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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Trudeau, Where Is Your Back Up Plan For The Arctic Ban?

When Canada’s federal government issued a five-year moratorium on oil and gas drilling in the Arctic at the end of last year, the environmentalist community rejoiced, just as it did in the United States, when the Obama administration did the same. Everyone seemed sure the move would bring benefits to everyone. Or perhaps they just didn’t really care that there are communities heavily dependent on the oil and gas industry for their livelihood.

Now, the premier of Canada’s Northwestert Territories has slammed Ottawa for its decision, along with others concerning the northern province, saying what we are witnessing today in that part of the world is “a return to colonialism.”

In a statement issued earlier this week, Bob McLeod said, Restrictions imposed on our vital energy and resource sector – 40 percent of our economy and source of middle class jobs and incomes for many of our people – are driving companies away, and with that go the jobs that sustain healthy families and community life. Staying in or trying to join the middle class will become a distant dream for many.

Earlier this year, when he had to defend the ban to a northern community whose livelihood depended on the oil and gas industry, PM Justin Trudeau said that while “one door of potential economic opportunity” has been shut, the government would work on all levels to open new doors. Those new doors, however, still remain undefined and, as such, provide little peace of mind for the local communities affected. Related: OPEC Eyes $70 Oil

Along with other decisions from the federal government being imposed on the Northwest Territories, according to McLeod, the ban on Arctic drilling demonstrates the lack of understanding in Ottawa that what works in the South doesn’t necessarily work in the North.

There is a strong enough argument against Arctic drilling: an oil spill there would quickly wreak havoc on extremely sensitive ecosystems and it would be a hell of a job to clean it up. As one Oilprice.com commenter said earlier this year when we reported on the ban, a large spill in the Arctic would bankrupt any company, as the Deepwater Horizon catastrophe is still too fresh in everyone’s memory.

Yet there are also arguments in defense of drilling, however little environmentalists want to hear them. None of these arguments are new: The transition to all-renewable energy will be a slow one. Until it is complete, the world will need oil. A lot of this oil has already been depleted—and a lot of what remains is in the Arctic.

It’s no wonder that Norway and Russia, two other Arctic countries, are focusing a lot of efforts on Arctic oil and gas exploration. And while Russia is not famous for a strong environmental lobby, Norway is among the greenest countries in the world, so the fact that Lundin, Statoil, and other E&Ps are betting big on the Arctic should be telling. Related: Does The U.S. Lead The World In Carbon Emissions Reduction?

Cynically speaking, for the government in Ottawa, the voices of the First Nations in the Northwest Territories probably count less than those of the much more densely populated southern provinces. The ban will hardly be revoked and it’s doubtful how willing the current license holders for Canadian Arctic blocks would be to utilize them.

This means that, in addition to inter-provincial rows elsewhere, such as between Alberta, which is complaining about the lack of enough pipelines to transport its oil, and British Columbia, which does not want tankers in its ports, now Ottawa also has to open those doors that Trudeau talked about in February.

By Irina Slav for Oilprice.com

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Leave a comment
  • Mark on November 09 2017 said:
    There are some unproven and incorrect assumptions in this article.

    First, "The transition to all-renewable energy will be a slow one." Two words: climate change. If we take the threat seriously (which we must), there is no reason why the transition should be a slow one. We have the technological capabilities to transition now if we want to. Oil companies (and apparently some analysts) want us to believe that we will need oil long into the future because they have a vested economic interest in keeping the oil flowing. Of course Norway and Russia are betting on oil. It's their bread and butter. By the way, the Norwegian government is being sued by its own citizens precisely for trying to open up the Arctic to more drilling (which undermines their Paris commitments to reduce GHGs). We are either serious about climate change or we are not. As we all know, drilling in the Arctic is simply not compatible with a with climatic stability.

    Finally, Bob McLeod may well have said that the oil and gas industry accounts for "40 percent of our economy and source of middle class jobs and incomes for many of our people" but, here in Canada, no one knows where he got that figure. It's a vast exaggeration and does not seem to be based on anything credible.

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