Canada Has Green Concerns Over Oil Goldmine

Aug. 14, 2008— -- On a clear day, aboard a small plane over Alberta, the carpet of green below seems to stretch forever. The pine and spruce make up one of the last original forests on the planet, long considered one of Canada's most precious treasures.

But these days, it is the dirt beneath those trees that is most admired, because it holds as much oil as the United States, Russia and the United Arab Emirates combined. The rush to get it becomes obvious a couple hundred miles north of Edmonton, where the green blanket disappears in the world's largest industrial zone.

In the last decade, dozens of massive open pits have been dug out of the boreal forest. The Muskweg River Mine is six miles in diameter and every hour of every day -- Christmas included -- it crawls with some of the largest trucks ever built.

"It's pretty much like driving a two-story house," says truck driver Jennifer Sims, glancing into a side mirror the size of a refrigerator.

She will spend her shift hauling loads of dirt that look and feel like chocolate cookie dough and smell like diesel fuel. This earth is a mixture of sand, soil and a gooey type of petroleum called bitumen. One load in Sim's truck will eventually produce around 8,000 gallons of gasoline, and there are more than enough truckloads up here to bury the state of Florida.

Thanks to bitumen, Canada's oil reserves are second only to Saudi Arabia. But unlike the sweet, light crude that flows out of the Saudi desert, this sticky goop must be strip-mined -- or steamed and pumped -- from the sand and clay. It is, in essence, scraping the bottom of the barrel.

For decades, oil sands were considered more trouble than they are worth. But since oil prices topped $100 a barrel, they can't dig it up fast enough.

Every day the mines and plants burn as much natural gas as every residence in Ohio combined, heating up to four barrels of river water for every one barrel of oil. That water is then stored in massive, toxic reservoirs called tailing ponds. One of them killed a flock of 500 ducks this spring, raising concerns that oil sand production could be poisoning the water, land and air.

"Concerns are concerns. People have concerns," said Brian Maynard, vice president of the Canadian Association of Petroleum Producers. "I'm not one to say if they are fair or not."

But beyond the obvious impacts on the ground, this mining and refining process also produces two to three times more global warming pollution than conventional oil. That might not matter to some countries, but this is Canada. With a leaf on the flag and a loon on the money, America's kindly neighbor has long been considered a champion of the Earth. When their government signed the Kyoto Accord and promised to reduce global warming faster than any nation, three quarters of Canadians polled approved.

But if current trends continue, there is no way that they will meet the Kyoto targets. According to the U.N., Canadian carbon emissions have increased 27 percent since 1990. And if oil sands development continues at the current pace, that carbon footprint can only get bigger.

"Canada likes to think of itself as, you know, an environmental leader," said Dan Woynillowicz, director of strategy and external relations for the Pembina Institute, an environmental watchdog, "and yet that seems to have been taken over by the federal government's belief that Canada is and should be an energy superpower."

As their southern neighbors wrestle with record gas prices, Canada's so-called "dirty oil" is now an American political football. California and the U.S. Council of Mayors support a ban, and both the Obama and McCain energy policies reject this kind of unconventional oil. So what would happen if Canada's biggest customer decided to stop importing the fruit of Alberta's soil?

"Well, that's the beauty of a fungible commodity," said David McColl, analyst with the Canadian Energy Research Institute. "It will go somewhere else. China needs oil. India needs oil. So that can be sent elsewhere."

Environmentalists argue that regardless of who buys this oil, the difficult production process won't allow for cheaper gas at the pump now or later.

"It's not like Saudi Arabia where they drill another well, and they've got a gusher," Pembina Institute's Woynillowicz said. "So in the short term, the tar sands are not going to be some silver bullet that brings global prices down or…secure oil into the North American market."

Regardless of who buys it, Alberta seems determined to keep producing it. In the next decade, the amount of investment in Canadian oil sands is expected to top $200 billion. You can see it in the gleaming office towers of Calgary and in the lustrous pick-up trucks on the streets of Ft. McMurray. This former fur trader's post is the town closest to the mines and the demand for labor is so high, a 21-year-old truck driver can roll into town and soon make $150,000 a year.

"I started off washing buses eight months ago and now I'm a manager," said Adam over the hum of the tattoo needle tracing his shoulder. "I'm making quadruple what I could be making back home." As for the quality of life in the place now known as "Ft. McMoney?" "It sucks," he says glumly.

With virtually no unemployment, residents face staggering inflation. A dire housing shortage means rent on a two-bedroom goes for over $2,300 a month, and buying a mobile home on a tiny lot can cost half a million Canadian dollars. "It's ridiculous," said Scott, who works in the oil industry but didn't give his last name. "I swear for $500,000, back in Ottawa, our nation's capital, I can get a mansion with servants and maids."

As a result of high prices and no vacancies, few men bring their families and settle; instead they live in massive labor camps near the mines. It is common to have four days off at time, so many curb the boredom in classic boomtown style.

"Guys come into town and just drink, drink, drink, drink and yeah, sure, you get in a lot of stupid fights." Scott explains. He says many spend their free time and big paychecks on more than just whiskey. "Everybody's more into crack or cocaine 'cause it's only in your system for a couple of days, so if you get [drug] tested, you know you can pass the test."

"There was a time when, honestly, this was a real family community," said 20-year resident Anne Lastiwka. "I think we can get there again." She describes how cocaine addiction has shattered families and how most stores now feature empty shelves and signs asking customers not to be abusive toward employees. But she is fiercely proud of her town and says she hates the Wild West image her home has been given.

"I think we can get back to core family values by people bringing their families here and seeing that this is a viable, vibrant community, not just a place you come and get a paycheck," Lastiwka said.

Two years ago Ft. McMurray's mayor, Melissa Blake, asked the provincial government and the oil companies to ease development so that the town could catch up. Social services are strapped, traffic is snarled, and the phone book lists twice as many escort services as clinics.

"I have to be very conscientious about how I say it," Blake said, describing the boom. "It's, you know, wonderful and exciting. It's beyond our capabilities presently, but we want more than anything else to match pace with the growth that we are experiencing."

Despite the societal and environmental concerns, the oil industry and Alberta's provincial government show no signs of slowing down.

"We have been successful as an industry when we are able to operate and generate profits that we can then invest in those types of challenges," said Maynard of the Canadian Association of Petroleum Producers.

David Collyer, President of Shell Canada, agreed. "I think the challenge for us as industry, and frankly for us as society, is to decide how we want to balance socioeconomic impacts, environmental impacts and economic growth," he said. "And it's not for us to say how that should be done."

Shell Canada flew ABC News to Ft. McMurray as the industry and the Alberta government tries to counter the "dirty" image of oil sands energy. Our media tour included a stop at a charity golf tournament hosted by First Nations Chief Jim Boucher. Tribes of native North Americans, the First Nations have lived and hunted in the forests of Alberta for a millennia. Boucher's Fort McKay tribe was an early opponent of oil sand mining, but many of them now work as caterers and janitors for the oil companies and at this tournament, Shell executives are honored guests.

"If it wasn't for the oil sands, we would have no economy," Boucher said. "So to be pragmatic and practical about it, the alternative is to do nothing and sit there and collect welfare or to be a part of the economy. And I'd rather be a part of the economy than let our people be there collecting welfare."

Other tribes that live miles downstream from the mines are still opposed. They say there has been a spike in rare cancer cases, and they are concerned it could be the result of oil sand mining. There is a study under way, but no science as of yet to back up those claims.

But while the debate rages and the mines widen, the oil industry insists that new technologies will allow them to expand without destroying the land or heating the planet. Those promises, that the mines and tailings ponds can be turned back into forest, have yet to be proven. But Maynard said the oil companies will not fail and cannot afford to fail.

"If there is anybody that can do that, to address these challenges," he said, "it is the oil and gas industry."