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Key things you should know about these new oil sands projects

new oil sands projects

Current fossil fuel production levels – including existing and planned oil sands are not in line with global emissions reduction targets outlined in the Paris Agreement to keep global warming under 1.5 degrees celsius1.

The production of oil sands is less well known in some parts of the world compared with other fossil fuel industries such as coal, but it is still highly controversial.

Where are the proposed new oil sands projects?

Frontier mine, Alberta Canada. This project was proposed, however Teck Resources Limited (the company) withdrew its application for the Frontier Oil Sands Mine project on February 23, 2020. It was predicted to produce 260,000 barrels of bitumen each day at its peak, but as the world shifts to clean energy, this would no longer be viable. However, global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products.

Canada’s long history in oil production makes it the fourth largest producer and exporter of oil globally3. The government relies heavily on oil, but as global oil demand declines, this fossil fuel is quickly becoming another high-emissions stranded asset. New projects would be a step in the wrong direction both economically and environmentally.

Why are the new oil sands projects controversial?

Firstly, the environmental impact of the oil sands industry is huge. If the Frontier mine continued through to production, it would be entirely incompatible with climate targets. Research suggests it would produce 6 million tonnes of greenhouse gas emissions per year until 20674. This is a staggering amount, however, it’s not so dissimilar from other Canadian oil sands projects and their devastating environmental impacts.

Given forests act as a natural carbon sink, deforestation for oil sands production will drive further climate change5.

What are current plans?

Teck Resources Ltd. pulled its application for a new oil sands project in Alberta in February 20206. This has promoted Canadian Prime Minister Justin Trudeau to review the future of the region’s oil production in order to align the country’s commitment of becoming carbon neutral by 2050.

What else do I need to know?

Canada has had a strong history with oil sands projects due to its rich reserves. However, the Frontier mine project does not appear to have a long lifetime at just 41 years7, as future oil demand remains in question. This perhaps contributed to Teck Resources Ltd.’s own uncertainty about the economic viability of the project, alongside more global concerns.

References

  1. https://www.ipcc.ch/sr15/
  2. https://www.greenpeace.org/canada/en/story/28683/behind-the-headlines-5-need-to-know-facts-about-the-teck-frontier-mine/
  3. https://www.nrcan.gc.ca/science-data/data-analysis/energy-data-analysis/energy-facts/crude-oil-facts/20064
  4. https://www.greenpeace.org/canada/en/story/28683/behind-the-headlines-5-need-to-know-facts-about-the-teck-frontier-mine/
  5. https://thenarwhal.ca/10-things-you-need-to-know-about-the-massive-new-oilsands-mine-that-just-got-a-green-light/
  6. https://www.bloomberg.com/news/articles/2020-02-24/teck-pulls-application-for-oil-sands-mine-in-relief-for-trudeau
  7. https://thenarwhal.ca/10-things-you-need-to-know-about-the-massive-new-oilsands-mine-that-just-got-a-green-light/
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