The story of Alberta’s oil demonstrates that, contrary to conventional wisdom, public money can be instrumental in unlocking economic growth
Emily Smejkal is the geothermal policy lead at the Cascade Institute at Royal Roads University and a fellow collaborating with the Accelerating Community Energy Transformation initiative.Thomas Homer-Dixon is the institute’s executive director.
Canada’s oil and gas sector lies at the nexus of this tangled challenge. It’s among our country’s largest industries, supporting more than 70,000 jobs in domestic extraction alone and making us the world’s fourth-largest oil producer. The sector is also one of Canada’sMoreover, the oil sector’s innovation is mainly focused on incremental improvements to boost the output, extend the lifespan and reduce the direct carbon emissions of oil-sands facilities.
The financial investments needed to commercialize extraction far below ground – and the risks associated with those investments – far exceeded what the private sector was prepared to bear, leaving 80 per cent of deposits untouched., endowing it with $100-million from the Alberta Heritage Savings Trust Fund. This was a down payment on what ultimately turned out to be a government investment of $1.7-billion in today’s dollars.
If we use gross revenues as a rough measure of direct economic activity, the technology produced a 100-fold return on investment – and that doesn’t count the vast indirect economic activity that SAGD’s deployment stimulated in Alberta and across Canada.
This approach faced resistance. Alberta’s conventional oil industry saw the oil sands as a competitor and lobbied the government to invest instead in enhanced recovery of conventional oil. But the Alberta government persisted in believing that disruptive innovation would dramatically accelerate economic growth. Although it eventually broadened AOSTRA’s scope to include enhanced oil recovery, AOSTRA’s focus remained oil sands research and development.
Aostra Canada Output Alberta Innovation Sagd Approach International Energy Agency Alberta Ottawa
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