Introduction
According to Alexander (2014), the oil sands of Alberta have around 1.7 to 2.7 trillion barrels of bitumen reserves. The recoverable oil resource in Canada is second only to that of the leading oil producer, Saudi Arabia. The vast oil reserves are capable of supplying Canada’s energy needs for over 500 years. Presently, nearly 40 percent of Canada’s oil production is generated from the oil sands (Alexander, 2014). They comprise mainly of bitumen mixed by sand and water. Alberta’s major oil sands are located in Cold Lake, Athabasca, and Peace River. Different deposits and areas have distinct characteristics requiring different techniques for the extraction of the bitumen that they contain. Huge investments were pumped into Canada’s energy sector to transform Alberta’s oil sands into a profitable and sustainable project. Furthermore, technological innovation and scientific research that is supported by a dynamic industry played an integral role in improving the efficiencies in the extraction of crude oil from the oil sands (Alexander, 2014). The oil sand reserves of Alberta will continue to be the main sources of crude oil in Canada for many years to come.
Assess the Development and Future Outlook of Alberta Oil
Across the globe, oil demand by around 20 percent over the past two decades. The growth is occurring at a time when the world is experiencing a decline in the supply of cheaper conventional sources while new discoveries are not replacing the reserves at a fast rate. Alberta’s oil sands will likely to play a prominent role in helping the world meet its demand. Demand created by growing economies and the need of offsetting decline in production from conventional sources will make Albertan oil become a pillar of global oil supply (Gates, 2007).
The future of Alberta oil will influenced by factors such as its economic attractiveness, environmental and regulatory acceptance, operational certainty and large-scale availability (Gates, 2007). Investment in Albertan oil should be treated as a long-term endeavour. In future, foreign countries will be seeking security of crude oil to help them meet their respective domestic energy needs. To remain economically viable, Alberta’s unconventional sources of oil will depend on technological advances. It is widely expected that technology will significantly change oil production from oil sands, hence leading to a decline in the supply costs. Long-term investors will find it financially viable to accumulate the Albertan oil reserves (Gates, 2007).
The drop of oil prices in the 2016 casts a darker cloud on the economy of Alberta. The crashes in oil prices have negatively impacted Albertan economy. Some companies are delaying oil sands projects while well and rig activities shrivel. An upward momentum for global oil prices would give a better future economic prospect of Alberta oil (Patel, 2015). Despite the current bleak picture for Alberta’s oil producers, the output of Alberta’s oil sands is still expected to grow. The reason for this forecast is that Alberta’s oil sands are different from other forms of conversional crude oil projects. However, the durability in growth of oil sands production remains unclear. While the reduced price scenario has led to the shelving of many future oil projects, some of the large projects that had been started are still continuing (Patel, 2015).
Environmental Effects of Alberta Oil
As the scale and rate of the development of oil sands continue to increase, there is increasing concern over the environmental impacts associated with it. The environmental effects of Alberta oil should be understood in the context of the global initiatives to reduce carbon footprints. Oil sands of Alberta underlie about 140,800 square kilometres. In situ development can occur beyond the mining area creating disturbance to boreal forest (Alexander, 2014). The linear disturbances that range from core hole and seismic exploration, pipelines and roads as well as production well pads can have a negative impact on wildlife species that avoid such linear features.
The extraction and transformation of bituminous, viscous sands into crude oil on a large scale is energy intensive and technically complex (Alexander, 2014). The environmental impact of the extraction and transformation activities is costly and troublesome to reduce. The development of Alberta’s oil sands is a carbon-intensive undertaking. Greenhouse gases are emitted due to the upgrading and production necessary for producing synthetic crude oil from mining of the oil sands. Oil sands are also GHG-intensive sources of fuel (Lattanzio, 2014).
Water use is another environmental concern associated with Alberta oil. Synthetic crude oil production from the oil sands requires large amounts of fresh water after considering water recycling. Athabasca river experiences seasonal fluctuation but large amounts of water are pumped from it to the mining of oil sands. Such withdrawal of water (especially during the low periods of low flow) has the potential of harming the Athabasca River’s aquatic life. The process of extraction makes the water toxic and cannot be returned back to the natural river system. In situ developments also produce waste waters pumped into deep aquifers found at the site instead of containing the waste water in the tailings pond (Lattanzio, 2014).
Potential Benefits and Benefits of Carbon Tax in Canada
Carbon tax is a form of tax on GHGs (greenhouse gases). It serves as a market-based policy tool that can be employed in achieving emissions reduction in a cost-effective manner (Lattanzio, 2014). Carbon dioxide is comprises the majority of GHGs. A carbon tax relies on the market-price signals for encouraging companies and institutions to reduce the GHG emission from various sources. Carbon dioxide remains the predominant GHG produced by humans through the burning of fossil fuels. A Canadian carbon tax would involve imposing a charge of oil that is proportionate to the carbon amount they are containing. The tax is then factored into the prices of energy-intensive goods and petroleum products (Lattanzio, 2014).
However, it is important to consider some of the trade-exposed and carbon intensive industries that can experience a significant decline in their growth rate (Lattanzio, 2014). Companies in such industries may find more attractive to shift their production to foreign countries whose carbon price is much lower. Canadian government should device ways of protecting the country’s economy from foreign nations with non-existent or lax carbon pricing. The revenue generated from the carbon tax mechanism can be utilized in assisting trade-exposed industries in order to ensure their international competitiveness (Lattanzio, 2014).
Carbon tax can deliver a sustained and significant reduction in the emissions of GHGs across diverse sectors of the economy. Unlike trade or cap system, carbon tax is easier to implement hence it can be introduced by the Canadian government at a faster pace because the government can use its existing administrative structures to tax GHG emissions. Canada is lagging behind many of developed countries in establishing prices on its GHG emissions (Lattanzio, 2014). A carbon tax will play a significant role in helping Canada meet its obligation in the global efforts to reduce GHG emissions and fight climate change.
Conclusion
Alberta oil sands play a crucial role in Canada’s energy sector. The conventional crude oil sources are on the decline while unconventional oil sources such as bitumen in Alberta’s oil sands are increasingly playing a crucial role in offsetting the decline in conventional oil production. The oil sands in Canada remain the second largest oil reserves in the world. Understanding the difference between Alberta’s oil sands and conventional crude oil is important in the forecast of the future of Alberta oil. It is also critical in understanding Canada’s and Alberta’s economic outlook. Most of oil sands in Canada are found in Alberta. The oil production from Alberta’s oil sands has various negative environmental impacts to the local ecosystem and the larger society. However, Canada like other countries is experiencing the effects of climate. A carbon tax can be used by the country as a mechanism or instrument of reducing GHGs emissions.
References
Alexander, K. (2014). Unrefined: A Canadian oil sands story. Toronto: Harper Collins Press.
Gates, S. (2007). The Canadian oil sands investors guide. New York: Prentice Hall, Press. Lattanzio, K. (2014). Canadian oil sands: Life-Cycle assessments of greenhouse gas emissions. Toronto: Harper Collins Press
Patel, S. (2015). The future of oil: A straught story of the Canadian oil sands. Oxford: Oxford University Press.
