Winnipeg Free Press

Winnipeg Free Press (Newspaper) - September 23, 1981, Winnipeg, Manitoba Winnipeg free september f focus self sufficiency for Canada fades v by Eric Roher special to the free press As a result of the Energy Deal recently signed by the Federal and Alberta Oil and Gas prices will increase substantially Over the next five Many observers argue that these increases will induce canadians Cut Back on Energy Mervin the Alberta Energy min said that the agreement will play an important role in helping Canada achieve self sufficiency in Oil by the goal of Ottawa National Energy after the agreement was promised to resume Oil prod auction shipments Cut by barrels a Day As soon As possible and Industry spokesmen said that work will begin on the massive tar Sands Oil projects in the West and on new drilling despite the new momentum to increase How realistic is the Federal governments current Energy policy in terms of its goal of reaching self sufficiency in Oil by 1990 in a paper in Energy crisis policy a Book recently published by the Institute for research on pub Lic Knelman underscores need for a new policy which would Combine a More intensive commit tent to conservation with support for development of new Energy sup if one examines the consumption of Petroleum in our Energy the minimal amount below which we can not satisfy present obligatory demands in and petrochemical sectors is estimated to be Between 2535 per cent of our total Energy Knelman projects that by 1990 we will barely be Able to satisfy this and contends that we will not be Able to sustain that level for More than a couple of he the grim fact is that Canada is now Well towards becoming a major importer of Petroleum in this there is considerable evidence to reinforce the assertion that Over the next decade the trend in Canada will be to rely less on indigenous sources and More on foreign billion annually in Oil provided per cent of Canadas total Only when one examines the contribution to economic activity of the diesel in farm plastics arid All of which use Oil or Are derived from can we comprehend what is meant by an Oil we import about barrels a Day from foreign sources to satisfy the demand for Oil in the Eastern provinces at a Cost of Over billion per reserves in Alberta Are presently supplying areas West of the Ottawa Valley but there is Abun Dant evidence that Over the next decade Canadas Domestic reserves will face rapid Knelman contends that the reserves to production ratio of our remaining Oil Stock is now at the peril Point of due to the physical restrictions of oilfield Albertas proven re sources have reached the maximum efficiency rate of recovery of 10 per cent per Knelman concludes that at the current level of annual there is Only ten years of Oil Supply he shows that within ten reserves of natural Gas Are projected to decline to a minimum desirable with no significant new discoveries or Only discoveries in costly Frontier it is Clear that a substantial amount of time is required to either bring new Fields into production or to develop alternatives from unconventional recent studies indicate that in the last 10 additions to Western Canadian Petroleum reserves have averaged less than on third of the annual rate of withdrawal of these while exploration in Frontier most notably in the Beaufort sea and off the Newfoundland has yielded some encouraging the extent and commercial potential of these discoveries remains giant if found at will Only be found in Remote areas and will be expensive to the Long Lead up to 10 to 12 years for the development of Remote Frontier re Rule out the possibility of substantial Reliance do new indigenous even if new supplies could conceivably become available before recognized Between the areas in which electricity can be substituted for Petro for the demand for ther Mal Energy As in space heating or process heat can be met by electricity derived from Coal or nuclear but the demand for mechanization in transportation and agriculture in the form of and petrochemical feedstock cannot be satisfied by the fact that Ontario found itself in 1980 with an excess of 42 per cent of electrical generating capacity is an indication of the limits to Energy critic Amory Lovins argues that conversion from such Wells As mobiles Hiber Nia off studies show that the initial finds will have Little effect on Canadas Overall Supply Pic in searching for alternatives to re place the depleting Domestic it is hard to avoid the Over one trillion barrels of synthetic crude in Canadian Oil Sands and other heavy Oil deposits mostly located in but the sizeable economic and environmental problems in trying to re Trieve this Oil put into question whether a substantial amount of marketable crude can be produced from these sources before the end of the practical methods for developing these enormous Energy reserves As sources of Oil Are still in their Lack commercial performance and Are perceived As in the Case of heavy oils and deeply buried Oil the most immediate difficulties relate to recovery problems primary recovery of heavy oils by conventional Petroleum recovery methods yields on average less than seven per cent of the Oil in where Oil Sands can be recovery is less of a but there Are other the separation of Bitumen from the still the Only commercially proven is environmentally it consumes very Large amounts of water and re quires disposal of spent Sand and associated toxic alternative processes that would minimize these hazards Are still in Early stages of development and Are very Many experts predict that the development of in Situ technology will play an important role in achieving Energy chairman of the Alberta Oil Sands technology and research has said that the Challenge to develop this technology is even greater than rigorous examination of the various options available to Canada suggests that Energy minister Marc Lalonde goal of self sufficiency by 1990 is was Candy technology because weve got both the Basic research and engineering design to do there is no in Situ technology that is economic ally and technically feasible at it is estimated that the Lead time will be at least 10 years for the first prototype and both capital requirements and net Energy considerations could constrain the rate of devel of the Many techniques that have been suggested As possible substitutes for one of the More prominent can be seen in the increased application of electricity from Coal or nuclear the proponents of electric Power would have us believe that we can transform our Oil based technological structures to convert to an electric but a distinction must be to electricity is incredibly inefficient and grossly uneconomic and compares it to cutting butter with a Chain Coal liquefaction could meet much of the Petroleum but the Lead economic Uncertain and technical problems make it an unlikely substitute in the medium time in reviewing Canadas current Energy situation a few factors Are in our most accessible Petroleum reserves Are rapidly facing a Long Lead time is required for the development of Large pools of Frontier the technology for exploiting unconventional reserves As sources of Oft is costly and still in Early stages of there Are Seri Ous limitations in trying to substitute electricity for voracious canadians assuming that the High rate of con sumption in Canada remains relatively constant we Are the most voracious Consumers of Energy among Western industrialized then it seems that Given the above the goal of self sufficiency in Oil by 1990 is not Likely to be a recent study undertaken by the United states government projects that Canadian Oil imports will Rise million barrels a Day by Canadian Energy critic John Kettle predicts that before 1990 we could be importing As much As million barrels a Day and at a Price of Canadian a the annual outflow of capital would reach some this is close to the Federal governments total current annual it is Evi Dent that a growing demand for Oil imports would increase our vulnerability to disruption in without some reordering of Priori ties and rethinking of Public policies respecting Energy resource develop we in Canada May face massive discontinuities in our Economy and ouf rather than focussing Only on increasing the Supply of an astute policy of self Reliance must also emphasize the reduction of a study by the peace research Institute shows that Canadas Energy effectiveness ratio total primary Energy to Gnu is the poorest among Recd countries and that we have the most dismal record of real Energy it says that Canada has merely slowed Down rather than eliminated a massive program of conservation and efficiency and a genuine commitment to renewable Energy sources is needed if we Are to reduce demand in striving to achieve Energy there is no reason Why we cannot have an acceptable level of economic growth of Over three per cent a year at an Energy growth of less than two per cent a a study conducted by the department of mines and re sources predicts that if an Energy de Mand of two per cent is obtained by Canada would be saving Energy equivalent to the combined annual output of five Oil Sands plus 20 per cent of total natural Gas production in plus 13 picker in sized nuclear plus Mil lion tons of bituminous some Energy experts say that we can achieve this with Only modest adjust ments in such adjustments include adopting More rigorous fuel mileage standards for promoting a More extensive insulation program to make buildings and providing More incentives to re Duce waste in action has already been taken on Many of these fronts and the results Are the average new Auto Mobile in 1985 will use on half As much Energy As a 1975 car and although there will be More cars on the Road by in total they will Burn substantially less than they Are using it is estimated that All the insulation installed in Canada Between 1972 and 1978 saved 60 to 80 million barrels of Oil in consumption drop Given the rapid increases in the Price of among other the National Energy Board says that we can expect a 1981 drop in Overall Petroleum con sumption of More than four per a comprehensive and aggressive Energy program based on conservation should Lead to even greater reductions in the growth of demand in the near there Are no assurances that with a massive conservation program the goal of self sufficiency by 1990 will be but one can be assured that without conservation As a Central ele ment of a National Energy self sufficiency is not Likely to be achieved by the end of the the substantial increase in Oil and Gas prices recently agreed upon by the Federal and Alberta governments is an important step in encouraging canadians to reduce Energy but More must be done if we Are to achieve self Reliance in the medium a comprehensive conservation policy would help ease the need for the vast sums required to develop new Energy and would provide breathing room to refine the Complex technology essential to meet our future Energy what we have is a sound policy in search of a More focus on Page 8 How Peter Lougheed torpedoed Joe Clark Alberta Premier Peter Lougheed weekend speech to the Canadian Cham Bers of in which he discus sed the possibility of a floating interest rate for is being widely interpreted As his testing of the Waters for a Federal tory leadership if indeed that is the there will be one individual above All who will be struck by fates cruel twist current conservative Leader Joe Clark is waging a Tough Battle to hang on to his in no Small part due to the actions of Lougheed during the Brief life of the Clark government in the fall of the Story of the Clar Lougheed of How Clark tried and failed to achieve a rational resource tax re is history but it is highly relevant in fat homing the Depths of the crisis in Federal provincial relations and in leadership in Canada it was outlined in Superb detail in Jeffrey Simpsons discipline of which won the governor generals award for nonfiction in in a appropriately entitled the limits of Simpson charts the course of the ill fated in one of his most revealing Pas Simpson says to Joe Clarks he made the heroic Effort to forge a new Energy he nearly but he failed because his government collapsed just Frances Russell when it finally appeared that a pricing agreement might be signed with Alberta Premier Peter it had taken months of excruciating bargain ing with Lougheed even to approach an and the Story of those months in Joe Clarks slow disillusionment with the Alberta pre Mier and the shaking of the Young prime ministers conviction that the conservative premiers of Canada really wished him to he was naive on entering the negotiations nothing in opposition had prepared him for the intractability of provincial govern he believed that by showing Good will and making Early concessions he could consummate a speedy Energy agreement that would fulfil his elec Tion Promise to end the warring be tween Ottawa and the provinces As the negotiations dragged on with Clark found his political Posi Tion undermined in Ontario by the Public perception that he was Capitu lating to that perception was strengthened enormously by Ontario i Premier William who launched a systematic Campaign to discredit Clarks Energy policy in order to protect the Ontario conservative party standing in Clarks goal from the beginning was to have an agreement that met Alberta on Price but permitted a sensible piece of the action for the National govern believing that conservative pre Miers wished him to Clark began by proposing that Ottawa raise the Oil Price by a barrel Over the next three in Clark wanted All of the Industry additional revenues and half of the producing provinces to assist initiate conservation programs and finance new Energy the creation of an Energy self sufficiency fund and a Canada resource corporation variations of ideas that had been advanced before by Saskatchewan Allan Bla Keney and Ontario Bill Davis were proposed to accomplish these three when the offer went to Simpson Lougheed was Furi he refused to make any equity contribution to a National Energy Bank or a stabilization it was for which owned the natural re to determine what to do with the provincial revenues from those re sources Alberta needed its Heri Tage fund to guard against the Day when conventional Oil was gone and not one Penny was going to be diverted from that heritage fund to an Energy Bank or stabilization fund controlled by the Federal Simpson said Lougheed viewed Clark As his intellectual inferior and refused to so Clark modified his propos Al to permit Alberta to loan Money to the fund at half the prime rate planting the seeds that led to his offered to use the Federal excise tax As a Way to obtain Revenue and discourage again Alberta Simpson Lougheed then lec tured Clark and his Federal gave them Albertas Bot Tomline Posi which included Loans from the heritage fund at near commercial gathered up his papers and stomped out of the at later Lougheed torpedoed Clarks suggestion for a Federal wellhead saying it was an invasion of provincial the talks dragged Simpson describes Lough eeds negotiating style As like Clemenceau at of whom the historian Alfred Cobban he tried to make obstinacy do the work of at the time the Clark government was Defeated on its budget four major Points still remained to be negotiated with the tory Energy pricing regime never got off there Are several lessons to be Learned from this with potent relevancy for should he Ever go to will carry with him a disastrously truncated View of the who Felt the sting of provincial rights More personally than other prime could revive his Flag Ging leadership and his party by shed Ding his hopeless Community of communities idea and returning to the tory party nationalist John Diefenbaker one Canada surely is More than a partisan Liberal doonesbury spraying Over 6kwpsl1ke wgoww5 doing the Only sow such As fowin6 the inheritance 7ax Laws 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