By Robert Collier
San Francisco Chronicle
March 24, 2005
The $6 billion Mackenzie Pipeline project would open the Canadian Arctic for natural gas drilling and send the gas 800 miles south down the Mackenzie River Valley to Alberta. There, much of this fuel would be used to throttle up production in a huge but hard-to-tap supply of petroleum dispersed in underground gravel formations. These so-called oil sands hold petroleum reserves that are second in size only to Saudi Arabia's, and analysts say they could supply a large portion of U.S. energy needs for decades to come.
But the project has sparked opposition from some native tribal groups, which call it a federal grab of their ancestral lands, and from environmentalists, who say it would churn out greenhouse gases linked to global warming.
It is a fight that is likely to forever set the course for Canada's vast and empty north. The project is full of continental superlatives _ North America's richest oil patch, its biggest construction project since the Alaska pipeline in the 1970s, its largest strip-mining operation.
"By far the most important thing for North America are those oil sands in Canada," said Robert Esser, director of oil and gas resources at Cambridge Energy Research Associates in New York. "It's nice we're going to have access to (the Alaska refuge), but there are a lot of unknown questions there. We have no idea whether there is oil or gas or how much. In the oil sands, we know the reserves are huge, much larger than in Alaska."
The Canadian government, which calls the project an economic necessity, is not required to seek approval from Parliament in Ottawa. Pipeline construction is expected to start in early 2007, with gas flowing two years later.
In Alaska, by contrast, congressional authorization is required to develop the wildlife refuge. Last week's Senate vote to allow drilling will be followed by several more months of legislative maneuvering and, if the plan is approved, about eight years of preparation before oil begins to be pumped.
Despite its bright prospects, Canada's pipeline could still be stopped in its tracks by opposition from one of the region's native tribes, which are known in Canada as First Nations.
The Deh Cho First Nation, a tribe of about 4,200 people who occupy the southern third of the pipeline route, has filed suit in federal court in Vancouver, British Columbia, to block the project. The Deh Cho are holding out for autonomous powers in their area. Until a deal is reached on the land dispute, the government lacks legal authority for a pipeline right of way, the tribe insists.
Natural gas is the crucial ingredient in the process of extracting oil from the sands. Although other fuels have been used to cook the oil sands, such as coal and the bitumen itself, none works as well as gas.
The nearest major source is in three well-explored yet untapped gas fields in the delta of the Mackenzie River on the shore of the Arctic Ocean. If the pipeline is built, gas from the delta can be funneled down to Alberta, where it will connect with the province's pipeline system to reach the oil sands.
With international oil prices soaring over $50 a barrel and likely to remain high for years to come, the oil sands are a bonanza in the making. The oil sands are estimated to contain 174 billion barrels of oil, second only to Saudi Arabia's 260 billion barrels.
"Imagine Saudi-type production levels just north of the U.S. border in a friendly country," said Roland George, an Alberta analyst with Purvin & Gertz, an oil industry consulting firm in Houston.
But environmentalists say the process of burning large amounts of energy just to get more energy is reckless. "The oil sands are the world's dirtiest source of oil," said Stephen Hazell, director of the Sierra Club of Canada's campaign against the Mackenzie pipeline.
The oil sands expansion is expected to increase Canada's emissions of greenhouse gases by as much as 12 percent of the country's total allotment under the Kyoto Protocol, making it almost impossible for the government to meet its commitments for reducing emissions, Hazell said.