It was just another evening in Sarnia, February 2017, when the apocalyptic flaring began.

Without warning, enormous flames engulfed Imperial Oil’s petrochemical refinery, spewing plumes of smoke into the air. Nearby houses in Aamjiwnaang First Nation and south Sarnia shook and windows rattled. A foul odour overwhelmed the area.

For the next five hours, the night sky was aglow with vivid oranges and yellows. A grass fire broke out on a nearby lot.

By 11:30 pm, the incident had formally concluded. But flaring continued for the next 10 days.

Since that week and a half of chaos back in 2017, local community members who live near the refinery in Sarnia’s notorious “Chemical Valley” have been pushing for answers from the province and for Imperial Oil to be held accountable for potentially exposing them to toxic chemicals.

Ontario’s Ministry of Environment and Climate Change recently released a preliminary incident report after being prompted by an application from Aamjiwnaang First Nation member Vanessa Gray and Ecojustice scientist Elaine MacDonald back in October.

The ministry referred the investigation to its enforcement branch to determine if charges are warranted — a process that could take years.

Experts say it’s an important first step for residents who are surrounded by Chemical Valley’s 57 industrial polluters and often feel their serious environmental concerns are ignored.

“What stood out to us this time was the severity of the event and also not seeing much in the way of follow-up by the ministry,” said Kaitlyn Mitchell, lawyer at Ecojustice.

“We started talking to people about it, because we thought ‘well, if it looked and sounded that big then maybe it had some impacts on people, but that’s not really coming through in any of the ministry’s or company’s updates.’”

Over 500 incident reports filed in Sarnia region in only two years

Sarnia’s Chemical Valley is one of the most notorious spots in Canada when it comes to local environmental impacts.

Around 40 per cent of the country’s petrochemical industry is located in the 25 square kilometre region, producing everything from gasoline, to fertilizers, to plastics.

Imperial Oil’s facility can refine up to 120,000 barrels of crude oil a day as well as produce products like polyethylene and chemical solvents. It’s only one of the nearly 60 industrial facilities in the area.

In 2012 the World Health Organization awarded Chemical Valley with the top spot for most polluted air in Canada.

Such toxic pollutants can include sulphur dioxide and benzene, which can cause serious respiratory and cardiovascular impacts as well as having links to cancer.

A recent collaborative investigation by Global News, the Toronto Star, the National Observer and a number of journalism schools found that over 500 incident reports had been filed in 2014 and 2015 for spills and leaks in the Sarnia area: yet only one public warning had been issued through the municipality’s alert system.

With that said, flaring — used to prevent the dangerous buildup of gas by combusting it as an alternative to releasing it straight into the air as methane — is a routine process in the area and usually doesn’t become an “incident” (although it does result in significant air pollution, including volatile organic compounds, soot and sulphur dioxide).

The uncontrolled flaring that caused the 10-day incident in February 2017 resulted from an equipment malfunction.

But according to the application for investigation filed by Gray and MacDonald, that was the 10th malfunction-related flaring incident at Imperial Oil’s facility since January 2014.

Mitchell said that while the government indicated it was looking into the incident prior to the application for investigation, it became clear that they weren’t aware of many of the impacts on the surrounding community.

“What we would say is that when there’s a massive flaring event, you should not assume unless otherwise told that there were no off-site impacts and community members were not adversely impacted,” she said.

“You should be proactively reaching out. If the flames were big enough to be rattling people’s houses, then I would like to see the ministry knocking on people’s doors and asking them if they did have any sort of impacts or if they’d like to talk to the ministry about the flaring event.”

Warning sirens only went off for a few seconds during flaring

Sarnia has 15 municipal sirens to warn of chemical spills and leaks, as well as a public alert system that uses phone calls, email and text messages.

But when the Imperial Oil flaring incident happened, sirens only sounded for a few seconds.

Many members of the surrounding community, including Aamjiwnaang First Nation, were left without any knowledge of what was happening.

The application for investigation detailed how many attempts were made to contact both the provincial ministry and Imperial Oil to find out details, but to no avail: “The combined effect of these impacts was to cause residents significant fear, as they did not know whether their health and safety was in danger.”

This confusion was aggravated by the province’s failure to conduct any air monitoring during the flaring incident. That left Imperial Oil to conduct monitoring.

“They just went out with these handheld monitors to try to measure levels around the facility,” MacDonald told DeSmog Canada. “The handheld monitors were nowhere near sensitive enough to actually determine whether any air standards were being violated.”

In the following days, Imperial Oil brought in consultants to conduct sampling with more sensitive equipment: but that monitoring didn’t occur downwind or include testing for sulphur dioxide.

While increases in sulphur dioxide levels were noticed on several nearby stations, many of the monitors in the Sarnia region were operated by industry and didn’t provide public information.

“At the time this happened, we had no information on what the monitoring stations were picking up,” MacDonald said. “If it would happen again now, at least we’d be able to look at those air monitoring stations as they’re finally online.”

This means that nobody has firm evidence of the type or quantity of toxic pollution that was emitted during the incident.

In a press release issued on March 1, 2017, Imperial Oil stated: “The disruption Imperial has experienced is not an emergency situation for the community.”

Vanessa Gray, a member of Aamjiwnaang First Nation and co-applicant in the call for investigation, said in an interview with DeSmog Canada that “even the people who are investigating this incident are very dismissive of the adverse effects of personal experiences in the community.

“I feel like that’s the general feeling when Indigenous community members talk to the ministry: they’re very dismissive to our concerns,” she said. “If they’re not looking out for our best interests, then who is?”

‘This happens as part of daily life’

There have been some instances of progress for Chemical Valley’s current approach to air pollution.

In late March, the province of Ontario adopted a new sulphur dioxide standard which reduces the maximum amount a facility can emit within a single hour by almost seven times. The ministry also recently clarified its rules on the tracking of flaring by industry, which has long been accused of being overly ambiguous.

But there’s still much to be done.

The Environmental Commissioner of Ontario identified a series of problem areas in its 2017 report, which devoted an entire section to air pollution in Aamjiwnaang. They include the ministry’s ignoring of cumulative effects of emissions (instead only regulating facilities on an individual basis), an over-reliance on self-reporting by industry, a lack of monitoring equipment and an inadequate approach to warnings and communications.

Onlookers suggest government must also reconfigure its relationship with a community of residents who have been effectively forced to acclimatize to significant air pollution as a way of life.

“The thing that struck me when I was speaking to people was this is not a stand-alone incident,” Mitchell said.

“This happens as part of daily life, in some ways — of course, it doesn’t happen every day but it happens frequently enough that it’s not as alarming or doesn’t seem as surprising to people as it would in other Canadian communities.”

Gray agreed: “It’s not enough that Indigenous activists from Aamjiwnaang have been speaking out against the amount of pollution we’ve been experiencing my whole life. There are reasons that are piling on that there should be more action than there is. But what we’re seeing in Sarnia is they continue to expand. It’s not slowing down. Industry is still proud of what they’re doing.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Eleven of Canada’s largest oil and gas companies have dozens of subsidiaries and related companies in known tax haven jurisdictions, according to a new report from the Ottawa-based non-profit Canadians for Tax Fairness.

Those companies include Suncor, Enbridge, CNRL, TransCanada, Imperial Oil, Cenovus and Husky.

The report, titled “Bay Street and Tax Havens: Curbing Corporate Canada’s Addiction,” examined the largest 60 companies listed on the Toronto Stock Exchange and found that just four didn’t have a publicly listed subsidiary in a known low-tax or no-tax haven.

“If you can afford the lawyers and accountants and it’s legal to do, you’ll do it,” report author Diana Gibson, told DeSmog Canada.

“Maximizing shareholder returns is the job of the CEOs and if it’s legal to avoid taxes then they will.”

Knowing how pervasive the issue is among oil and gas companies in Canada is important in order to pressure lawmakers to act, Gibson added.

“We’re not talking about slapping the hands of a couple of folks — we’re talking about a problem that needs to be fixed in the legislation.”

The new report shows companies like Enbridge and TransCanada are in line with global oil and gas industry practices. In 2015, a federal parliamentary inquiry in Australia found ExxonMobil and Chevron hold a combined $87 billion USD in tax havens.

Canadian Oil and Gas Companies Own a Combined 46 Entities in Tax Haven Countries

The report arrives on the heels of the explosive Paradise Papers, which contained 13.4 million confidential documents implicating many renowned figures — including the Queen, Bono and three former Canadian prime ministers — in the legal but ethically dubious practice of storing money in offshore tax havens.

The revelations also come as many oil and gas companies claim government policies such as methane regulations, carbon pricing or higher royalty rates create undue financial burdens and could cripple their business case.

“We constantly hear these stories about these large corporations — particularly oil and gas corporations in Alberta — operating on the margins: that they can barely make ends meet; that any shift will ultimately affect their bottom line and cost jobs and all of those things,” Ricardo Acuña, executive director of the Parkland Institute, told DeSmog Canada.

Those common talking points paint of picture of an industry without profits to hide, Acuña said.

The new report contradicts that, he said.

In total, the report calculated that oil and gas companies own a combined 21 listed subsidiaries and 25 companies inferred to be related.

These were identified by using information from corporate filings and company registries.

There could be more: Gibson from Canadians for Tax Fairness said the figures in the report are likely incomplete due to a lack of transparency required from companies.

Enbridge, TransCanada Among 11 Canadian Oil and Gas Firms Using Tax Havens https://t.co/iDlneUBXEv #cdnpoli @CdnTaxFairness @ParklandInst #oilsands

— DeSmog Canada (@DeSmogCanada) November 16, 2017

Canadian Direct Investment in Tax Havens Grew A Hundredfold in 20 Years

The report’s definition of a “tax haven” provided by the Organisation for Economic Co-operation and Development (OECD), has four simple components: an extremely low or non-existent tax rate, a separation of tax rates from the country’s regular economy, a lack of regulatory supervision and an absence of information exchange.

In other words, a region where money is kept solely to house excess profits that people or corporations wish to remain untaxed.

The best known tax havens are based in Caribbean countries, including Barbados, Bermuda, the Cayman Islands and the Bahamas. The U.S. state of Delaware actually served as the most popular location for Canadian companies to house their money, sporting 472 subsidiaries from only 60 companies.

It’s virtually impossible to know how much companies actually store in these jurisdictions.

But as noted in the report, Canadian foreign direct investment (FDI) into the top 10 tax haven jurisdictions has increased from $2.1 billion in 1994 to more than $284 billion in 2016.

While companies might claim that such a spike is associated with productive investments, there’s a complete disconnect from local employment: in Bermuda, there’s only one person hired for every billion dollars in assets, increasing to a mere 16 people per billion in Barbados.

Dozens of notorious tax treaties and tax information exchange agreements (TIEAs) allow for the easy transfers of money between jurisdictions.

“We don’t know how much of this money is being hidden, how much of it’s being legitimately invested,” Acuña said.

“We’re trying to piece this together from information we don’t have. The government needs to crack down on what companies have to report out when they’re moving money around and in terms of their foreign direct investment.”

Canada Losing Estimated $10 Billion to $15 Billion Per Year

The report found Canada was missing out on an estimated $10 billion to $15 billion in taxes per year from the 60 companies listed.

Four of the oil and gas companies identified in the report were also listed in Canadian Business magazine’s 2014 investigation into corporations that were paying “unbelievably low tax rates.”

That investigation reported that over the course of a decade, CNRL, Enbridge, TransCanada and Suncor only paid between 13.6 per cent and 15.6 per cent of their income in taxes.

While companies like CNRL and Suncor receive significant deductions due to capital costs and royalty payments, such percentages are still extremely low when compared to the average Canadian’s tax rate of 42 per cent.

As noted by Acuña, it’s not enough to just increase corporate income rate rates or revamp the nonrenewable resource royalty framework if companies can continue to move their profits to low-tax jurisdictions. Such a move would have to be paired with a serious clampdown on rules about tax havens.

“The issue is that the law needs to change,” Gibson said. “You can’t crack down on legal tax avoidance.”

Billions Likely Needed in Coming Decades to Cover Environmental Costs

Gibson pointed to NDP MP Murray Rankin’s recently proposed private member’s bill as a good first step.

Bill C-362 would amend the Income Tax Act to deny tax breaks to financial transactions that “lack real economic substance.” That would ensure that earnings are taxed properly in the jurisdiction in which they’re made.

The report made several other recommendations. Those include requiring the Canada Revenue Agency to compile actual information and data on tax havens, renegotiating tax treaties to set a minimum threshold for tax rates, and taking a much stronger international leadership role.

Such conversations may take on additional urgency in coming years as costs of environmental and climate liabilities continue to mount for various levels of government, although Acuña expressed some skepticism about the federal government acting given Finance Minister Bill Morneau’s recent run-ins with similar issues.

“It sure looks like oil and gas companies are raking in the profits and stashing them away in tax havens, while Canadians are stuck with the mess they leave behind, including toxic tailings ponds, oil spills, and climate damages,” Patrick DeRochie, climate and energy program manager at Environmental Defence, told DeSmog Canada.

“Once you take away all the oil and gas subsidies and the money stowed away in tax havens, and start accounting for the massive costs to the environment and public health, you get an industry that is no longer economical.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Throughout Exxon’s global operations, the company knew that CO2 was a harmful pollutant in the atmosphere years earlier than previously reported.

DeSmog has uncovered Exxon corporate documents from the late 1970s stating unequivocally “there is no doubt” that CO2 from the burning of fossil fuels was a growing “problem” well understood within the company.

“It is assumed that the major contributors of CO2 are the burning of fossil fuels… There is no doubt that increases in fossil fuel usage and decreases of forest cover are aggravating the potential problem of increased CO2 in the atmosphere. Technology exists to remove CO2 from stack gases but removal of only 50% of the CO2 would double the cost of power generation." [emphasis added]

Those lines appeared in a 1980 report, “Review of Environmental Protection Activities for 1978-1979,” produced by Imperial Oil, Exxon’s Canadian subsidiary.

[click on any of the screenshots in this story to see a PDF of the full document]

A distribution list included with the report indicates that it was disseminated to managers across Exxon’s international corporate offices, including in Europe.

The next report in the series, “Review of Environmental Protection Activities for 1980-81,” noted in an appendix covering “Key Environmental Affairs Issues and Concerns” that: CO2 / GREENHOUSE EFFECT RECEIVING INCREASED MEDIA ATTENTION.

InsideClimate News unveiled much new information in its Exxon: The Road Not Taken series clearly demonstrating the depth of climate science knowledge among Exxon’s U.S. operations. Additional revelations about the company's early climate research were published by the Los Angeles Times in collaboration with the Columbia School of Journalism. 

A 1980 Exxon report explained the company’s plans:

“CO2 Greenhouse Effect:  Exxon-supported work is already underway to help define the seriousness of this problem. Such information is needed to assess the implications for future fossil fuel use. Government funding will be sought to expand the use of Exxon tankers in determining the capacity of the ocean to store CO2."

Now DeSmog’s research confirms that the knowledge of the carbon dioxide pollution threat was indeed global across Exxon’s worldwide operations, earlier than previously known, and considered a major challenge for the company’s future operations. The new documents revealed today were found by DeSmog researchers in an Imperial Oil (TSE:IMO) archival collection housed at the Glenbow Museum in Calgary, Alberta. We first learned of the existence of the collection in one of the articles published in the Los Angeles Times in collaboration with the Columbia School of Journalism.

"Since Pollution Means Disaster…"

A document discovered by DeSmog reveals that Exxon was aware as early as the late 1960s that global emissions of CO2 from combustion was a chief pollution concern affecting global ecology.

Those details were found in a 1970 report, “Pollution Is Everybody’s Business,” authored by H.R. Holland, a Chemical Engineer responsible for environmental protection in Imperial Oil’s engineering division. [click to download PDF of "Pollution is Everybody's Business]

Holland wrote:

“Since pollution means disaster to the affected species, the only satisfactory course of action is to prevent it — to maintain the addition of foreign matter at such levels that it can be diluted, assimilated or destroyed by natural processes — to protect man’s environment from man.”

Included in Holland's report is a table of the "Estimated Global Emissions of Some Air Pollutants." One of those "air pollutants" on the table is carbon dioxide with the listed sources as "oxidation of plant and animal matter" and "combustion."

Holland emphasized the need to control all forms of pollution through regulatory action, noting that “a problem of such size, complexity and importance cannot be dealt with on a voluntary basis.” Yet the fossil fuel industry has long argued that its voluntary programs are sufficient, and that regulations are unneeded.

Exxon Understood Climate Science, Yet Funded Decades of Climate Science Denial

Despite Exxon’s advanced scientific understanding of the role of CO2 pollution from fossil fuel burning causing atmospheric disruption, the company shelved its internal concerns and launched a sophisticated, global campaign to sow doubt and create public distrust of climate science. This included extensive lobbying and advertising activities, publishing weekly op-eds in The New York Times for years, and other tactics.

Exxon and Mobil were both founding members of the Global Climate Coalition, an industry front group created in 1989 to sow doubt — despite the GCC's internal understanding of the certainty.

While the GCC distributed a "backgrounder" to politicians and media in the early 1990s claiming “The role of greenhouse gases in climate change is not well understood,” a 1995 GCC internal memo drafted by Mobil Oil (which merged with Exxon in 1998) stated that: “The scientific basis for the Greenhouse Effect and the potential impact of human emissions of greenhouse gases such as CO2 on climate is well established and cannot be denied.”

And the most obvious evidence of Exxon’s pervasive efforts to attack science and pollution control regulations lies in the more than $30 million traced by Greenpeace researchers to several dozen think tanks and front groups working to confuse the public about the need to curb CO2 pollution.

As the science grew stronger, Exxon’s embrace of its global, multi-million dollar denial campaign grew more intense. 

Imperial Oil's Public Denial Grew Stronger In 1990s Despite Its Own Prior Scientific Certainty

Imperial Oil, Exxon's Canadian subsidiary, as these documents demonstrate, had a clear understanding of the environmental and climate consequences of CO2 pollution from fossil fuel combution, yet its public denial of these links grew stronger throughout the 1990s.  Imperial Oil chairman and CEO Robert Peterson wrote in "A Cleaner Canada" in 1998: "Carbon dioxide is not a pollutant but an essential ingredient of life on this planet."  

(DeSmog will take a deeper look at Imperial Oil's conflicting CO2 positioning in public vs. its internal communications in future coverage.)

Reached for comment, Imperial Oil did not respond by press time. ExxonMobil media relations manager Alan Jeffers provided the following response: 

"Your conclusions are inaccurate but not surprising since you work with extreme environmental activists who are paying for fake journalism to misrepresent ExxonMobil’s nearly 40-year history of climate research. To suggest that we had reached definitive conclusions, decades before the world’s experts and while climate science was in an early stage of development, is not credible."

Legal Implications of Fossil Fuel Industry’s Knowledge of CO2 Pollution and Climate Impacts

Calls are growing louder to hold Exxon and other fossil fuel interests accountable for funding climate denial campaigns given their advanced understanding of climate science and the implications of CO2 pollution for the atmosphere going back many decades.

In multiple U.S. states and territories — including New York, California, Massachusetts and the Virgin Islands — state Attorneys General are investigating Exxon’s depth of knowledge regarding the climate impacts of burning fossil fuels, and whether the company broke the law by fueling anti-science campaigns through corporate contributions to organizations and individuals working to sow doubt and confusion about global warming. [DeSmog coverage: State Investigations Into What Exxon Knew Double, and Exxon Gets Defensive]

Climate activists and even presidential candidate Hillary Clinton are urging the Department of Justice and other relevant government agencies to investigate the fossil fuel industry’s deliberate efforts to delay policy action to address the climate threat.

Democratic U.S. Senators Sheldon Whitehouse (RI), Ed Markey (MA) and Brian Schatz (HI) introduced an amendment to the energy bill expressing Congress’s disapproval of the use of industry-funded think tanks and misinformation tactics aimed at sowing doubt about climate change science. But it remains to be seen what action Congress might take to hold the fossil fuel industry accountable for delaying policy solutions and confusing the public on this critical issue.

Imagine where the world would be had Exxon continued to pursue and embrace its advanced scientific understanding of climate change decades ago, rather than pivoting antagonistically against the science by funding decades of denial?

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Only three-and-a-half months have passed since the federal election, but fossil fuel companies and lobby groups haven’t wasted any time in ramping up their lobbying efforts.   Suncor, the country’s largest energy company by revenue, has led the pack in meeting with high-ranking federal officials — logging at least 12 meetings in just over one month.   Between Nov. 2 and Nov. 19 the dominant oilsands player met four times with Louise Metivier, who was Canada’s chief negotiator at the UN climate summit held in Paris between Nov. 30 and Dec. 12.   Steve Williams, the company’s CEO and head lobbyist, also met three times with Environment Minister Catherine McKenna (on Nov. 18, Dec. 7 and Dec. 8) another three times with Environment Canada’s chief of staff Marlo Raynolds (on Nov. 5, Dec. 7 and Dec. 9) and twice more with Gerald Butts, Prime Minister Justin Trudeau’s right-hand man and principal secretary ( Nov. 18 and Nov. 19).   “The meetings were preparatory meetings for Suncor’s participation at COP 21 in Paris,” explained Sneh Seetal, spokesperson at Suncor, via e-mail. “Our president and CEO, Steve Williams, attended as a member of the Canadian delegation at the invitation of the federal government. We discussed Suncor’s perspectives on climate change and how industry can help be a part of the solution.”

Lobbyists Include LNG Canada and TransCanada

Other oil and gas interests have displayed similar determination since the Liberals formed government.   Take LNG Canada Development (a Kitimat-based joint venture composed of Shell, PetroChina, Korea Gas and Mitsubishi), which met with Erin O’Gorman, assistant deputy minister of Natural Resources Canada, on Oct. 27, Nov. 5 and Jan. 8.   TransCanada, the proponent of both the Energy East and Keystone XL pipelines, lobbied Canada’s ambassador to the United States, Gary Doer, three times on Oct. 30.

The Canadian Energy Pipeline Association met with NEB chairperson Peter Watson on Nov. 2 and Dec. 17. And the Petroleum Services Association of Canada lobbied McKenna, Finance Minister Bill Morneau and Employment Minister MaryAnn Mihychuk in separate meetings on Dec. 22.

It’s important to keep in mind that the lobby registrations are likely just scraping the surface of the actual lobbying happening in Ottawa.   Richard Girard, executive director of research centre Polaris Institute, notes that only employees who spend more than 20 per cent of their month’s work on lobbying efforts are required to register as a lobbyist. As a result, Girard suggests there are “lots of meetings that are more likely taking place that we don’t know about.”   Even the meetings that are registered lack specifics, only hinting at general subjects such as “environment” or “energy.”   “It certainly provides you with a list of who’s seeing who, which is helpful,” says Gillian Steward, author of the Toronto Star’s 2015 Atkinson Series on public policy on the oilsands. “They do have to at least put down the topic of what they’re talking about. On the other hand, it can be very difficult to get — say, from CAPP — exactly what they’re presenting.”

Bear Head LNG Lobbies Federal Government 15 Times in 10 Weeks

Some companies have clearly been making plenty of moves, with Bear Head LNG — the company proposing to build a liquefied natural gas facility in Nova Scotia — meeting with Doer on Oct. 21, Oct. 26, Oct. 30, Nov. 10, Nov. 11, Dec. 10 and Dec. 18.   Represented by former U.S. ambassador Derek Burney, the company also lobbied the duo of Jay Khosla (assistant deputy minister of Natural Resource Canada’s energy sector) and Terence Hubbard (director general of Natural Resource Canada) four times between Nov. 12 and Dec. 29, with Khosla chatting individually with the company an additional four times in the window.

‘It’s a Question of Balance’

Girard notes that while the Canadian lobbying registry has improved over the years, it’s still flawed because it doesn’t show how much companies are spending on lobbyists, unlike the U.S. But reasonable conclusions can still be made.   “The number of times people register communications increases around certain important pieces of legislation,” says Girard, who served as co-author for the Polaris’ report Big Oil’s Oily Grasp. “Many of those pieces of legislation were very positive for the industry. We can’t draw the line, but yes we can see there’s a correlation between the level of lobbying — who’s lobbying and for what — and the outcome of the legislation.”   The Polaris Institute’s 2012 report found that that 2,733 lobbying communications were made by oil and gas companies between July 2008 and November 2012, far outweighing similar efforts by mining and forestry interests. Prominent lobbying organizations such as the Canadian Association for Petroleum Producers (CAPP), TransCanada, the Canadian Gas Association, Imperial Oil and Suncor led the way. Meanwhile, only 11 environmental non-governmental organizations were registered as lobbyists in that window.   “It’s a question of balance,” Steward says. “[Oil and gas companies] have a right to go and do that. It’s just that they have more resources and more power to actually have those meetings, where environmental and First Nations groups and other kinds of NGOs don’t have the funds or staff, and aren’t represented as well. It’s much harder for them to actually get their message across to the people who influence those decisions.”

Image: Steve Williams takes the helm as Suncor CEO in 2011.  

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

During her recent election campaign, Alberta NDP leader Rachel Notley pledged to raise Alberta’s minimum wage from $10.20 an hour to $15 by 2018, which would make the province’s minimum wage the highest in the country — by far.

Not so fast, objects economist Ron Kneebone. In a National Post commentary a week after the election, Kneebone argues that raising the minimum wage will do little to fight poverty. He suggests other, less achievable, policies.

Notley’s platform also included a pledge to raise corporate tax rates, review oil and gas royalties and cut greenhouse gas emissions.

Not so fast, objects economist Jack Mintz. In a National Post article published the day after Kneebone, Mintz asks, “how many times can you skin the cat?” If Notley raises corporates taxes, capital will take flight, he predicts. “Some companies are planning to shift profits out of Alberta if the rate goes up to 12 per cent,” he says, as if profits don’t already leave the province because the energy sector is mainly foreign owned.

A third promise Notley made was to promote the upgrading and refining of Alberta’s natural resources within the province to deliver better value to Albertans.

Not so fast, objects economist Trevor Tombe. In a National Post commentary six days after Mintz, Tombe calculates that oil and gas extraction adds more value per job than refining. But the real comparison should be refining in Alberta compared with refining — and adding value — elsewhere.

Aside from being economists, having serious problems with NDP proposals and getting major play in the National Post, Kneebone, Mintz and Tombe share something else: they are associated with the University of Calgary’s School of Public Policy (SPP). Mintz is school director, Kneebone director of the tax and economic growth program, and Tombe an economics department academic who publishes frequently through the SPP.

In just one month, the SPP had taken three swipes at Notley’s platform.[view:in_this_series=block_1]

And there will be more to come because the SPP isn’t just a degree-granting academic institution, it’s also an industry-supported think tank embedded within the university.

Like all industry-backed think tanks, the SPP’s purpose is to produce research that supports the industry and the free market. If Notley strays too far afield from industry consensus, rest assured the SPP will be on her case.

Industry’s Big (Reputational) Problem

Canada’s oil and gas industry has had a big problem: it’s the least trusted source of information about energy issues.

This was a key finding of a survey commissioned in February 2015 by Alberta Oil, a magazine, as DeSmog’s Emma Gilchrist points out, “destined for the desks of the energy sector’s senior executives and decision-makers.”

These energy sector executives may oppose minimum-wage and corporate-tax hikes and increased oil sands refining in Alberta, but it’s futile for them to fulminate publicly about Notley’s plans, if the Alberta Oil survey is to be believed.

Only 14 per cent of survey respondents found energy company executives to be a credible source of information on oilsands development, and just 11 per cent trusted industry information about carbon emissions.

Perhaps the tens of millions of dollars Enbridge was spending to promote its pipelines and the millions more spent by the Canadian Association of Petroleum Producers to persuade Canadians about the amazing benefits of oil sands development were well and truly wasted.

But Alberta Oil’s survey did reveal a ray of hope for the industry. At 53 per cent, respondents regarded the academic community as the most trusted and credible source of information. So if industry executives can’t speak for the industry, perhaps academics can.

The School of Public Policy, Born of Oil Money 

The School of Public Policy was established in 2008 with a donation of $4 million from James Palmer, one of Canada’s leading oil and gas lawyers, Palmer perhaps recognizing industry’s credibility problems. At the time, all three major Alberta political parties were calling for higher royalties.

Who would speak for the industry?

With Palmer’s money the university hired tax specialist Jack Mintz, CEO of the corporate-sponsored C.D. Howe Institute, to head the SPP. Like C.D. Howe, corporate influence in the SPP is heavy. The connections to one company in particular — Imperial Oil — are extensive. (This is not to suggest that industry money can buy supportive academic research, but that academics sympathetic to business and conservative viewpoints are recruited for such positions.)

Mintz himself is an Imperial Oil director and a director of the Imperial Oil Foundation, that doles out $6-to-$7 million a year to organizations in communities where Imperial Oil operates, to build good will. Like all directors, Mintz is obligated to advance the best interests of the company, as former Alberta Liberal leader Kevin Taft points out. “The directors, in exercising their powers and discharging their duties, shall act honestly and in good faith with a view to the best interests of the corporation,” says Imperial Oil’s 2014 Management Proxy Circular. As head of SPP, Mintz’s loyalties seem murky.

Palmer was one of Canada’s most celebrated energy lawyers (he died in 2013), specializing in corporate mergers and acquisitions. He was on the boards of numerous oil and gas companies and for a few years lobbied the federal government for Imperial Oil and its parent company, ExxonMobil, promoting their oil pipeline proposals.

Imperial Oil CEO Tim Hearn had just retired and joined the SPP’s advisory council; his company donated $1 million to the school and another $200,000 several years later. Hearn’s successor, Bruce Marsh, was a featured speaker at SPP’s kick-off conference. Jean-Sébastien Rioux, recruited to lead the SPP’s Master’s program, had previously headed Imperial Oil’s lobbying and public relations efforts.

The school seems a marriage of business, ideology and politics. A decade before it was established, a group of political scientists, historians, and economists at the university emerged as the intellectual backup for neoliberal and social-conservative causes.

Advancing the Conservative Agenda

Dubbed the Calgary School, these academics coalesced around arguments to slash social programs, downsize government, promote business, deregulate the economy, and cut taxes. Led by political scientist Tom Flanagan, the Calgary School had enormous influence on federal policy and politics.

It helped shape the direction of the Reform Party and Canadian Alliance and dominated the thinking of Stephen Harper, who studied under Calgary School professors, selected one — Flanagan — as a close adviser, and picked the student of another — Ian Brodie, who studied under political scientist Ted Morton — as his first chief of staff.

After the school was up and running, the entire Calgary School migrated into its ranks. Brodie became director of research, Flanagan a distinguished fellow and Morton an executive in residence. Economist Robert Mansell, a Calgary School associate who had been one of Harper’s professors, became the SPP’s academic director.

Four SPP program directors, including Kneebone, are, or were, Fraser Institute fellows. SPP receives about $200,000 a year from Peter Munk’s Aurea Foundation, which has emerged in recent years as paymaster to the right through its funding of the Fraser Institute and other neoliberal think tanks.

And there are the political connections. Flanagan is well-known as a mentor to former Wildrose leader Danielle Smith; Morton was a minister of Energy in the Ed Stelmach government; and Jean-Sébastien Rioux was chief of staff to Jim Prentice when he was federal minister of Indian Affairs and Industry.

Given the funding and the lineup of personnel, it’s not surprising that SPP’s research is hostile to Notley’s program.

They’ll be carefully monitoring the NDP’s moves on the energy and environment files. SPP authors have already sounded the alarm that Alberta must get its bitumen to markets in the Pacific Rim as quickly as possible, or risk losing out to competitors. Canada needs to get on with the Northern Gateway and Trans Mountain expansion projects as quickly as possible, the authors urge.

A paper by Trevor Tombe about “the facts” on Canada’s energy trade presents as one fact the claim that promoting energy trade “requires lowering investment barriers and creating a predictable and stable investment climate for foreign direct investment,” certainly not the capital flight that Jack Mintz threatens.

Notley will be looking across the legislative aisle for clues to opposition strategies. She should also be looking over her shoulder to the School of Public Policy for the “research” and policy that will provide the real opposition to her government.

Image: Industry Minister James Moore speaks at a Calgary School event via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

As production in Alberta's oilsands continues to expand, waste byproducts continue to build up as well, from petcoke piles to tailing ponds. Now the energy companies behind the oilsands boom are planning to dump their growing volumes of toxic wastewater into man-made lakes, in the hope that they eventually become natural habitats.

Jeremy van Loon of Business Week writes that Syncrude Canada, Royal Dutch Shell, and ExxonMobil affiliate Imperial Oil "are running out of room to store the contaminated water that is a byproduct of the process used to turn bitumen–a highly viscous form of petroleum–into diesel and other fuels."

By 2022 the monthly output of wastewater from these companies "could turn New York's Central Park into a toxic reservoir 11 feet deep, according to the Pembina Institute," writes van Loon.

To accommodate the growing volume of byproduct, the energy companies have reportedly "obtained permission from provincial authorities to flood abandoned tar sand mines with a mix of tailings and fresh water." According to van Loon, this would "transform northern Alberta into the largest man-made lake district on earth."

Syncrude's Base Mine Lake, on which work began last summer, will measure 2,000 acres when complete, and is expected by the company to "eventually replicate a natural habitat, complete with fish and waterfowl."

Non-profit environmental group Pembina describes these end pit lakes as "high-risk and experimental," noting that "historical data about using end pit lakes as toxic waste dumps are insufficient to determine whether or not they are a safe, long-term tool for reclaiming tailings waste as no example of a functional end pit lake currently exists."

There are about 30 end pit lakes planned for the Athabasca Boreal region, according to Alberta's Cumulative Environment Management Association.

"There's no way to tell how the ecology of these lakes will evolve over time," said Jennifer Grant, director of oilsands at Pembina. "It's all guesswork at this point. It's reckless."

"We're playing Russian roulette with a big part of an important ecosystem," said David Schindler, an ecology professor at the University of Alberta. "Nothing is going to grow in that soup of toxic elements except perhaps a few hydrosulfide bacteria. And all of the unforeseen events are being downplayed."

Syncrude began creating an end pit lake 30 miles north of Fort McMurray this summer, filling in a mine with fresh water from a dam to a depth of 16 feet to keep toxic tailings down at the bottom. According to company spokeswoman Cheryl Robb, trials involving "test ponds" resulted in naturally occurring ecosystems, with microbes helping to break down pollutants.

However, van Loon writes that the "largest test pond was 4 hectares–roughly 1/200th the size of Syncrude's lake."

"The big question we have is how long will it take before the water is clean, how long is it going to take before the littoral zones develop and the shoreline vegetation builds up?" said Robb. "But we're confident in the technology."

One of the major concerns surrounding end pit lakes is the possibility of contaminated water seeping into the boreal ecosystem. In October, "communities bordering Canada's Athabasca River were cautioned not to drink from the waterway after a breach in a coal tailings storage pond dumped 1 billion liters (264 million gallons) of contaminated water into an area west of Edmonton."

According to Pembina, the exact amount of seepage from tailings in Alberta is "either not known or has not been made public," but modelled estimates suggest that "11 to 12.6 million litres of tailings leak from tailings ponds each day."

Image Credit: WhitneyH / Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

It was less than six months ago that a handful of energy companies resorted to selling off portions of their stake in the oil patch after failing to garner the kind of investor support they needed to fund major projects.

The costs of development in the oilsands is increasing due to material and labour shortages in Alberta and limited real estate. According to reports by the Petroleum Human Resources Council of Canada, the industry is effectively innovating itself out of the labour market, expanding beyond what the available pool of skilled labour can support.

Development costs are also escalating as the environmental toll of extracting and upgrading tar-like bitumen from the region has put both policy makers and the public on edge.

Jean-Michel Gires, the former CEO of the Canadian unit of France's Total SA, says crude from the oilsands is "among the most expensive oil" in the world to produce. Yet, development continues, leading some experts to claim that the oilsands costly production still doesn't accurately reflect the true costs associated with the resource.

Rising Costs

Royal Dutch Shell's Athabasca Oil Sands Project costs jumped from an estimated $3.5 billion in 2005 to $14.3 billion in 2010 due to unforseen expenses. 

Even without environmental regulations concerning waste, companies are already spending billions on tailings reduction technology simply because they’re running out of space. Tailings ponds currently cover more than 176 square kilometres of the region.

The Kearl Mine, an Exxon-owned Imperial Oil project, cost $12.9 billion in its first phase – more than 40 percent over the expected price tag.

The mega-project is intended to produce 600,000 barrels of crude oil per day by 2020. Downgraded from three development phases to two, the Kearl project is expected to produce 110,000 barrels per day by the end of this year.

The mine is already connected to Enbridge’s Cheecham Terminal by the Woodland Pipeline and will begin to test capacity before long. Enbridge quietly received regulatory approval in August of last year to build a $1.3 billion extension of the Woodland Pipeline to accommodate the expected increase in production at Kearl. The project is set to be complete in 2015, the same year Imperial plans to move an additional 110,000 barrels of bitumen per day out of Kearl.

Inflating Investments

According to investment analysts, the solution to the problem, both in terms of money and morale, is to greenlight the various pipeline projects currently under consideration, including proposal to modify existing pipelines such as Enbridge’s Line 9 to eastern Canada. But those pipelines themselves are projected to cost billions of dollars to build.

Moving ahead with such projects has been made easier with a flood of outside investment used to artificially prop up the industry.

One such surge of investment recently came from Warren Buffet. This summer marked the first time one of the world’s largest investors plunged billions into Canadian resource development. Buffet, head of Berkshire Hathaway Inc, has thrown his weight behind Suncor, Canada’s largest oil and gas company.

Ironically, this kind of large-scale investment serves to drive costs up even higher by contributing to inflation.

Counting the Real Costs

It’s unlikely the rising costs of development, no matter how severe, will investment in the oilsands to an end. Yet when it comes to realistic cost accounting for large-scale carbon projects, there are people working on pragmatic solutions.

In spite of the environmental movement’s push for a shift in values, some experts say it’s more likely carbon policy will make the difference.

Dr. Andrew Leach, professor at the Alberta School of Business at the University of Alberta says the rising social cost of tar sands development, as well as meaningful environmental policy changes are contributing to the higher price tags on new projects, but it’s ultimately consumer choices that will determine whether projects in the tar sands remain viable.

To illustrate, Leach uses the example of the car-driven suburb model of living.

“In order to meet at 450 ppm target, we can’t have people living out in the suburbs and driving big cars, but people are still living in the suburbs and buying big cars.” The analogy applies to dirty oil development. It’s not that developers don’t know what’s going on; it’s that they won’t stop until someone makes them.

“That’s sort of at the heart of carbon pricing to say let’s let the market decide what activities make sense given a particular carbon budget.”

From a policy perspective Leach, who spent a year working on policy initiatives with Environment Canada, believes the best thing we can do it is force the industry to internalize the social costs of extracting oil from the ground.

“The social cost of a carbon future, reclamation expenses, water and air pollution – those need to be internal to company decisions, and that can be done in any number of ways,” he said, adding that this is a standard view among economist, despite how popular media portrays the issue.

Matt Horne, Director of Climate Change at the Pembina Institute, says industry regulation and policy changes are already making renewables more competitive. Combined with success stories from various fields within the green energy, the gap between oil and renewable energy is getting smaller. It’s just the policy piece that’s missing.

He says the combination of solid economics and strong environmental policies will make renewables the norm rather than “a few leading examples.” The goal is ultimately to make it cheaper to produce clean energy than it is to extract oil from the ground.

“I think policy can change quickly and change the economic playing field quite quickly.”

Mark Jaccard, professor in the School of Resource Management at Simon Fraser University and author of Sustainability Suspicions, believes that with more attention on those leading examples—particularly the ones closest to home like California and British Columbia—we can make that change sooner rather than later.

“I am amazed that environmentalists all over North America are not talking about California's policies every day and focusing strategic efforts to effect voting support on vulnerable politicians where they do not push for similar policies,” he said in an email interview.

He cited the Low Carbon Fuel Standard, the Renewable Electricity Portfolio Standard and the Vehicle Emissions Standards among others as examples of economic and environmental success.

Jaccard also believes the movement needs to shift its focus from individual projects to the broader issue of the climate. When it comes to particular projects, such as the Enbridge Northern Gateway Pipeline, he says the benefits for the people in power will always outweigh the environmental costs. To create the critical mass necessary for change, we should be focusing on climate change as a global issue, something no one can ignore.

“When did we get good policies implemented? Never when talking about oil sands and oil spills. But yes when we got enough people (probably less than 10 percent of the population) very concerned about climate change. Politicians, ever watchful of swing voters, had to pay attention.” Environmentalists should also be fighting for trade penalties on imports from jurisdictions that are still using the atmosphere as a dumping ground, he adds.

“Only in this way can environmentalists put together a coherent argument for action. Only in this way can we effectively counter the fossil fuel arguments like, one, we need the Chinese to act, two, our emissions are only a small percentage, three, we won't stop needing oil tomorrow, etc.”  

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

DeSmog Canada recently revealed Andy Cobb and Mike Damanskis – two political satirists in the spotlight for their ongoing spoofery of the Alberta tar sands project – had an Indiegogo fundraising promotional video for their upcoming "vacation" to the Alberta tar sands ordered removed from YouTube due to an alleged copyright violation.

Alleged because under U.S. legal precedent (YouTube is a U.S. company), it's almost impossible to claim copyright damages for parody and/or satire. That won't keep Travel Alberta, the province's tourism bureau, from trying.

"The original inspiration for our project is that industry PR around the tar sands seems like a cross between a travel ad and oil company ad, inviting us to 'come to Alberta' and see for ourselves," Mike Damanskis told DeSmog. 

Demanskis has provided DeSmog with a copy of Travel Alberta's complaint, a screenshot of which can been seen below.

As the screenshot portrays, Travel Alberta is being represented by Denton for this complaint, a firm formed with the merger of international law firm Salans LLP, Canadian law firm Fraser Milner Casgrain LLP and international law firm SNR Denton in March 2013.

Under-explored thus far in the saga: the relationship between Denton and Big Oil.

A DeSmog investigation has revealed Denton is a major corporate firm representing Big Oil in all facets of its operations, from upstream, to midstream to downstream. Further, the attorney-of-record issuing the complaint, Jordan R.M. Deering maintains an attorney-client relationship with Big Oil. Fraser Milner Casgrain also formerly lobbied on behalf of Big Oil and also represented infamous climate change denier Tim Ball in court. 

Representing ExxonMobil Tar Sands Project, Enbridge Northern Gateway Pipeline 

Denton has "made the case" for many oil and gas industry clientele and works closely both with tar sands producers and also pipeline companies bringing the product to market. 

One of Denton's major clients for the past year and a half has been Enbridge, concerning the company's controversial Northern Gateway Pipeline set to carry tar sands crude from Alberta to the coast of British Columbia at Kitimat. From there, diluted bitumen ("dilbit") will be shipped to predominantly Asian export markets. Northern Gateway – by and large – is Canada's version of the controversial Keystone XL pipeline and has encountered fierce resistance. 

Denton explains of its legal role for Northern Gateway on its website as "advising on all aspects of the proposed dual pipeline…and the marine terminal at Kitimat…Counseling the client during environmental assessments and National Energy Board proceedings and providing advice with respect to negotiations with aboriginal groups and governments, shipping and navigation reviews, commercial structuring, finance and construction." 

A dues-paying member of the Alberta Chamber of Resources and the Canadian Association of Petroleum Producers, Canada's largest oil and gas lobby, Denton also enjoys another powerful client: ExxonMobil, the "Private Empire."

Exxon's the subject of Cobb and Damanskis' first tar sands-centric satire poking fun at Exxon's massive Pegasus tar sands Pipeline spill in Mayflower, Arkansas, which aired on primetime on "The Rachel Maddow Show," as seen below.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.