The Teck Frontier mine

Not only is the Trudeau government calling into question its seriousness about decarbonization by allowing the Trans Mountain pipeline expansion, they are considering allowing Teck to build another open-pit bitumen sands mine which will produce 6 million tonnes of CO2 per year in its operations and far more when the fuel it produces is burned.

Every Canadian government must live in fear of being the ones in power when the markets and Canadians finally realize that developing the bitumen sands has been a mistake and the industry has no future. Since every government wants to avoid the blame when that happens, they each do what they can to maintain the illusion of a future for the industry which will justify the tens of billions that have been invested. In so doing, they inadvertently tell Canadians and the world that they are willing to create a permanently destabilized global climate in exchange for as many more years of oil profits as they can get away with.

36 thoughts on “The Teck Frontier mine”

  2. Federal and provincial environmental regulators are both recommending approval of a massive new oilsands mine, but whether the environment minister in Ottawa agrees is up in the air.

    Teck’s Frontier project is estimated to cost $20.6 billion, significantly more than any other facility in the region. It would also be the northernmost oilsands operation and cover a territory about half the size of Montreal.

    Even if it receives the green light, it may not get built. Investors aren’t keen these days to sink big money into an oilsands project that will take many years to produce a return.

    In addition, oil prices will need to rise to between $70 and $80 US per barrel before large oilsands mines can be economically viable, said Mark Oberstoetter, a Calgary-based oil and gas analyst at Wood Mackenzie.

    Some industry insiders believe that Teck may look to sell the project to an existing oilsands player in the area, if it receives federal approval.

  9. Canada, on the other hand, elected a government that believes the climate crisis is real and dangerous – and with good reason, since the nation’s Arctic territories give it a front-row seat to the fastest warming on Earth. Yet the country’s leaders seem likely in the next few weeks to approve a vast new tar sands mine which will pour carbon into the atmosphere through the 2060s. They know – yet they can’t bring themselves to act on the knowledge. Now that is cause for despair.

    The Teck mine would be the biggest tar sands mine yet: 113 square miles of petroleum mining, located just 16 miles from the border of Wood Buffalo national park. A federal panel approved the mine despite conceding that it would likely be harmful to the environment and to the land culture of Indigenous people. These giant tar sands mines (easily visible on Google Earth) are already among the biggest scars humans have ever carved on the planet’s surface. But Canadian authorities ruled that the mine was nonetheless in the “public interest”.

    https://www.theguardian.com/commentisfree/2020/feb/05/when-it-comes-to-climate-hypocrisy-canadas-leaders-have-reached-a-new-low

  10. Canada readies aid for Alberta as deadline for provincial oil sands project nears: sources

    OTTAWA — Canada is preparing an aid package for Alberta, heart of the country’s struggling oil industry, that would help dull the pain if it blocks an oil sands project that could create thousands of jobs, sources familiar with the matter said this week.

    …

    Rejecting the project would be “a devastating signal for investors looking at Canada,” a spokesman for Alberta’s energy minister said. About 20 oil sands projects currently sit dormant despite receiving approval.

    Options being considered in the provincial aid package, to be featured in the upcoming budget, include a cash injection to help clean up thousands of inactive oil and gas wells abandoned by bankrupt companies, five sources with knowledge of the situation said.

  12. Clearing the air on Teck Frontier: Here are the expected benefits — and harms — of the oilsands project

    Andrew Leach & Martin Olszynski
    CBC News · Posted: Feb 12, 2020 2:00 AM MT | Last Updated: February 12

    …

    The project is being framed as both a test of Prime Minister Trudeau’s resolve to combat climate change, and a referendum on the federal government’s support for Alberta’s economic interests and its commitment to national unity.

    …

    Frontier is among the most destructive oilsands projects assessed to date.

    …

    Frontier’s remediation and reclamation plans, which like all of its predecessors must address the contentious issue of the project’s tailings, are marked by a high degree of uncertainty.

    Teck’s plan would see 240 million cubic metres (about 100,000 Olympic-sized swimming pools) of fluid fine tailings accumulate on the landscape by 2037.

    …

    Teck estimates that reclamation liabilities on the site will peak at $4.3 billion in 2037, and that $2.9 billion of reclamation liability will remain when the mine ceases production in 2066.

    Teck’s reclamation plan requires “45 to 65 years or more” of post-closure care. Sixty-five years after the mine’s expected closure would be the year 2131.

    …

    The JRP did not make a final determination with respect to the project’s greenhouse gas (GHG) emissions, estimated at 4.1 million tonnes of CO2 equivalent per year.

    …

    Whether Frontier’s significant adverse environmental effects are “justified in the circumstances” appears to depend largely on the positive economic ones. The JRP is explicit: “the economic benefits for Alberta and Canada and the expected social and economic benefits for Indigenous communities outweigh the adverse environmental effects.”

    The environmental damage doesn’t change with the oil price, but economic benefits do. As oil prices change, so do the taxes, royalties and returns to investors that inform the benefit side of the equation.

    These likely benefits have dropped — a lot.

  13. “Moving from a 2011 oil price forecast to a current equivalent would reduce expected revenues from the Frontier project (all else equal) by about a quarter, while reducing taxes, royalties and return on capital each by about a third.

    If oil prices follow the $65 plus inflation break-even cited by the Canadian Energy Centre, that would reduce revenues by almost two thirds, and taxes, royalties and returns to investors by about three quarters.

    At today’s oil prices, plus inflation, revenues would be reduced by three quarters relative to 2011 forecast levels, and taxes, royalties and returns on capital would be reduced by about 95 per cent.”

  17. Regardless of the decision, Teck Frontier proves the system is still broken

    Canada is facing a decision on the biggest oil sands mine proposal in almost a decade. Alberta’s Frontier oil sands mine, proposed by Teck Resources, has gone through a lengthy regulatory process culminating in a recommended approval from a joint federal-provincial review panel and is now under consideration by the federal cabinet. A casual observer might assume that given the potential environmental and economic impacts, this process would have been comprehensive.

    Yet, the panel’s report, which shares the reasoning behind the decision, is remarkably weak on its considerations of climate impacts. Surprisingly, no conditions were proposed that mitigated any of the project’s climate effects. In a year in which two thirds of Canadians voted for stronger climate action, this is unacceptable.

    In the 1,300-page report, only seven pages were spent discussing the climate impacts from the project, and in that space, the panel dismissed much of the evidence put in front of it. Moreover, the panel remained silent on whether emissions from the mine would result in a “significant adverse effect.”

    Contrary to popular belief, the bitumen that would be produced by the project – as approved by the joint review panel – would not be best in class from a climate emissions standpoint. Yet the panel accepted that, as proposed, Frontier would be, at best, an average emissions performer per barrel, compared to its oil sands neighbours. This has much to do with the lower quality of the ore that the company would extract, leaving it exposed as investors increasingly consider carbon risk. It encouraged the company to do better, but imposed no conditions to ensure this aspiration.

    The panel also rejected any consideration of alternative oil price forecasts put in front of it. It instead relied on a highly optimistic forecast for global oil demand and future oil prices. This means that in order for Canadians to enjoy the stated economic benefits from the project, we are likely accepting that the world will fail to prevent the worst impacts of climate change.

  28. Teck’s decision to bail on Frontier lets everyone off the hook to the country’s detriment | Calgary Herald

    …

    But here’s the thing: that discussion was happening, thanks to the impetus of a deadline to decide on a project that had the potential to crystalize what this country’s elected government means when it says we can maintain a fossil-fuel industry and fight climate change at the same time.

    Instead, Lindsay might have sabotaged the dialogue he said he wants, not encouraged it.

    With a federal Conservative leadership race in train, a minority government in Ottawa, and a pack of right-wing premiers keen to blame Prime Minister Justin Trudeau for everything that’s wrong with the country, you tell me if you think Canada’s political leaders will use that “space” constructively?

  34. Teck knew as much. In his letter explaining the decision, Teck chief executive officer Don Lindsay effectively said the company was no longer willing to have its project become fodder for an interjurisdictional bunfight over climate and energy policy, nor did it believe it should have to answer for matters well beyond the company’s control. “The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” he wrote. “It is our hope that withdrawing from the process will allow Canadians to shift to a larger and more positive discussion about the path forward.”

    But here’s what Frontier really was: an improbably large bet on a bygone oil market. Its emissions would have been significant and, when combined with the local environmental effects, presented a significant barrier to its construction. But as the mine becomes, to some, a symbol of a broken regulatory process, the fallout from the application withdrawal should not distract from what has really changed in Alberta’s oil sands industry, nor should it provide comfort to those fighting for better local and national environmental policies. In winning the battle, they may still lose the war.

    Frontier would have been a $20-billion investment for Teck, which is more than twice its current market capitalization. The company could not have built it without a partner, but it may not have been in a hurry to build it at all. Teck announced a $1.2-billion writedown in the future value of its 21.3-per-cent share of Suncor’s Fort Hills mine because of lower expected prices for bitumen. Frontier would have been, to a reasonable approximation, a larger version of Fort Hills, which at full operation barely generated enough cash to pay for continuing capital investment last year, while paying only $1.85 a barrel in royalties to the Alberta government. To generate a healthy return on the capital invested in Fort Hills, oil prices would need to be back in the range of US$80.

  36. Teck is dead. What’s next?

    …

    Clayton Thomas-Muller, a member of the Mathias Colomb Cree Nation and an organizer with the environmental organization 350.org, won’t call it a death knell for the oil and gas industry in Canada until it comes straight from the top. “It’s only a matter of time, but [Teck being rejected federally would have been] the final nail, that represent[ed] the end of big oil in Canada. But Teck wasn’t rejected. Wherever the pressure came from, […] they pulled their own application. I think that that was to avoid [federal rejection].”

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