I’m writing this blog in Alberta, where I’ve lived almost all of my life. It’s inevitable, growing up in Alberta, that one becomes a witness, willing or not, to the conversation about the “energy sector,” and its woes and victories. Young Albertans are slowly perfused with the idea that the fate of “oil and gas” is linked to their own fortunes, along with those of their fellow Albertans. “We’re all in it together,” says Oil and Gas. And they mean it, until they don’t!
Of course, “oil and gas” in Alberta is a vast sector, with various corporate types and sizes. I want to focus this post on that portion of the sector that excavates bitumen. The areas where bitumen is mined are collectively known as the “oilsands,” “the oil patch,” or, for short, “the Patch.” 
The Patch, by the late 1990’s, had been developed to such an extent that it was attracting thousands of workers, both temporary and permanent, from all over the world. An entire city- Fort McMurray- grew out of global investment in the Patch, and it is, contrary to what one might imagine, a truly middle class suburban city complete with burgeoning families, schools, libraries, a hospital, churches, rec centers, etc- all of the trappings of modern life fueled by what some surely thought would be infinite oil patch profits.
Bitumen is a substance made up of oil, sand, water, and fine clay particulates. It’s found in the Caribbean, Europe, and the Middle East, but it has become intrinsically associated with the boreal forest of northern Alberta, which was, 100 million years ago, covered not with trees, but with a shallow sea teeming with marine life. Over millions of years, and the deaths of billions of these organisms, a sludge accumulated at the bottom of this sea. This decomposing matter was covered over with sandy mud and clay.
Then, during the last Ice Age, vast glaciers formed atop it, and after compression over milleniae, the sludge became bitumen. When the glaciers melted, 12 000 years ago, the running waters exposed the bitumen in some areas.
The Indigenous of the area, the Dene, knew it was there, and it was a Dene woman named Thanadelthur, abducted by a Cree raiding party, and then taken to the Hudson’s Bay company in 1714, who first told Europeans about the “Gum or pitch that runs down the river.” The Cree sometimes used it to seal their canoes. 
A systematic survey of the area was done in 1913 by Sidney Ells. In 1920, the newly-created Alberta Research Council sent an engineer called Karl A. Clark to investigate the commercial potential of bitumen. By then it was recognized that bitumen wouldn’t be useful as fuel until technology to separate the oil from the sand, water, and clay was developed. Decades passed as liquid crude oil was discovered in America, Iran, Saudi Arabia, the Amazon, and Indonesia. Oil gradually became the engine of seemingly unlimited economic growth. And increasingly, of conquest and war.
World War 1 “was fought significantly, if not centrally, over vast oil deposits in the Middle East.” World War 2 was the “first war at oil’s full size and speed… fed by aviation fuel and continent-wide supply chains.” And in this war too, securing oil was one of the combatant’s big priorities: “The Japanese sneak attack on Pearl Harbor in 1941 was to some extent a preemptive strike to prevent losing control of its vital Indonesian oil fields.”
“Oil’s abundance and power ignited dreams of limitless growth and impossible wealth. The whole modern world took on some of the delirious logic of the boomtown and the gusher, driven by the certainty that there would always be more.” To some, it was unthinkable that Alberta’s bitumen could not be tapped so that Canada could profit from its own vast oil sands reserves.
In 1947, Imperial Oil hit a gusher at Leduc in central Alberta. The boom convinced then Premier Ernest Manning to renew efforts into what seemed stubbornly unyielding: those enormous oil sands deposits. Turns out Karl A. Clark had been working on his refining process all along. It involved “heating a slurry of bitumen and hot water with chemical catalysts to separate the bitumen from the sand. His process, with certain modifications and updates, is the process that is used at oil sands plants today.” The Alberta government heard that “crude oil could be made from the bitumen of the McMurray Formation at around $3 a barrel.” This was cheap enough to be commercially viable.
A Sun Oil-led consortium called the Great Canadian Oil Sands got approval for an oil sands excavation and processing plant in 1962. It took decades of trial and era before the process was really cost-effective. Even today, engineers continue to tweak it, shaving off seconds of time, kilaJoules of energy, and automating where they can. New materials have been developed, and gargantuan pieces of equipment have been built. As Turner writes, “the oil sands project has been haunted by a thousand mean demons every step of the way. Nothing about turning bitumen-rich ore into profitable flows of crude oil has proven to be straightforward.” They persevered: there was a vast global market for oil.
And yet, global oil prices MUST be maintained above a certain break-even point for oil sands operations to make money. The prices we’ve seen since the COVID-19 outbreak are nowhere near that price. In fact, Oil Sands Magazine pegs the break-even price for a barrel of WTI oil refined from bitumen at $70/barrel. And that amount excludes “blending and transportation costs but include[s] capital expenditures.” At present prices, with WTI oil under $40/barrel, Alberta bitumen is unviable.
Nevertheless, bitumen is touted by Alberta’s government as a critical product, and an industry that must be saved, no matter what it costs the taxpayer. The government persuades many. Some Albertans develop a deep respect for the bitumen industry, and may even idealize the men and (a few) women who work in it, and pay taxes while doing it. Others have a more nuanced opinion, seeing the industry as a fact of life with pro’s and con’s, but keep misgivings to themselves.
A few Albertans learn that the industry consumes vast amounts of fresh water (which, with climate change, is becoming more precious and rare), and natural gas. And that it makes vast ponds of toxic wastes which dot the northern boreal forest, presenting a hazard to all living things for years to come. Still, this latter group often chooses not to speak a word against the industry. It’s a precious few that feel confident enough in person and career to speak of the dangers the industry poses to living things. If you find it troubling that citizens of a free and democratic province feel reluctant to speak truthfully about an industry that harms the planet, then you’re not alone.
The Albertan government, as is common in regions where oil has been found, is invariably a big cheerleader of the industry… and so it behooves them to be, because the wealthy oil company executives and management, and their well-paid employees, have a lot of money to throw into political contests. I venture to say that without the support of oil-related people, a candidate for provincial legislature is unlikely to be elected at all. Certainly s/he has only a tiny chance to advance in power and influence, and almost no chance at all of becoming Premier or a Minister.
The reality of climate change has done little to alter this dynamic. Although there was a flash-in-the-pan government that made some brave attempts at advancing Alberta into the 22nd century. That Premier, Rachel Notley, established productive relationships with many of the oil companies, which are, if nothing else, pragmatic in their interactions with the political types.
It’s said that Albertan oil executives, unlike those operating in some regions, recognize that greenhouse gas emissions are damaging the planet, and have to be reduced. Some even speak of the “zero emissions” barrel of oil, although no company on Earth is near that miraculous feat. But during the NDP government, oil companies accepted the Premier’s implementation of a small carbon tax, and it brought in $2.7 billion for the province before the Albertan electorate rejected it, in 2019, by returning a nominally “Conservative” government to power.
As a Petrostate– a region with oil- Alberta was immensely fortunate to experience a progressive, accountable government even for a limited time. Why? Because regions who “strike oil” are almost invariably corrupted by the wealth it brings in. Those privileged few who benefit from the sale of oil cannot resist using some of their wealth to buy the conditions most conducive to their business, and those conditions may or may not allow for debate or a general “rising of all boats.”
Over time, a large and growing wealth inequality tends to set in, with people directly or indirectly employed by oil companies raking in an ever larger share of the province’s income. Inevitably, oil companies employ lobbyists, at great expense, to manipulate politicians into making, modifying, or eliminating laws, as they see fit for “profit maximization.”
At first, social services such as education and healthcare, and municipal governments, seem to benefit from the increased tax revenue taken in by government from profitable oil companies and employees. But inevitably, wealth translates into “I want my taxes vastly reduced,” and “We want to pay way less in royalties.” Those unconnected to oil slowly lose out. Diversification of the petrostate suffers as the government concentrates on oil to the detriment of emerging/nascent initiatives.
The public purse is starved, but that fact is often obscured. Hidden as much as possible, too, are the financial benefits and taxpayer-provided subsidies generously, albeit undemocratically, bestowed upon oil by government. Parts of the previously democratic government are now “captured.” And once caught, it’s pretty difficult for them to wiggle their way out.
And that’s all during the boom times. What happens if something goes wrong- and heaven knows there’s a lot that can go wrong- and the price oil companies can obtain for each barrel of oil falls, or their costs of production rise for some reason?
Well, oil company employees lose their jobs, maybe permanently. Companies that derive their income from supporting oil go out of business. Construction in the area sputters, so contractors, carpenters, electricians, plumbers, painters, etc lose work. Companies that provide housing, food and cleaning services to temporary workers suffer. Restaurants, bars, motels, retail, etc all experience loss in income. Oil companies cut any labor considered in any way extraneous.
Invariably, upper management is just fine, but the damage to lower pay grades can be immense, cruel, and widespread. Meanwhile, the companies get taxpayer money in order to avoid bankruptcy. They’re able to pay upper management salary and bonuses, and pay dividends to shareholders. They may use taxpayer money to shore up their company’s market value by buying their own stock. The assets of the wealthy are thus protected by tapping the taxpayer. And of course, the taxpayer is paying for laid off employees to get unemployment insurance and other financial help.
All of this, the boom-and-bust cycle, the roller coaster of profit and loss, and the benefits to the people, which inevitably become costs, is known as the “resource curse.” The resource curse is not a phenomenon unique to Alberta; it has harmed the peoples of Nigeria, Russia, Venezuela, Iraq, America, and even Norway, whose government, arguably, has been the most wise and progressive about dealing with the mixed blessing of discovering oil on its territory. It has a $1 TRILLION oil-derived “people’s” fund. Contrast that to Alberta’s Heritage Fund, established by Premier Lougheed in 1976, which now stands at a relatively pathetic $18.2 billion as of March 2019.
Why did Alberta fare so badly vis-à-vis the resource curse?
I will leave that to another post.
Footnotes:  The oil sands were first called “tar sands” in an 1894 report by the Geological Survey of Canada. The first surveyors saw the bitumen as proof that there were large liquid oil reserves underground in the area. A Robert Bell of the Survey even mentioned that a pipeline would probably be required there, in the early 1880’s.
 Thanadelthur’s people were wiped out by smallpox. The Dene who took over their territory had lived farther north, and refused to mix with Europeans.