For more than a decade, the Niger Delta has been smothered in oil.
The region’s economy is dependent on exports and refining crude oil: there are virtually no other industries to speak of.
But now that years have passed without any major developments – even though Nigeria has seen some improvement with its GDP rate – it would seem as if the industry is stuck in place. But this could be changing soon, thanks to one small plant which was recently built near Geregu city. The plant produces 30% cleaner diesel fuel from local waste matter; experts hope that by using innovative technology such as nanotechnology and natural gas, production will rise exponentially over time until reaching an overall 25-30% increase within five years or less., making transportation far greener for Nigeria as well as many countries around the world
TORONTO— Under pressure from investors and environmentalists, major oil corporations are departing Canada’s oil sands, the world’s fourth-largest oil resource and, by some accounts, one of the most ecologically unfriendly. Existing projects have seen a halt in investment, and banks are reluctant to finance new ones.
Nonetheless, oil production is anticipated to last at least another two decades. Local businesses have stepped forward to keep the existing mines and wells operational. Last year, the oil sands produced more oil than ever before.
To combat climate change, governments and financial institutions are striving to wean the globe off of fossil fuels. Energy demand, on the other hand, continues to be strong. Existing oil resources, regardless of their carbon impact, are likely to stay in production long after big-name global corporations have left.
Outside of Saudi Arabia, Venezuela, and Iran, the Canadian state of Alberta still has around 170 billion barrels of viscous, tar-like bitumen beneath its boreal woods. Domestic companies such as Canadian Natural Resources Ltd. CNQ 1.82 percent, Suncor Energy Inc., SU -1.10 percent, Cenovus Energy Inc. CVE -0.62 percent, and Imperial Oil Ltd. IMO 0.96 percent, an affiliate of Exxon Mobil Corp. XOM -0.72 percent, extracted more crude from those fields in the third quarter of last year than in the same period the previous year.
Politicians and others advocating for a quick shift to greener energy sources are faced with a dilemma. Despite increased attempts to wean the world economy off of fossil fuels, renewable energy sources are still unable to match current demand. Companies will continue to extract oil from carbon-intensive sources as a result of this.
“We will continue to see growth,” said Alex Pourbaix, CEO of Cenovus, a Calgary-based company that last year raised its dividend. Cenovus raised oil sands output by about 50,000 barrels per day in the third quarter.
Cenovus Energy’s Christina Lake oil sands project in northern Alberta has a processing facility.
Cenovus (photo)
Mr. Pourbaix believes that despite the global drive for renewable energy, oil’s relevance as a cheap energy source will not diminish anytime soon. “There is no large-scale technology that can replace what oil can accomplish,” he stated. “It’s simply the way things are.”
In June, the benchmark West Texas Intermediate oil price in the United States, which had fallen to record lows in the spring of 2020, surpassed $70 per barrel for the first time since 2018.
Even international leaders who are dedicated to lowering emissions have called for additional production as a result of the steep surge in costs. Last year, as gasoline prices began to rise, President Biden requested the Organization of Petroleum Exporting Countries to increase production, and in November, he released oil from the United States’ strategic reserve in an attempt to lower gas prices. He also backed the development of a replacement for Line 3, a pipeline that transports petroleum from the oil sands to the United States and is managed by Calgary-based Enbridge Inc.
Justin Trudeau, Canada’s prime minister, is investing more than $12.5 billion to extend the Trans Mountain pipeline, which transports petroleum from the oil sands to the country’s west coast. When completed in 2023, the extension would increase Trans Mountain’s capacity to about 900,000 barrels per day, offering businesses like Cenovus and Suncor better access to Asia’s booming markets.
Mr. Trudeau has said that money from Canada’s oil sector would be used to support the country’s transition to cleaner energy sources.
Despite a years-long flight of money from the region, output in Canada’s oil sands is increasing. The area, which was once one of the hottest investment locations in the energy industry, has now become a no-go zone for foreign capital.
Royal Dutch Shell RDS.A -0.12 percent PLC, ConocoPhillips COP -0.92 percent, and Total SA TTE -0.91 percent have all announced intentions to sell or have already sold their Canadian interests since 2017. Greenhouse gas emissions and unsatisfactory profits are among the arguments given. Chevron Corp. Chief Executive Michael Wirth claimed the area was not a strategic asset for the corporation and that he was willing to selling a part in it.
The Trans Mountain pipeline, which transports petroleum from the oil sands to Canada’s west coast, is being expanded. In Kamloops, British Columbia, a pipe yard serves Trans Mountain.
Reuters photo/Jennifer Gauthier
Oil sands assets have been removed from the portfolios of several BlackRock Inc. investment vehicles and Norway’s sovereign wealth fund. Last year, the Caisse de dépôt et placement du Québec, one of Canada’s biggest pension funds, declared that by the end of 2022, it will sell all of its oil firm stock holdings, including its stakes in Canadian businesses.
In September, the fund’s chief executive, Charles Emond, said, “The principle underlying this is to avoid contributing to extra oil production.” The Caisse oversees more than $300 billion in assets for public workers in Quebec, with around 1% of that invested in oil company shares. “In the face of the climate catastrophe, this is a leadership choice.”
Smaller independents and private investors have stepped in as multinational energy firms have left the oil sands, and some have pushed to enhance output.
Waterous Energy Fund, a Calgary-based private equity business, has purchased three oil sands projects in Alberta in the last two years, according to Adam Waterous, CEO. The projects together generate between 50,000 and 60,000 barrels per day, with the potential to expand to 100,000 barrels per day over the next five years, according to him. Because he doesn’t have to answer to public shareholders, he added, his firm has greater latitude to boost output while investing in technology to minimize carbon emissions.
The petroleum sector in Canada contributes for around 5% of the country’s total economic output. Oil has been Canada’s top trade export for all but two years since 2008.
Between 2000 and 2014, the oil sands developed over an 88,000-square-mile region in northeast Alberta. High oil prices and sufficient supply enticed international businesses to rush to Alberta to create extraction megaprojects with names like Sunrise, Peace River, and Surmont.
During the boom years, $183 billion was invested in the oil sands. According to the Alberta Oil Regulator, the provincial body that governs Alberta’s energy sector, capital investment increased gradually from $3.3 billion at the turn of the century to $26.4 billion at its high in 2014.
Alberta’s petroleum is buried in quartz sand, making extraction difficult. Producers either claw the oil-infused sand out of the ground using dinosaur-like excavators or pump the petroleum out of wells by liquefying it with steam injected deep into the earth.
The extraction of the oil consumes a lot of energy and leaves a visible scar on the environment. The mining operation produces a slurry of quartz sand, water, and poisonous chemicals, which is stored in massive reservoirs known as tailings ponds, which can be seen from space. The millions of gallons of water heated by natural-gas plants billow thick plumes of steam over the oil wells.
Oil sands extraction in Alberta emits around 160 pounds of carbon every barrel, according to research company Rystad Energy, which is more than any other oil in the world. The amount was regarded as “staggering” by the business. By contrast, shale oil producers in the United States produce an average of 26 pounds per barrel.
Sherwood Park is home to Suncor Energy’s Edmonton refinery.
Artur Widak/NurPhoto/ZUMA PRESS/Artur Widak/NurPhoto/ZUMA PRESS
Environmentalists started to focus on the area in 2002, when Alberta authorities calculated the extent of its reserves for the first time. “They are undoubtedly the most obvious human scars on the earth,” said Bill McKibben, a famous environmentalist and co-founder of 350.org, an organization devoted to ending the global use of fossil fuels.
In 2014, actor Leonardo DiCaprio paid a visit to the oil sands and created a National Geographic documentary on climate change that focused on the area. Protests were planned in Washington by groups including 350.org, Rainforest Action Network, and Sierra Club, which halted pipeline building projects and urged banks and financial institutions to cancel financing for oil sands projects.
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In 2014, a reduction in the price of oil, along with pressure from energy firm shareholders to cut emissions, had an impact on investment. According to the Alberta Energy Regulator, capital investment on oil sands projects will reach a 16-year low in 2020, reaching $5.8 billion. Since peaking in 2014, such capital investment has been declining every year. In 2021, it was expected to climb somewhat, but stay lower than in 2019.
Shell’s Chief Executive Ben van Beurden said in 2017 that the corporation aimed to enhance profits by selling numerous oil sands properties for $7.25 billion. The statement coincided with the company’s revelation that director incentives would be linked to greenhouse-gas emission reductions.
TC Energy Corp., located in Calgary, stated in June 2021 that it was discontinuing a 12-year quest to construct the Keystone XL pipeline project, a route for Canada’s oil to reach the US market. Mr. Biden made the statement six months after keeping a campaign pledge by withdrawing the permit that had enabled the pipeline’s construction to proceed.
Almost 60 financial organizations have reduced their oil sands stakes, including Deutsche Bank, HSBC Holdings PLC, and Hartford Financial Services Group Inc. Japan Petroleum Exploration Co., or Japex, a state-owned oil and gas corporation that initially leased property in Alberta in 1978, announced in July that it had sold its part in the Hangingstone oil sands project for $800 million.
In the third quarter of 2021, Calgary, the corporate heart of Canada’s oil sector, had a commercial-real-estate vacancy rate of 33%.
The Wall Street Journal’s Jason Franson took this photo.
According to Petroleum Labour Market Information, a part of Energy Safety Canada, which works with firms and employees to create industry safety standards, employment in Canada’s oil-and-gas sector fell by 17 percent between 2014 and 2019, from 226,500 to 188,760 in 2019. Covid-19-related losses, according to the organization, hastened the declining trend, with the sector losing another 20,000 jobs in 2020.
The toll is obvious in Calgary, Canada’s oil industry’s corporate headquarters. During the zenith of the business, the steel and glass towers that rise above the prairie landscape on the banks of the Bow River were erected. Many of them are almost vacant today. According to CBRE Group, a commercial real-estate services business, downtown Calgary had the highest commercial real-estate vacancy rate in North America in the third quarter of 2021, at 33%. By contrast, Houston’s vacancy rate was 24 percent.
According to economists, the lack of investment would eventually cause output to decline when oil from certain sites is exhausted. According to Kevin Birn, an analyst at IHS Markit, certain projects might start to deplete by the middle of the following decade.
As the initial deposits run out, certain mines are being changed. Suncor’s North Mine at the Syncrude project is scheduled to be exhausted by the middle of this decade, but an expansion is being developed that would extend the mine’s life for another 14 years.
Newer initiatives, on the other hand, are more likely to produce for a long time. Suncor’s Fort Hills open pit truck and shovel mine, which opened in 2018, can produce about 200,000 barrels of oil per day. Based on current plans, it should be able to operate for the next 50 years.
According to the Alberta Energy Regulator, producers extracted more over 3.84 million barrels per day in October, a new high. Production reached 1.09 billion barrels between January and October, a new high.
Vipal Monga can be reached at [email protected].
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