EKOS Communications, Inc.

A quick scan of the news headlines from today revealed that PetroChina, China's largest oil and gas producer and distributor, has just purchased "a 60 percent stake in the MacKay River and Dover oilsands projects" according to The Canadian Press.  They quote Bill Gallacher, chair of the Athabasca Oil Sands Corp., the company that brokered the deal, as saying "[this] is excellent news for Alberta and the rest of Canada."

But is it?

Back in 2006, Peter Tertzakian issued a stern warning about our addiction to oil and the growing control of it's supply by state-owned oil companies in his book, A Thousands Barrels A Second. At the time of its writing, humanity's consumption of oil was about to exceed a thousand barrels a second.

Think about that for a moment. Picture, if you can, what 1000 freight cars passing over a railway crossing in that time. Or, that many vehicles passing under a bridge.

Hard to imagine, isn't it. Yet that's how fast we're burning up what we know is a rapidly declining source of non-renewable energy that we have become critically-dependent upon.

Not surprisingly, every country is growing anxious about securing its share as fast as possible before it runs out, while some countries have chosen to create state-owned oil and gas companies to achieve this goal.

In 2007, twenty-five companies qualified as the world's largest oil  and gas companies, according to PetroStrategies, Inc. Most are national companies. In fact, they dominate the top ten positions, representing the interests of (and in the following descending order): Saudi Arabia, Iran, Qatar, Iraq, Venezuela,  Abu Dhabi, Kuwait, Nigeria, Libya, and Algeria.

You have to look way down the list before you would encounter a name familiar to most North Americans. Holding 17th place is Exxon-Mobil; its production of about a quarter of that of Algerian Stonatrach and only one twenty-eighth of the Saudi Arabian Oil Co, the largest of the largest. 

Now consider this provocative question from Tertzakian: "Have we entered a new multi-polar world where energy is the primary source of geopolitical tension?" And how about this one. "Is China's growing thirst for energy sustainable?"

As the top ten list of the world's oil and gas companies certainly supports the "multi-polar world" assertion. As for energy being the "primary source of geopolitical tension," I would make the case that it is one of the major sources, along with water, but that is a small quibble. Regarding his second question, after reading Jared Diamond's Collapse, and in particular the chapter on China, I'm convinced that it's thirst for energy is definitely not sustainable over the medium- to long-term. In the meantime, through the business ventures of PetroChina, it guzzles up oil and gas around the globe to keep the country's burgeoning population and economy fueled. 

In light of this analysis, I challenge the claim that this deal is good for Alberta and the rest of Canada. As near as I can tell, what's being sold is a portion of the nation's energy security. Notwithstanding the terrible environmental and social costs associated with the oilsands projects. Sure, this production is producing lots of well paying jobs, but really, who is taking most of the money home? Certainly not the heavy equipment operators.  It's the senior executive and the largest shareholders.