Foreign companies buying into tarsands: Canada losing profits and control as refining moves to countries with low labour and environmental standards

Foreign corporations, some controlled by national governments, have been using their economic clout to buy into Alberta's oil sands and take control of our natural resources.

US, French, British, Chinese, Thai, Korean and Norwegian interests have all bought stakes in oil-sands projects. According to the Canadian Association of Petroleum Producers (CAPP), international companies have invested nearly $20 billion in the last three years through mergers, partnerships and outright purchases of projects.

Not every foreign interest with a stake in the oil sands has our best interests at heart.

This increased foreign investment raises questions. Who has the right to develop our natural resources? Who sets the rules for how these resources are developed? Who controls where the resources are processed and sold?

For example, in April 2010, the Chinese company Sinopec, a majority-owned subsidiary of a national company, paid $4.65 billion for Houston-based ConocoPhillips' stake in Syncrude. What makes this deal significant is that under the terms of the deal, the state-controlled Sinopec has a veto on the critical decision of whether the company should upgrade bitumen here or export it in raw form overseas.

Most oil-sands producers are thought to be looking to upgrade and refine here or in the US, rather than ship raw bitumen overseas, and then sell their oil to whatever market that offers the most money. Sinopec's investment in the Northern Gateway Pipeline, however, is seen as a strategy to ship massive amounts of bitumen out of North America to Asia for upgrading, refining and finally consumption in mainland China.

Not every foreign interest with a stake in the oil sands has our best interests at heart. A case in point: Koch Industries is a major supplier of funds to the Tea Party in the US and other far-right groups. Their anti-union activities in Wisconsin and dozens of other states are having a serious and detrimental impact on middle-class families.

Koch Industries also makes money off our oil sands. Koch Exploration Canada Corporation has a small oil-sands project, known as Gemini, being developed in Cold Lake. Koch Industries is a major player on the pipeline and refining scene. It already processes and handles some 25 per cent of oil-sands crude imports to the US. Koch Industries would increase this share if the US government approves the Keystone XL Pipeline to export bitumen south (Canada has already given the project the green light).

If the US approves the Keystone XL Pipeline, not only will Alberta lose quality, value-added jobs by not processing bitumen here, we may also see our resources going to fuel anti-union, extreme free-market activities in the US and, perhaps, even here.

But the federal government does not pay heed to those sorts of political considerations. They do, however, pay lip service to environmental concerns.

During the 2008 federal election, Prime Minister Stephen Harper made a surprise announcement that his government would stop the flow of unprocessed bitumen to countries with worse environmental standards than our own. This would also keep oil-sands jobs and revenue in Canada, he said.

This decree was thought to be directed at China. China's increased involvement in the oil sands and Sinopec's stake in the Northern Gateway Pipeline might mean a future where hundreds of thousands of barrels of unrefined Alberta bitumen are piped to oil tankers bound for Asia, where environmental standards are virtually non-existent.

In response to Harper's election promise, then Alberta Deputy Premier Ron Stevens said: "Alberta has the responsibility for the development of its natural resources and that certainly includes bitumen."

Stevens is right, but the federal government determines whether resource exports are in the nation's best interests.

Nevertheless, the Stelmach government has since reaffirmed its support for raw bitumen exports. In the 2011 Throne Speech, Premier Stelmach declared: "It is in the national interest that Western Canada has improved port capacity — whether by pipeline or rail — that will open the door to Asia's rapidly growing markets."

Since the 2008 election, the Conservative government has repeated Harper's promise to block bitumen exports to countries with poor environmental standards like China, but has been silent as to what exactly it will do. No binding legislation, regulations or trade barriers have been enacted. We're only just starting to wake up to the reality that there are companies and countries investing in our resources whose track record on human rights, pollution, accountability and transparency as far below the standards we demand here at home.

As a nation and as a province, we've been naïve about being good neighbours and good free traders. We're the owners of this resource. As owners, it's up to us to demand our provincial and federal governments enact strong and meaningful rules on how the oil sands are developed — rules that ensure tens of thousands of jobs are not sent down the pipeline to countries with worse environmental and human rights standards than we demand at home.

As global demand for energy grows, and supplies of stable, accessible energy shrinks, we must set the ground rules now before all the stakes in the oil sands are claimed.

Tony Clark is a researcher with the Alberta Federation of Labour. His research interests include energy and taxation policy.

Straight Goods, Mon May 9 2011

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