothing – in fact, it greatly increased federal tax revenues.
Canadian and Provincial governments have been appallingly negligent in failing to approve much-needed oil pipelines to get our products to market. The failure to complete new oil pipeline capacity to the East and West Coasts and to increase pipeline capacity to the Gulf Cost has cost Alberta and Canada about $200 billion in forever-lost oil revenues. The study by Steve Allan et al proved that $1.3 billion of foreign money was spent in Canada to sabotage much-needed oil pipelines, and our governments stood idle as this foreign-funded economic sabotage took place. Appalling incompetence!
THE CHRONIC FALSE ALARMS OF THE DECEITFUL RADICAL GREENS
Fraudulent “environmental” arguments are a chronic element of discussions about the Alberta oil sands. Extreme-left economic saboteurs appeal to the public’s desire to “save the planet” by literally inventing false green crises one-after-the-other, in order to progress their economic sabotage of our country. I am vastly more qualified in many environmental areas than the radical greens and will say conclusively that most of their alleged environmental crises are false – the greens just fabricate their false crises to scare the public and it works, because most people have no scientific or technical competence and naively believe the green lies. That incredible environmental ignorance extends to the boardrooms and senior management of Alberta’s oil industry – more appalling incompetence!
“Rode and Fischbeck (2021), professors of Social & Decision Sciences and Engineering & Public Policy, collected 79 predictions of climate-caused apocalypse going back to the first Earth Day in 1970. With the passage of time, many of these forecasts have since expired; the dates have come and gone uneventfully. In fact, 48 (61%) of the predictions have already expired as of the end of 2020.”
For 60:40 predictions, the odds of being that wrong are 1 in 13 quintillion; for 70:30 predictions, the odds are 1 in 13 septillion. It's not just climate scientists being randomly mistaken - they must have known they were not telling the truth.
The biggest green lie is the fraud of fossil-fuel-driven “Climate Change”, previously called “Catastrophic Anthropogenic Global Warming”(“CAGW”), until the world started to cool circa February 2020, even as atmospheric CO2 continued to increase – just as it did previously from ~1940 to 1977. These warming and cooling cycles are naturally-caused, probably driven by solar and ocean cycles, and are certainly not significantly driven by atmospheric CO2.
To be clear, anyone who truly believes in the “fossil fuel-driven climate emergency”, aka “Global Warming Crisis ”, aka “CAGW” is an unscientific imbecile. Here’s why:
NO EVIDENCE OF CLIMATE CRISIS
by Allan M.R. MacRae, B.A.Sc., M.Eng., June 13, 2022
In reality a Carbon Tax, a tax on carbon dioxide (CO2) emissions, has never been justified either scientifically or economically. Climate Sensitivity to atmospheric CO2 is very small, so there is no real fossil-fuel-caused climate crisis. For decades, alarmists have ignored that reality, squandering trillions of dollars and millions of lives with their false climate crisis. In fact, the only measurable impact of more CO2 is hugely beneficial – improved crop yields to feed the world.
The Catastrophic Human-made Global Warming (“CAGW”) Hypothesis is based on a false premise – it assumes that atmospheric CO2 changes drive temperature changes, which is incorrect. If CO2 was a significant driver of global temperature, CO2 changes would LEAD temperature changes, but they do NOT. Atmospheric CO2 changes LAG temperature changes at all measured time scales, as proved by MacRae (Jan2008), and Humlum et al (Jan2013). Kuo et al (Feb1990) made similar observations in the journal Nature that were ignored for decades.
The CAGW Hypothesis ASSUMES that the future is causing the past. The CAGW Hypothesis is disproved.
In fact, the CAGW Hypothesis has also been proved false in many other ways, but as Albert Einstein famously stated, “One would be enough.”
Solar-driven Global Cooling is happening now, just as we predicted in 2002 – another disproof of the false global warming climate crisis. Crop failures, food shortages and price inflation are happening, and famine is increasingly probable, caused primarily by cold and wet weather.
To conclude, the alleged fossil-fuel-caused Global Warming Crisis does not exist in reality. The only real, measurable impact of increasing atmospheric CO2 concentrations is improved crop yields, which are hugely beneficial.
Cheap abundant reliable energy is the lifeblood of humanity. The failure of intermittent wind power electrical generation is causing the current disastrous electrical energy shortfalls in Britain and Germany. The Climate-and-Green-Energy falsehoods are causing a global disaster.
UNJUSTIFIED INCREASES IN COST AND REDUCTIONS IN RELIABILITY OF ELECTRICITY IN ALBERTA
Electricity deregulation by Ralph Klein and successors has proved to be an expensive, costly disaster – costs of generation, transmission, distribution and administration have all increased with no significant benefits and significant detriments.
Many of those electricity cost increases are due to imbecilic false-green policies that have been implemented by successive Alberta Conservative and NDP administrations:
- Alberta’s low-cost coal-fired power plants have all been converted to be fired with natural gas – this move was costly and imbecilic, as explained below.
- the introduction of wind and solar power generation has added very costly, intermittent “green” energy that provides little useful (“dispatchable”) energy to the grid and also destabilizes the grid.
- Two new long-distance DC power lines were installed to accommodate wind and solar power generation, needlessly increasing transmission costs;
- Distribution lines that were owned by municipalities have been privatized and sold, so that taxpayers now have to pay distribution costs for local systems they used to own;
- Administration costs have increased as multiple power companies compete for customers.
Led by the woke-left NDP, our politicians subsidized billions to convert our coal plants to natural gas, even as natural gas prices quadrupled. Coal power is more reliable, because the coal is mined right at the power plant site, whereas natural gas supply can be interrupted by a severed pipeline. They allegedly made the change from coal to natural gas to improve air quality – but that was also wrong. Air quality in Alberta is usually excellent, because our coal-fired power plants burn low–sulphur local coal and have anti-pollution equipment that cleans particulates. Of course, CO2 is a red herring – more on that below. Forest fires from Alberta and BC typically cause 1000 times the real air pollution of our coal plants. Changing our power plants from coal to natural gas made no measurable difference in air quality – it just wasted billions of dollars and greatly increased electricity costs. A much smaller investment in Alberta and BC forest management would have made a greater improvement in air quality. I recently wrote Alberta politicians, asking how many more billions it would cost to undo the damage and convert our power plants back to coal.
COMMENTS ON ALBERTA’S EARLY SPRING FOREST FIRES.
Much of Alberta was submerged in dense smoke from numerous forest fires today, 16May2023 - thanks to our idiot NDP “feel-good” former government.
Rachel Notley’s idiot woke NDP wasted billions to convert Alberta coal–fired electric generation plants to natural gas, allegedly to improve air quality and reduce greenhouse gases - but there was NO measurable improvement in air quality and no significant reduction in global greenhouse gas emissions. All these fools did was needlessly drive up the cost of our electricity.
If Rachel and her motley crew was even slightly less foolish, they would have saved these billions and spent a small fraction on proper forest management, and Alberta air quality would be vastly improved.
However, that is a BIG IF, even a FUTILE IF, because woke leftist imbeciles are historically incapable of rational decisions – they do things that “feel good” to other incompetents, but rarely “do good”.
Regards, Allan MacRae, Calgary
My electricity-expert friend explained his opposition to the new DC power lines as follows: DC power lines are typically justified because they have lower line-losses than AC lines, but there’s a catch: DC power systems also have ~5% fixed losses due to the conversions of AC-in-to-DC and DC-out-to-AC, whereas the older AC powerlines in Alberta had total line losses of less than 5%. DC lines are competitive with AC lines over longer distances, where the AC line losses are greater.
We should cancel the pensions of our politicians and send them the bill every time they make such costly, foolish errors. Politicians are energy imbeciles - keep them away from the hot stove.
Here is my TV interview of 12Apr2023 on the Climate scam:
HOW TO TURN AROUND THE ALBERTA ECONOMY
The solution to Alberta’s current economic stagnation is to:
- REJECT all the woke falsehoods of “Climate Change” hysteria and expensive, intermittent “Green Energy” nonsense that have driven costly changes in Alberta energy policy in recent decades; and
- UNDO all the imbecilic changes that were made to Alberta energy policy in the past ~20 years and return to sensible energy policies that created our outstanding prosperity and growth.
That is what worked before, and that is what will work again – it just requires much greater intellect and competence from Alberta politicians – a tall order, but it could happen.
Regards, Allan MacRae, Calgary
ABOUT THE AUTHOR
Allan M.R. MacRae, B.A.Sc.(Eng.) Queen’s U, M.Eng. U of Alberta
Conducted business at a senior level on six of the world’s seven continents.
Recommended AGAINST the Covid-19 lockdowns on 21March2020, in a post essentially identical to the Great Barrington Declaration published 6 months later by the world’s top experts.
Highlighted the significant risks of the experimental Pfizer and Moderna Covid-19 mRNA injections and the high risk-low reward of these injections to under-65’s and especially to very-low-risk groups including schoolchildren, on 8January2021.
Safeguarded up to 600,000 Calgarians from probable death by intervening to shut down the Mazeppa sour gas project; MacRae was honored by the Society of Petroleum Engineers.
Authored ~12 papers since 2002 that prove catastrophic human-made global warming is a false crisis, and intermittent green energy is not a practical solution.
Co-authored a 2015 paper on Excess Winter Mortality entitled “Cold Weather Kills 20 Times As Many People As Hot Weather”.
Advocated since 2002 against the fraudulent claims of leftist extremists that have cost Alberta and Canada over $200 billion in lost oil revenues.
Wrote the competent Energy Policy for the Wild Rose Party, rejecting the destructive Stelmach Royalty changes.
Initiated the New Oilsands Royalty Terms and the New Oilsands Tax Terms implemented by the Klein PC’s and the Feds and also the reduction of Syncrude Canada Ltd. production costs from $18 to $12 per barrel.
Incorporated these initiatives into a comprehensive strategy for Syncrude Canada Ltd, which was implemented and was instrumental in the successful growth of Syncrude and the Alberta oil sands industry.
Result: $250 billion capital investment in Alberta and 500,000 new jobs created in Canada. Canada became the 4th largest oil producer in the world, the largest foreign supplier of energy to the USA and the strongest economy of the G8 countries. ~80% of that oil production is from Alberta.
Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.
- Matthew 25:40
This is my creed. It was the creed of my father and my grandfathers - they lived it.
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Hi Greg and thank you for your thoughts.
I've added some words regarding the share of profits from the oil sands:
"With these new Royalties and Taxes, the Alberta and Canada governments shared a ~50% interest in profits from the oil sands, without having to invest one penny!"
I regard that 50:50 share between oil sands investors and governments as quite fair - the governments invest nothing and get half! But that was not sufficient for Ed Stelmach so he increased the Royalties and killed growth in our primary economic engine!
I continue to be amazed by this colossal incompetence.
George Carlin explained it thus:
“You know how stupid the average person is, right? Well, half of them are stupider than that!”
I applaud your persistent efforts to bring awareness of the flaws and serious consequences of the economic and environmental policies of a succession of Alberta and federal administrations. The presumptions upon which these policies are based fail to pass informed scrutiny but are widely held by the public and policy-makers alike. "Extraordinary claims require extraordinary evidence". The claims of catastrophic global climate change are supported by speculative hypotheses whose projections have failed to be realized by anything but cherry-picked anecdotes which fail to indicate global trends. There is virtually nothing in the climate and weather-event record of the past several decades which has not been exceeded in extent and magnitude in the past, prior to the post WW2 industrial era.