Canada

Uncontrolled energy

ROBERT MARSHALL May 2 1977
Canada

Uncontrolled energy

ROBERT MARSHALL May 2 1977

Uncontrolled energy

In Nova Scotia, wood stoves and chain saws are selling fast as amateur lumberjacks harvest the forests for what they can no longer afford from the provincial power corporation or the oil companies—fuel to heat their homes. In Madoc, a small southeastern Ontario farming community, just a mention of Atomic Energy of Canada Ltd. (AECL) provokes a hostile response, AECL was considering a nearby granite outcrop as a dumping ground for lethally radioactive nuclear waste, until the sheer force of local opposition convinced the Crown agency to put off even preliminary drilling tests. And in Alberta, provincial officials say they’ve been “unbelievably patient” so far in selling oil and gas to the rest of Canada at—by world standards—bargain prices. Their patience is running out.

That, in microcosm, is the Canadian energy dilemma, the problems facing the country’s energy ministers as they meet in Ottawa again early this month. And despite years of discussion between Ottawa and the provinces, Canadian energy policies remain fragmented and frustrated.

The scene looked much the same in the United States until President Jimmy Carter decided to act late last month, launching an ambitious, coordinated energy conservation program with a warning that “the alternative may be a national catastrophe.” But there is still no sign of any such centralized, forward-looking policy for Canada.

Nowhere was the crying need for foresight and better planning as well demonstrated as in Canada’s inability to decide

how much of its own energy resources it must keep, and how much could be exported. At the beginning of the decade, the federal government was still putting the arm on the United States to buy more of what was seen as Canada’s almost limitless supply of gas and oil. As recently as March, 1973, Imperial Oil said in its annual report: “Canada is not in any way deficient in energy resources. Our present energy reserves, using present technology, are sufficient for our requirements for several hundred years.” But now, Hans Maciej, technical director of the Canadian Petroleum Association (CPA), a principal source of the government’s information on reserves, acknowledges that “our educated guesses have come back to haunt us.” Nobody really knows how much oil there is. The CPA now is anticipating a “worldwide energy pinch around 1985, give or take a couple of years.” While Canada’s delusions of abundance are being exposed, the cost of imported fuel is soaring, and that in turn puts irresistible pressure on domestic prices. So the woodcutters of Nova Scotia, along with the residents of all fuel hungry provinces, can only look forward to higher prices in the traditional sources of energy.

The nuclear energy story is also unfolding in unanticipated directions. That super-dream of the Fifties, the wonderful technology where Canada saw itself as a leader in “peaceful uses,” is showing all the signs of turning into a torturous nightmare. On the international level, India has used Canadian material to produce a bomb, and the sales program for the CANDU reactor has been hammered by charges that bribes were used to encourage purchases. At home, big question marks hang over various factors of nuclear technology, running all the way from fears of a reactor explosion (the U.S. Nuclear Regulatory Commission accepts a probable casualty figure of 3,300 in the worst conceivable “meltdown”) to doubts about mining the uranium fuel in the First place. And there is still nowhere to store the growing piles of waste that nobody wants in his own backyard. The people of Madoc may have won their fight now, but where will AECL turn next?

Given this situation, is an all-embracing Canadian energy policy being mapped out as the energy ministers prepare for their next meeting? No chance. Almost certainly, the talks will be dominated, as they have been for the last four years, by one single topic: the prickly internal political question of oil pricing. While Canada’s oil prices have remained substantially below the world level, it’s becoming clearer all the time that the lack of attention to Canada’s fuel needs over the next decade and longer has left overall energy strategy in a state of confusion. “Hit and miss energy policy?” says British Columbia’s minister Jack Davis. “It certainly has been, and probably more miss than hit.” But at the same time, the Quebec minister Guy Joron says he’ll fight any federal attempt to in-

fringe on provincial jurisdiction over natural resources. “Alberta should be free to sell its oil at any price it decides,” says Joron.

The absence of a Canadian energy policy became more glaringly evident when President Carter, only three months in office, unveiled his dramatic proposals for the United States. Calling on Americans to sacrifice comforts and conveniences for their own long-term good. Carter declared: “With the exception of preventing war, this is the greatest challenge our country will face during our lifetime. The energy crisis has not yet overwhelmed us, but it will if we do not act quickly.” Carter’s overall aim is to reduce the nation’s annual growth in energy demand from an average of 3.6% to 2% and in Ottawa, Energy Minister Alastair Gillespie said the President’s message should help promote a conservation consciousness north of the border. But he pointed to the huge problem faced by Ottawa politicians (as recognized by Quebec’s Joron): the constitutional fact of provincial jurisdiction over resources.

How could Canada, actively promoting the export of oil and gas until only a few years ago, suddenly find itself after the Arab boycott in 1973 facing the prospect of shortages within a decade or so? The answer lies in the abysmally inaccurate methods used to estimate reserves. In a policy statement last year, the energy ministry recognized that one of its most serious problems is the uncertainty of these estimates. (See Chart.) The National Energy Board (NEB) is supposed to be the public watchdog on oil and gas (as well as electricity) exports, and therefore on how much of Canada’s reserves are “surplus” to domestic needs. But because it’s only as good as the source of virtually all its information— the oil and gas companies—the NEB, despite efforts to correct the situation, contin-

ues to be little more than an extension of these companies. The pre-1973 basis for oil and gas reserve determination was essentially a geologic “guesstimate,” a calculation of the volume of oil and/or gas that should be contained in rock formations, based on past experience. Now, however, federal estimates recognize that it’s not what is there but what can be produced that counts. Reserve estimates are no longer based on what’s thought to be in the ground, but on “producibility.” Consequently, they have plummeted dramatically. So, while some government and industry geologists are still as optimistic as ever about how much oil and gas lies under Canada, the focus now is on known rather than potential supplies.

One of the reasons even the oil companies accept a more conservative estimate of reserves is that it provides a basis for convincing—some say blackmailing— governments and the public into paying more for oil and gas, even from sources discovered years ago. The argument is that

the additional money is needed to turn the previously ballyhooed “potential” reserves into actual production. This approach was used most recently in a concerted industry campaign to get approval for a Mackenzie Valley gas pipeline and financial support for tar sands and heavy oil developments. Thus, the NEB is still seen in some quarters as little more than a puppet on the end of oil industry strings. In fact, the recently concluded Berger inquiry into the impact on the North of a Mackenzie Valley pipeline (the report goes to the government May 9) did more to unearth important and relevant information about the pipeline proposals than the NEB was able to do with a larger staff. One result of piecemeal energy development is the mounting evidence that frontier gas— from the high-cost explorations in the Beaufort Sea and elsewhere—is what Canada now needs least. Canadian Arctic Gas Pipeline Ltd. says a Mackenzie Valley pipeline, costing about eight billion dollars, must be built to transport relatively small quantities of gas (five or six trillion cubic feet proven to date). Others in the industry argue there is at least 30 trillion cubic feet of extra gas available in Alberta over the next decade. And some think there’s anywhere from 100 to 800 trillion cubic feet waiting to be tapped deep under the Rocky Mountain foothills and that those reserves should be the first to be tapped.

Alberta’s Energy Minister Don Getty says there isn’t a national energy policy because of the complexity of managing the various parts of Canada, combined with

rapid changes within the energy business. “We’ll never end up with one (a national policy) We’ll always be working toward one,” he says. Meanwhile, Alberta has its own policy: take care of Alberta first, then see what’s left over. Other countries have had to swallow world oil price hikes while Canadians have been phased in by an “unbelievably patient” Alberta. Now Getty is going to the next ministers’ meeting with a two dollars per barrel rise as “absolute rock bottom” for negotiations. And an increase of that size would have serious consequences for consumers. Every time the price of crude oil goes up one dollar at the wellhead, the cost of oil and gas consumed in Ontario goes up $300 million a year, the average homeowner pays $25 more a year for oil, the average driver pays $20 more a year for gas and 5,000 jobs disappear. Since 1974, the wellhead price of a barrel of crude oil has gone up by almost six dollars and Getty wants two dollars more. Ontario’s Energy Minister James Taylor is trying to cast himself as the consumer’s friend in the battle with Ottawa—and Alberta—over rising energy prices. His main complaint, and that of other critics, is that the money raked in each time there is a price hike doesn’t always end up where it should—in the development of new sources of energy.

Since uranium is the only non-renewable energy source Ontario possesses in large quantities (it has 80% of known Canadian reserves) it is not surprising that the province is leading the way in nuclear generation of electricity. Ontario Hydro’s first four reactors went into operation at the

Pickering A station in 1971, at a cost of $775 million. Another $10.6 billion is earmarked for a vast increase in nuclear generating capacity between 1979 and the mid-1980s. A massive investment for one province, especially considering the growing worldwide strength of the anti-nuclear movement (See page 62.) As typified by AECL’S confrontation with the people of Madoc, the biggest problem stemming from this increasing reliance on nuclear energy is what to do with the dangerous waste. The four reactors at Pickering daily produce 40 spent fuel “bundles,” each containing, among other things, about 100 grams of plutonium, a highly radioactive substance that takes up to 250,000 years to lose its potency. The bundles are temporarily stored on the generating station site, but pressure is increasing on AECL to find a suitable dumping ground.

The international nuclear debate has also taken root in Saskatchewan, with the battle lines clearly drawn between the six or seven mining companies covetously eyeing the province’s rich northern uranium deposits and a hastily formed coalition of labor, church and environmental groups who see uranium production as anathema to the province. The New Democratic Party’s annual convention last fall instructed the government to hold public hearings to study the implications of uranium mining, refining and processing in Saskatchewan and in an international context. The government was told to make no new commitments for uranium mining and refining until the results of the hearings are known, probably by November.

Recent history has provided the opponents of uranium development with ammunition to make their case. First, there were the excessive radiation levels discovered in Port Hope, Ontario, caused by contaminated landfill scooped from an Eldorado Nuclear plant. Then radon gas levels were found to be far in excess of acceptable levels in three schools and several homes in Uranium City in northern Saskatchewan. And there’s always the nagging question of radioactive wastes.

In Prince Edward Island, it’s not nuclear power but what some refer to as the “kooky”side of the business (wind and solar energy, for example) that’s attracting attention, as a three-million-dollar, federally funded energy lab called the Ark gets into production this year. The four Maritime provinces have largely gone their own way in energy matters. However, in one step toward a better coordination of energy matters, three provinces have set up a new Maritime energy corporation with the hope that Newfoundland will be included ultimately.

Meanwhile, the various parts of Canada cope as they can, with the average citizen the ultimate loser. James MacEachern, an NDP member of the Nova Scotia legislature, is refusing to pay the 47.2% power price increase, retroactive to March 1. He says back-dating is illegal and he’s pre-

pared to go to jail rather than pay. And though the province is selling off hardwood from Crown lands at three dollars a cord for home heating, it can’t meet the demand. The army of amateur woodsmen, driven to theft by still rising fuel prices, is growing.

ROBERT MARSHALL WITH

BUREAU REPORTS