By Bob Page

For Business Edge

"If we want to proceed with our announced plans, we have to change the way we are operating."

This recent comment from an energy industry colleague is being expressed more and more frequently, even by folks such as former Alberta premier Peter Lougheed.

Bob Page

How does Alberta proceed with the huge expansion of oilsands and thermal power given the growing public expectations for environmental stewardship and emissions cuts? This is clearly an issue that has to be addressed.

For decades, the two oilsands plants owned by Suncor and Syncrude operated in splendid isolation north of the Alberta mainstream. They survived with technical adaptations, production interruptions and patient investors because there was a firm belief that technical innovation would drive down costs and improve efficiency.

With perseverance and ingenuity, these companies saw their vision converted into commercial reality.

One of the key factors in that achievement was the pooling of the best brain power in the province. A large government-industry-university partnership was created called AOSTRA (Alberta Oil Sands Technology and Research Authority), which tackled the technology and other issues.

This consortium drove the development of the technology breakthroughs, which in turn drove down the costs per barrel. This converted the oilsands into the mainstream of the oil and gas business, and assured its commercial future and its attractiveness to investors.

We need a similar grand partnership to make the oilsands and coal reserves renewable and sustainable resources, consistent with public expectations on safeguarding the environment.

In the last five years, Alberta's energy reserves have increased in global importance, due to the huge increase in world oil prices and declining exploration and production levels in North America.

In the U.S., the George W. Bush administration has expressed rising concerns about energy security. During a recent trip to Washington, D.C., one of the Senate staffers said to me: "Alberta is now the most strategic energy source for the U.S. in the world, given our problems in the Middle East and with Venezuela.

Five million oilsands barrels a day will greatly strengthen American foreign policy."

The Canadian government has promised the Americans access to these reserves, which adds to the pressure for environmental-management solutions.

With the increased oil prices, the world has come knocking to northern Alberta. The two original oilsands plants will now be joined by another 20 or 25 facilities under construction or planned.

Most of the major producers are involved directly or indirectly, as well as the state-owned "national" oil companies from countries such as India and China, which are seeking supplies for their domestic consumption.

Globally, the Alberta oilsands represent the hottest oil boom today. The basic problems for the Fort McMurray area are complex and interconnected.

Oilsands production is much more greenhouse gas-intensive than convention oil production, and also creates emissions of the acid rain-causing sulphur dioxide.

There are also serious issues about the availability of enough water and about the water quality of adjacent rivers. The oilsands plants will disturb a huge area of northern Alberta for wildlife and First Nations.

The urban infrastructure is quite inadequate for the huge influx of workers and their families.

While the issues are many, the public concerns about the environment top the list and are attracting international attention.

Gov. Arnold Schwarzenegger of California recently announced significant new taxes on any oilsands products coming into his state, as a result of heavy pressure from local environmental groups.

For Alberta to address these problems, we need fundamental technology change such as "clean coal" or "bitumen coke" (coke is a byproduct of oilsands production) processes, combined with underground sequestration in geological reservoirs of remaining emissions.

How would this work? We would take coal or oilsands coke, gasify it as a fuel, capture sulphur or other pollutants, and permanently store the remaining carbon dioxide underground.

For a new power plant with such technology, the combustion would be virtually emissions-free. It would also mean dramatic improvements in oilsands emissions.

But there is still important work to be done in the development of this technology to make it commercial.

No one company or government can do it on its own. We need all the best brains working together. We need a new grand partnership between industry, governments and the universities to speed the technical, the scientific and the policy innovation needed.

We need an outreach program to the public to gain their understanding and support. We need new market mechanisms to complement government regulations. We need the political will and leadership to bring the parties together.

The fast-growing Institute for Sustainable Energy, Environment and Economy (ISEEE) at the University of Calgary has both the expertise and technical research capability to help deliver such a partnership.

ISEEE has the vision and the experience in bringing parties together and creating a new sustainable fossil-fuels economy for Alberta. The institute has the close links to industry and government, yet the necessary independence to help build public credibility.

This is a huge challenge for our province and the future of our energy industries.

Let us all work together and get on with the job.

(Robert (Bob) Page is ISEEE's new TransAlta Professor of Environmental Management and Sustainability. He was formerly vice-president of sustainable development at TransAlta Corp.)