Just Transition: Can oil and gas workers adapt to a green energy future?

There were times when I was taking home about $3,500 a week.” That was in the oil sands, during the boom before 2014. Lliam Hildebrand was a young welder who had come to the Athabasca oil sands for work.

Before that, the Victoria, BC, native spent his first eight years after high school in heavy machinery repair and steel fabrication, often on oil field equipment such as flare stacks and rig platforms. He says serving the oil field’s needs was “the bread and butter” of his work, with an occasional job building renewable-energy equipment such as parts for a biofuel facility.

“I really loved that job,” he says, but opportunities in the North called and he spent the next half dozen years in the oil sands, doing similar work, primarily during spring and autumn, when sites get set up and stripped down. He found it exciting, interesting—and lucrative.

Then came the downturn. As international market forces sent the price of Western Canada Select plummeting from close to $100 per barrel to at times less than $20, oil sands operations struggled to survive, especially as the break-even price for many operations was as high as $80 per barrel. The opportunities that brought thousands like Lliam north evaporated.

“It was crazy,” he says. “Every single day in the lunchroom we were having conversations about who was getting laid off… and when would we be laid off?”

Worldwide, the price crash saw more than 440,000 petroleum jobs disappear. Bloomberg UBS predicts that between a third and as many as half of those 440,000 jobs will never return. In Canada 46,000 oil and gas workers were laid off, mostly in Alberta. Pipeline purgatory and the spectre of fossil fuels’ decline dominate public and political rhetoric on the subject.

What hasn’t been at the forefront is talk of an escape plan for tens of thousands of oil workers. In the past, when industries from carriage makers to cod fishers suddenly crumbled, workers were abandoned. Now the hope is for a “just transition.” The concept of just transition holds that when an industry or sector declines, particularly if that decline is mandated by government policy, the workforce is entitled to planned support to move people to new gainful employment, ideally in their own community.

In theory it’s a grand concept and one of the best ways to gain support for climate change policies from the affected workforce. In practice, “just transitions” have had mixed results.

Alberta and Canada had a practice run in coal. Canada’s coal phase-out got its start in 2012 when the Harper government imposed emissions limits for coal-fired power plants that effectively guaranteed their shutdown. Technological solutions that would sufficiently lower emissions at these generators weren’t cost-effective, especially in the face of coal’s declining competitiveness worldwide.

Alberta followed suit in late 2015 when the Notley government announced similar limitations as part of its Climate Leadership Plan and soon after mandated that at least 30 per cent of Alberta’s electricity grid be powered by renewable energy by 2030. At the time, coal fed over half of the province’s electricity needs, and its production here was greater than all other provinces’ combined. Coal directly supported roughly 3,150 jobs in Alberta, mostly in mining and processing rather than plant operations. Coal workers include engineers, welders, mechanics, electricians, heavy equipment operators and maintenance staff. The economies of some 20 communities were tied tightly to the industry.

Pipeline purgatory and the spectre of fossil fuels’ decline dominate public and political rhetoric.

Hanna is one of those coal towns, and perhaps the poster child for the phase-out thanks to its vocal mayor, Chris Warwick, and the town’s concerted efforts to meet the phase-out head on.

Hanna’s population is 2,500, 210 of whom work in the nearby Sheerness coal mine and power plant. The mine operations prop up the town’s economy, inflating incomes above what would be expected in a remote farming community, allowing business and public services to thrive where they likely wouldn’t otherwise.

While Warwick’s efforts have focused on the town’s economic transition, councillor Connie Deadlock devotes her time to the workforce. “There have been a lot of conversations about just transition from the provincial and federal governments, as well as everyone else,” she says. The mine and the power plant are still operating, but the town is already affected by the inevitable changes, and residents are anxious.

“Not only do we have to worry about the direct job losses, there is no other industry, so many people and families will have to relocate,” Deadlock says. “Housing prices have already been declining, our schools are affected, our businesses, and the list goes on and on.”

She says that because the power plant will convert to run on natural gas, not everyone will lose their jobs, but the new operation will require far fewer employees.

Immediately after the phase-out announcement in 2015, Hanna’s leaders scrambled to find a way not only to keep the town alive but to maintain its quality of life. They contracted Calgary’s Urban Systems to make an analysis of the town’s predicament and attributes and outline a path forward. The resulting Cactus Corridor Economic Opportunities Report has good news and bad for the little town.

“Be realistic,” it recommends. “Living in a community/region can make one unrealistic about its potential.” Also, expect some decline, because “it’s unlikely high wage primary industry jobs can be replaced. If workers in these industries want to stay in the community, they may have to accept a reduction in income and work with less status.” Don’t rely on ongoing subsidies or bailouts, it adds; don’t look for a panacea; establish a sense of urgency.

Coupled with the phase-out, Hanna, like many coal communities, is also rural. It is already subject to the pressures of rural decline, making it even harder to replace coal in its economy.

Hanna does have some business opportunities. Urban Systems points out it has some of the best solar power potential in the country, and likely good wind power possibilities too. As a farming community, it is surrounded by arable land and a fair water supply.

Government hasn’t abandoned Hanna and other coal towns, either. In addition to setting an end date for coal, the NDP government had the foresight to consider the transition—especially important given the phase-out only had 50 per cent public support province-wide. The government wanted widespread support as it made major changes to the way Alberta dealt with climate change issues.

The provincial government gave Hanna $450,000 to set up community action teams and help establish an economic plan. Unfortunately, Hanna was left off the list when the government committed funding at the end of 2018 for the municipal training centres many people say are integral to a successful labour transition.

“Our community has so many ideas for business and expansion, but no funds to bring them to fruition,” says Deadlock. “The employees at the mine don’t feel they will benefit very much from any programs that are offered. There needs to be some significant changes.”

Disconnect between what workers say they need and what the transition programs actually offer is a pervasive problem in Canada’s just transition efforts for the coal industry. “The most requested thing is for the government to offer training and other programs while people are still employed, [but] none of the programs are a benefit while still working,” says Deadlock. “Employees feel that if they could do some upgrading, training or education while still working and having an income, they would have a better chance.”

In response to how initial transition programs were designed, Jamie Kirkpatrick of Blue Green Canada says, “I think that was stupid.” Blue Green is a collaboration of labour unions and civil and environmental groups that has spent the past 10 years advocating for workers affected by environmental issues. It has primarily focused on the fate of Canada’s coal workers as coal-fired electricity comes to an end. Kirkpatrick says requiring workers to lose their jobs before they can begin retraining for a new career sets them back from the start. He and Deadlock agree the reason transition programs often don’t resonate with labour is because many of the plans were made without on-the-ground consultation.

“You actually learn more talking to people who are going to be affected by this than telling them what’s going to happen,” Kirkpatrick says.

Governments issuing decrees rather than including affected groups in the decision-making has been a major sticking point among workers and labour unions throughout the phase-out, seriously eroding any support the decision may have garnered from those most immediately affected by it.  MORE

‘No excitement at all’ as oilpatch interest wanes for drilling rights auctions

Sales of Crown drilling rights have fallen off dramatically in Western Canada this year.


In Alberta, twice monthly auctions are on track for a record low with two sales left to go in 2019. (Larry MacDougal/The Canadian Press)

A key indicator of future oil and gas drilling activity in Western Canada is sliding lower as the industry deals with a lack of pipeline capacity, Alberta oil production curtailments and difficulty accessing capital markets.

Sales of Crown drilling rights — needed to allow energy exploration on land where mineral rights are held by the province — have fallen off dramatically in B.C., Alberta and Saskatchewan this year.

“When drilling rights are going well, it tends to mean somebody has found either a good reservoir or a good way to produce a known reservoir and so you get a lot of excitement,” said Richard Masson, an executive fellow with the School of Public Policy at the University of Calgary.

“This says to me, there’s no excitement at all right now. People are doing little bits of infill land buying but there’s nothing that looks like a very prospective play that would excite the industry and excite new capital to come in.”

In Alberta, which produces about 80 per cent of Canada’s oil and about 70 per cent of its natural gas, twice monthly auctions are on track for a record low with two sales left to go in 2019. Through 11 months, the province has raised $100 million by selling rights on 616,000 hectares.

The current low mark was set in 2016, when $137 million was paid for the rights to drill on 937,000 hectares, the lowest since the auction system was adopted in 1977.

The high was in 2011, when a bidding frenzy for lands for the Duvernay underground oil-bearing formation resulted in $3.5 billion spent to buy rights on 4.1 million hectares.

…Industry insiders say the declines are mainly due to the lack of new pipeline capacity to allow more oil and gas production, and the resulting loss of confidence by investors that has starved the sector of debt and equity funding. Production limits in Alberta imposed by the government to better align supply with pipeline capacity are another overhang on activity. MORE

Flood of Oil Is Coming, Complicating Efforts to Fight Global Warming

A Norwegian oil platform in the North Sea. Norway’s production has declined for two decades, but its development of the Johan Sverdrup deepwater field should reverse the trend.
Credit: Nerijus Adomaitis/Reuters

HOUSTON — A surge of oil production is coming, whether the world needs it or not.

The flood of crude will arrive even as concerns about climate change are growing and worldwide oil demand is slowing. And it is not coming from the usual producers, but from Brazil, Canada, Norway and Guyana — countries that are either not known for oil or whose production has been lackluster in recent years.

This looming new supply may be a key reason Saudi Arabia’s giant oil producer, Aramco, pushed ahead on Sunday with plans for what could be the world’s largest initial stock offering ever.

Together, the four countries stand to add nearly a million barrels a day to the market in 2020 and nearly a million more in 2021, on top of the current world crude output of 80 million barrels a day. That boost in production, along with global efforts to lower emissions, will almost certainly push oil prices down.

Lower prices could prove damaging for Aramco and many other oil companies, reducing profits and limiting new exploration and drilling, while also reshaping the politics of the nations that rely on oil income.

Canada, Norway, Brazil and Guyana are all relatively stable at a time of turbulence for traditional producers like Venezuela and Libya and tensions between Saudi Arabia and Iran. Their oil riches should undercut efforts by the Organization of the Petroleum Exporting Countries and Russia to support prices with cuts in production and give American and other Western policymakers an added cushion in case there are renewed attacks on oil tankers or processing facilities in the Persian Gulf.

Daniel Yergin, the energy historian who wrote “The Prize: The Epic Quest for Oil, Power and Money,” compared the impact of the new production to the advent of the shale oil boom in Texas and North Dakota a decade ago.

“Since all four of these countries are largely insulated from traditional geopolitical turmoil, they will add to global energy security,” Mr. Yergin said. But he also predicted that as with shale, the incremental supply gain, combined with a sluggish world economy, could drive prices lower. MORE

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Cenovus Energy to add 70,000 barrels per day of oilsands output


Rail cars wait for pickup in Winnipeg on March 23, 2014. The Alberta government is easing production limits on oil companies that ship their product by rail. File photo by The Canadian Press/John Woods

Cenovus Energy Inc. says it will add as much as 70,000 barrels per day of oilsands output following the Alberta government’s decision to ease production curtailments for producers that add crude-by-rail capacity.

The company can quickly add 10,000 to 20,000 bpd of raw bitumen output from its Christina Lake and Foster Creek northeastern Alberta thermal oilsands projects, said CEO Alex Pourbaix during a conference call Thursday morning after the decision was announced.

Meanwhile, it plans to begin startup procedures on its $675-million, 50,000-barrel-per-day Christina Lake phase G oilsands expansion project with production expected within six to 12 months.

Construction of the expansion was completed earlier this year but commissioning was put on hold until market access questions were answered.

“We think it’s a great way to incent further rail takeway capacity out of Alberta and we applaud the government for moving forward with this initiative,” said Pourbaix.

He added the move doesn’t remove the necessity of building more oil export pipelines.

Under the previous NDP government, Alberta put a cap on the amount of oil the industry can produce starting in January as a way to narrow local price discounts that grew as oil production exceeded the ability of pipelines to get the crude to market.

The measure was continued by the United Conservative government when it was elected last spring. The total industry quota is to increase to 3.81 million barrels per day in December, up 250,000 bpd from the original limit of 3.56 million barrels a day.

“Overall, we believe this program will be an important addition to the efforts to increase market access,” said Energy Minister Sonya Savage on Thursday.

“Looking ahead, maximizing the amount of crude shipped by rail is an important factor in moving forward towards an orderly exit out of curtailment altogether, which, under the enhanced policy, is scheduled to be concluded by the end of December 2020.”

Alberta currently ships around 310,000 barrels per day on rail, she said, but the rail system has the capacity for daily shipments of 500,000 to 600,000 barrels.

The new program is to be available as of Dec. 1 and operators will need to apply on a monthly basis and verify their rail shipments.

The province is still working on a plan to divest railcar contracts signed by the NDP government, Savage said.  MORE

 

Bargain prices for oil and gas companies as they hit the discount bin

Plan to roll back Alberta public employees’ pay is no surprise but seems unexpectedly inept

Alberta Finance Minister Travis Toews speaks about budget 2019. Image: Government of Alberta/Flickr
Image: Government of Alberta/Flickr

When Alberta’s finance minister announced the Kenney government’s plan to roll back unionized public employees’ pay by 2 to 5 per cent yesterday, he blamed Alberta’s debt and deficit, not the huge hole he’d just blown in the province’s budget with $4.5 billion in tax cuts for billionaires and big corporations.

Well, whatever. It’s not as if this comes as a big surprise.

What was going to happen was predetermined weeks ago and was predicted here and elsewhere repeatedly ever since the government appointed a panel led by former Saskatchewan finance minister Janice MacKinnon, whose op-ed calling for legislated wage rollbacks for public employees was published two years ago this week, to look into the state of the province’s finances.

When public sector unions’ wage arbitrations are allowed to resume after tomorrow’s Halloween celebrations are over, Toews explained in the government’s press release yesterday, there will be “an updated monetary mandate” that “moves from the previous position of no increase for 2019 to an average 2 per cent reduction for collective agreements that include a 2019 wage reopener.”

Regardless of the recommendations of the MacKinnon panel or the law the UCP passed to suspend arbitrations last spring until the panel reported, there’s a technical term for this sort of thing in labour relations, and it’s not trick or treat. It’s called bargaining in bad faith. It’s illegal.

What’s more, none of the public sector health-care unions affected by this planned rollback are negotiating with the government of Alberta. They’re negotiating with Alberta Health Services (AHS) and other health-care employers. AHS is supposedly an arm’s length agency. MORE

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‘Our future is at stake’: Greta Thunberg tells climate rally in Edmonton

‘We aren’t doing it because it’s fun … We are doing this because our future is at stake’


Swedish activist Greta Thunberg spoke to hundreds of climate activists at a rally at the Alberta Legislature in Edmonton on Friday. (Manuel Carrillos/CBC)

By foot, by bus and by truck, thousands of Albertans made their way to the provincial legislature grounds in Edmonton, drawn by a 16-year-old Swedish girl who is trying to convince governments to take action on climate change.

Wearing a turquoise parka, environmental activist Greta Thunberg marched among the hundreds of people along several major downtown Edmonton roads, ending at the Alberta Legislature where hundreds more were waiting to greet her.

Among the crowd were more than 100 people who set out early in the morning from Calgary to show up for the Fridays for Future rally, the climate strikes that originated with Thunberg and have spread around the world.

As Thunberg took the podium, she noted that it seemed like the rally had greatly exceeded that target.

“Today is Friday,” Thunberg said early in her remarks. “And as always, we are on climate strike. Young people all around the globe are today sacrificing their education to bring attention to the climate and ecological emergency.

“And we are not doing this because we want to. We aren’t doing it because it’s fun. We’re aren’t doing it because we have a special interest in the climate or because we want to become politicians when we grow up.

“We are doing this because our future is at stake.”


Hundreds of activists, along with some supporters of Alberta’s oil and gas industry, gathered at the legislature. (Peggy Lam/CBC)

The event included prayers, passionate speeches from Indigenous and non-Indigenous youth, and a performance by Chubby Cree, an Indigenous hand drumming group.

Thunberg gave a special shout-out to the young and Indigenous leaders at the rally, saying “you are the hope.”

Her speech touched on many of the themes she is known for: the need to heed science, the need for developed countries — like Sweden and Canada, she said — to lead the way in reducing their emissions to allow developing countries a chance to heighten their standard of living, and the desperate need to do things quickly.

“We need to start treating this crisis as a crisis,” she said. “Because you cannot solve an emergency without treating it as one.”

“And if you think we should be in school instead, then we suggest you take our place in the streets. Or better yet, join us so we can speed up the process.” MORE