This is a review of Chapter 8 of Open Canada’s Report: A Global Positioning Strategy for a Networked Age


First off, Canada is not now, nor is it ever likely to be, an “Energy Superpower”. This term was first used by Prime Minister Harper on the eve of the 2006 G8 meeting1. As evidence he stated:

‘Canada is the world’s third largest producer of gas, seventh in oil production, the biggest hydro-electric generator and the biggest supplier of uranium. Alberta’s tar sands are second only to Saudi Arabia as the world’s largest oil reserve.’

‘Harper also stated Canada believes in “a free exchange of energy products based on a competitive market – not self-serving monopolistic political strategies.”‘

Harper is an economist by training. Mainstream economics demands growth, and growth in GDP is historically highly correlated with growth in energy consumption. Notwithstanding the fact that they are finite, fossil fuels currently provide more than 80% of Canada’s energy. Mainstream economic assumptions that the “invisible hand” of the markets will somehow find an alternative to fossil fuels at the scale they are currently used is a pipedream. No combination of renewable and nuclear energy can come close to the energy throughput currently provided by fossil fuels. The Canadian practice of liquidating non-renewable energy resources as fast possible to stoke economic growth is a sell-out to the energy security of future generations.

The “Energy Superpower” mindset of Harper and the authors of the Open Canada report show they are not in sync with the geological realities of the energy production and consumption trajectory the world and Canada are on. Let’s look at the facts putting Harper’s statements into perspective and then at the conclusions of this chapter of the Open Canada report:


  • Canada may be the third largest producer of gas but ranks only 21st in the amount of proved reserves2. We are liquidating our gas reserves as fast as possible as dictated by the markets, not by any coherent energy policy. In Alberta, which produces 80% of Canadian gas, the average initial productivity of a gas well has declined by 72% since 1995, meaning we have to drill nearly four wells today to equal one average well in 1995.
  • Canada’s gas production is declining at 8.7% per year3, and the Alberta Energy and Resources Conservation Board projects a further overall decline in Alberta production of 35% from 2009 levels by 20194, which is likely a best case scenario.
  • Of the major gas producers in the world, only Canada has a lower reserve to production ratio than the US.


  • Comparing Canada’s oil sands to Saudi Arabia light oil is like comparing apples to oranges. The purported 174 billion barrels of recoverable oil in the oil sands is very energy- and capital- and time-intensive to produce compared to easier conventional oil. As a result, oil sands require much longer timeframes to ramp up production. Exuberant forecasts of five million barrels per day by 2025 have been toned down to perhaps three and a half5, which is still nearly triple current production. The BP Statistical Review of World Energy includes only “Oil Sands under Active Development” in its yearly global reserve reporting6. This puts Canada 11th, not second, to Saudi Arabia as the mantra of the Alberta and Canadian governments state (the balance of the 174 billion barrels are reported by BP as an external line item recognizing its fundamental differences).
  • The Open Canada report states “…oil sands produce $30 billion to $40 billion in annual revenues (depending on oil prices)”. These are gross, not net, revenues. At an average oil price of $70 per barrel, including the discounts for the price of bitumen, and an all-in average production cost of $40 per barrel, the oil sands net about $14 billion. Only a very small fraction of this net revenue is recovered by governments in the form of royalties.
  • The Open Canada report also fails to note that Canada imports 0.77 million barrels per day into the Maritimes. This oil is purchased on the world markets in competition with other major oil importers such as the US and Japan. As of March, 2010, if one subtracts imports from exports, Canada is a net exporter of 1.1 million barrels per day7. Canadian net oil exports currently amount to less than 3.6% of the global oil export market8.


  • Although Canada ranks number one in the world for uranium production it ranks fourth in uranium reserves. Canada has s a reserve to production lifetime of 35 years, the lowest of any major uranium producer9.


  • It is true that Canada is the biggest hydro-electric generator, but more than 60% of available sites have been developed, and hydro developments are associated with major environmental impacts.

A couple of fundamental facts underlie any discussion of energy in Canada:

  • Canadians are among the highest per capita consumers of energy in the world, exceeding even Americans, and currently consume five times the world average. More than 80% of this consumption is fossil fuels. The lifestyle of Canadians is underpinned by cheap energy.
  • Canada has been liquidating its inheritance of non-renewable fossil fuels as fast as possible in the name of economic growth. There are currently few restrictions other than the markets on the liquidation of these one-time resources that underpin Canadian energy security.

The Open Canada report advocates expanding market options to speed the liquidation of Canada’s fossil fuels. These include the construction of the Enbridge Gateway pipeline for oil sands exports from Edmonton to Kitimat on the West Coast as well as the construction of an LNG export terminal in Kitimat. Apache has supported the Kitimat LNG export proposal and has also advocated building a 500 kilometre pipeline to connect Kitimat to gas supplies in northeast BC and Alberta.

In reality, there are no worries in having our number one customer for oil sands production accept our product – period. Mexico, the number three oil exporter to the US behind Canada and Saudi Arabia, has experienced a collapse in what was the number two producing field in the world – Cantarell – and may soon become an oil importer. Compared to the majority of oil suppliers to the US, Canada is a model of political stability and reliability.When push comes to shove, the Americans, being the greatest oil addicts on earth, will take our oil as there will be few alternatives.

As for exporting gas, this is a delusion, based on hype from the US of the potential of shale gas deposits, which is defied by falling Canadian production (now 8.7% per year). Overall declines in Canadian gas production without drilling are 21% per year due to natural depletion, and even replacing this production is going to be very difficult, as evidenced by the steep declines in AERCB forecasts10, let alone growing it for export.

The Open Canada report advocates a “National Green Energy Policy” for Canada, which involves, among other things, re-branding the oil sands through technologies such as carbon capture and storage (CCS) to mitigate their carbon footprint. The futility of CCS at scale to mitigate such emissions is the subject of a separate analysis (involving energy waste, complexity, scale, etc.). Moreover, the much maligned ecological footprint of the oil sands is currently related to the extraction of only four billion barrels of oil, not the mess that will be left after extracting the 27 billion barrels “under active development” or the purported 174 billion barrels ultimately available. An alternative focus for the Open Canada report should have been a “National Green Energy Security Policy” for Canada, recognizing the one-time nature of fossil fuel endowment and its importance for future Canadian energy security. As well, fossil fuels will be needed to build the infrastructure required for a much lower energy footprint, which is the only way forward to a more sustainable future…

The Open Canada report does, however, make some sensible recommendations, which include:

  • Imposing a carbon tax, which will provide an incentive to reduce consumption and create resources to build infrastructure necessary to lower energy footprints.
  • The creation of a “Clean Energy Fund” from the revenues of the carbon tax to finance lower impact and alternative energy technologies.
  • Recognizing the need to reduce the rate of expansion in the oil sands – these resources are not going away, and they will likely be needed for the foreseeable future.

Suffice it to say there is really only one sustainable way to reduce emissions from non-renewable fossil fuels and promote energy security, and that is figuring out every conceivable way not to burn them in the first place. This will involve:

  • Recognizing the finite nature and crucial importance of intrinsic energy resources to current well-being and the construction of infrastructure to lower energy throughput.
  • Understanding that the holy grail of economic growth is not worth liquidating our one time heritage of non-renewable resources as fast as possible.
  • Developing a policy to restrict the plundering of Canada’s intrinsic non-renewable energy resources by all comers.

Energy is a commodity unlike any other as it underpins all aspects of modern industrial society. The finite nature of non-renewable fuels demands a comprehensive plan to manage the power-down that will occur, whether we like it or not. Canada needs a comprehensive strategy to manage this transition. Although the Open Canada report provides some sensible recommendations, it fails to recognize the longer term trajectory we are on with the supply of fossil fuels and energy security for future generations. Failing to address these issues is at our peril.


2 BP Statistical Review of World Energy 2010

3 Statistics Canada retrieved July, 2010

4 Alberta Energy Resources Conservation Board Report, June, 2010

5 2010 CAPP Crude Oil Forecast, Markets and Pipeline Report

6 BP Statistical Review of World Energy 2010

7 Statistics Canada retrieved July, 2010

8 BP Statistical Review of World Energy 2010

9 World Energy Council Survey of Energy Resources Interim Update 2009

10 Alberta Energy Resources Conservation Board Report, June, 2010,

A version of this article was published in July 8, 2010 in The Mark